Under Earth's crust, there is a layer of hot and molten rock called magma. Heat is continually produced there, mostly from the decay of naturally radioactive materials such as uranium and potassium. The amount of heat within 10,000 meters (about 33,000 feet) of Earth’s surface contains 50,000 times more energy than all the oil and natural gas resources in the world...
..Geothermal springs for power plants. The most common current way of capturing the energy from geothermal sources is to tap into naturally occurring "hydrothermal convection" systems where cooler water seeps into Earth’s crust, is heated up, and then rises to the surface. When heated water is forced to the surface, it is a relatively simple matter to capture that steam and use it to drive electric generators. Geothermal power plants drill their own holes into the rock to more effectively capture the steam.
There are three designs for geothermal power plants, all of which pull hot water and steam from the ground, use it, and then return it as warm water to prolong the life of the heat source. In the simplest design, the steam goes directly through the turbine, then into a condenser where the steam is condensed into water. In a second approach, very hot water is depressurized or "flashed" into steam which can then be used to drive the turbine.
In the third approach, called a binary system, the hot water is passed through a heat exchanger, where it heats a second liquid—such as isobutane—in a closed loop. The isobutane boils at a lower temperature than water, so it is more easily converted into steam to run the turbine...
...The choice of which design to use is determined by the resource. If the water comes out of the well as steam, it can be used directly, as in the first design. If it is hot water of a high enough temperature, a flash system can be used, otherwise it must go through a heat exchanger. Since there are more hot water resources than pure steam or high-temperature water sources, there is more growth potential in the heat exchanger design.
The largest geothermal system now in operation is a steam-driven plant in an area called the Geysers, north of San Francisco, California. Despite the name, there are actually no geysers there, and the heat that is used for energy is all steam, not hot water. Although the area was known for its hot springs as far back as the mid-1800s, the first well for power production was drilled in 1924. Deeper wells were drilled in the 1950s, but real development didn't occur until the 1970s and 1980s. By 1990, 26 power plants had been built, for a capacity of more than 2,000 megawatts (MW)...
..One concern with open systems like the Geysers is that they emit some air pollutants. Hydrogen sulfide—a toxic gas with a highly recognizable “rotten egg” odor—along with trace amounts of arsenic and minerals, is released in the steam. In addition, at a power plant at the Salton Sea reservoir in Southern California, a significant amount of salt builds up in the pipes and must be removed. While the plant initially started to put the salts into a landfill, they now reinject the salt back into a different well. With closed-loop systems, such as the binary system, there are no emissions; everything brought to the surface is returned underground...
..The U.S. Geological Survey estimates the geothermal resource base in the United States to be between 95,000 and 150,000 MW, of which about 22,000 MW have been identified as suitable for electric power generation.[11] Unfortunately, only a fraction of this resource is currently utilized, with an installed capacity of 2,800 MW (worldwide capacity is approximately 8,000 MW).[12] But thanks to declining costs and state and federal support, geothermal development is likely to increase. Over the next decade, new geothermal projects are expected to come online to increase U.S. capacity to between 8,000 and 15,000 MW. As hot dry rock technologies improve and become competitive, even more of the largely untapped geothermal resource could be developed. In addition to electric power generation, which is focused primarily in the western United States, there is a bright future for the direct use of geothermal resources as a heating source for homes and businesses everywhere. Source:
http://www.ucsusa.org/clean_energy/renewable_energy_basics/offmen-how-geothermal-energy-works.html