According to the Union of Concerned Scientists, geothermal systems use pipes driven deep into the ground to heat air, water or other fluids for the purposes of generating electricity or heating buildings. In some cases, geothermal systems use natural underground hot springs for this purpose, or the systems may pump a thermal medium into the ground to absorb the Earth's natural heat.
A geothermal power plant requires steam to run electric turbines. If the plant is situated over a natural hot spring, simply sinking a well into that spring may provide enough heat and steam to drive the turbines. Otherwise, the plant may pump water down into the earth, either using it directly as steam or running the heated fluid through a heat exchanger to capture its warmth.
Geothermal energy can also be used for direct heating or cooling. A few feet below the surface of the Earth, the ground temperature tends to hover around 50 degrees Fahrenheit. In the winter, a pipe buried at this depth transfers that warmth to air or a thermal fluid, allowing a geothermal heat pump to transfer that warmth into a home or business. In the summer, that same 50 degree layer can be used to cool hot air, providing air conditioning via the same mechanism.