What is geothermal and how is it important to New Zealand?

A long utilised taonga

Derived from the Greek words geo (earth) and therme (heat), geothermal energy comes from deep within the Earth’s crust, where magma heats surrounding rocks and water to extremely high temperatures in reservoirs deep underground. The water and steam from geothermal reservoirs can rise to the surface, causing geysers, hot springs, boiling mud pools, and sinter terraces.^[1] Now phenomenal tourism attractions, these geothermal features are taonga to Māori, who have used them for cooking, bathing, therapeutic and heating purposes for centuries.

New Zealand’s geographical location on the boundary of the Australian and Pacific tectonic plates means we have dynamic volcanic activity, giving us a unique geothermal advantage. Particularly in the Taupō Volcanic Zone (TVZ), Earth’s crust has stretched and thinned, allowing us to access significant geothermal resources and heat at much shallower depths.

A surge in development

Modern geothermal development in New Zealand began in the 1950s. A Crown-led explorative drilling programme between 1949 and 1986 jumpstarted our understanding of our geothermal fields in Ngāwhā and the TVZ. This work established the potential for electricity generation in these areas, utilising geothermal steam to power turbines.

New Zealand’s first, and the world’s second, geothermal power station was Wairakei, just outside Taupō, which first generated electricity in 1958. It is still operating nearly 70 years later and is now one of 17 geothermal power plants across 8 geothermal fields – delivering a combined generation capacity of 1,207 MW.^[3] Unlike wind and solar, geothermal energy is consistently^[4] available and, in 2024, accounted for 8,741 GWh, or 19.9%, of New Zealand’s annual electricity generation.^[5]

Partnering with tāngata whenua is an increasingly integral component of geothermal development, bringing a rich blend of economic insight, Māori development priorities and values to the forefront. This collaboration enables Māori, as kaitiaki, to actively shape the future and catalyse innovation across the industry.

Advances in reinjection technology are enhancing the sustainability profile of geothermal energy. In addition to being reliable and renewable, geothermal can now offer low-carbon electricity generation, as the naturally occurring greenhouse gases in geothermal fluids can be returned to the reservoirs rather than released to the atmosphere.

Beyond electricity generation

The potential of our geothermal resources does not end at electricity generation. In Kawerau and Taupō, renewable geothermal heat and steam powers industrial processes, such as timber drying and tissue manufacturing. In 2023, direct use of geothermal energy (across industrial, agricultural, commercial, and residential sectors) amounted to 7.45 PJ, with an additional 1.25 PJ^[6] used for co-generation.^[7]

The full spectrum of geothermal heat can be used in a variety of applications – including bathing, aquaculture, horticulture, and heating for water and our built spaces (see Figure 1). This strategy seeks to incorporate all these opportunities, including indirect use^[8], and uses the term ‘geoheat’ to capture these wider applications.

Unleashing subsurface value

Beneath the surface lies further commercial potential – from extracting valuable minerals dissolved in geothermal fluids to pioneering biotechnology that leverages the resilience of microorganisms thriving in extreme conditions. These innovations open new economic pathways and position geothermal as a source of scientific advancement, environmental stewardship, and industry transformation.

A global leader in geothermal development

New Zealand’s geothermal expertise is recognised globally, contributing to renewable energy development and building sector capability across the globe. Specifically, we have fostered partnerships with key regions including Indonesia, the Philippines, Africa, and the Caribbean. Through strategic partnerships, we strengthen trade relationships and gain access to international technology and expertise – critical advantages as we enter the next phase of geothermal advancement: supercritical geothermal.

Supercritical – the next frontier

New Zealand’s geothermal reservoirs (up to 350 °C and located between 1km and 3.5km deep) have long powered renewable energy, but the next chapter lies deeper – within the largely unexplored realm of supercritical geothermal. In the TVZ, our unique geology and thinner crust offer a rare opportunity to access superhot fluids at depths beyond 5 km and temperatures exceeding 400 °C. These resources could deliver up to 3 times more energy than conventional systems.^[9]

Backed by government investment, this bold exploration into uncharted subsurface territory could redefine our energy future and reinforce New Zealand’s leadership in geothermal innovation on the global stage.

Footnotes

[1] Sinter terraces are silica deposits formed as silica precipitates out of geothermal fluid as it cools – the most famous sinter deposits were the Pink and White Terraces which were destroyed in the eruption of Mount Tarawera in 1886.

[2] From MBIE’s International Visitor Survey.

[3] Capacity figure from Transpower’s ‘2025 SOSA – Final Supplementary Data – Final Version’ document which can be accessed here: https://www.transpower.co.nz/invitation-comment-security-supply-assessment-2025-closed

[4] Geothermal power stations are occasionally shut down for periods of maintenances or upgrades.

[5] From MBIE’s ‘Data tables for electricity’. Electricity statistics

[6] Direct use figure from MBIE’s ‘Energy balance tables’ spreadsheet. Energy balances

[7] Co-generation means the use of geothermal energy to generate both electricity and heat.

[8] The Resource Management Act 1991 defines ‘geothermal water’ as water heated within the earth to a temperature of 30 degrees Celsius or more. Usually, this resource can be used directly (e.g. for warm pool water, or for space and water heating) or for electricity generation. ‘Indirect use’ refers to the use of heat and energy sources that fall outside of this technical definition (for example, where heat pump technology is used to modify ambient ground temperatures for heating or cooling purposes).

[9] Power prices are painful but geothermal could be New Zealand's superhot solution(external link) — Earth Sciences New Zealand

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