Someone has done it. A majority of the electricity I buy comes from geothermal energy †.
Of course, I live in the Pacific Northwest of North America, which puts me close to a tectonic plate boundary. This presents good conditions for extracting geothermal heat (since the earth's crust is thinner at such boundaries ... making shallower wells productive).
In terms of why it isn't more widely used, I don't know for sure, but I would guess that at least some of the following factors apply:
- It's new. Give it time. This recent estimate predicts a 13% annual growth rate in geothermal production in coming years.
- Political reasons contribute to the status quo (fossil fuels) maintaining market share as long as possible (this includes both lobbying by existing fossil fuel business interests, and general ideological leanings by the political Right).
- Building the plants can involve hydraulic fracturing, somewhat like shale gas extraction does. There are environmental issues associated with that, or any type of drilling, especially in earthquake zones (although for the geothermal application, I believe they're far outweighed by the low carbon footprint per kWh of geothermal energy)
- As I alluded to before, not all sites are equally desirable, geologically.
- I don't want to get into regulations here, because they vary with every location, but in some places, utilities have been required to buy the very cheapest electricity, with no regard to pollution/carbon-neutrality. This could rule out geothermal, even if it's cost-competitive, so long as there's one available source with lower cost.
- You didn't limit your question to one particular region, but here's a link discussing some regional issues in my corner of the world.
From this source:
The major impediments which this industry faces include initial
financing of large scale projects, resource development risks like
failure of drilling wells and insufficient productivity, lack of
skilled labor to work on the projects, issues related to drilling rigs
and market and network issues like proximity to the market and network
capital costs. Also, there are some environmental problems in
producing geothermal energy like release of hydrogen sulfide and
disposal of toxic geothermal fluids while extraction.
Challenges to this industry are carrying out efficient programs for
land leasing where reserves of geothermal energy are located, better
drilling assistance in terms of accurate positioning of the site and
its viability, and significant financial support needed to establish
the plants at the desired locations.
The "Cost" Thing
One issue that should no longer be considered a primary factor limiting deployment of geothermal power is cost. From the US Energy Information Association, the pro-rated cost of new power plants (excluding externalities like pollution):
Plant type Total system levelized cost (2011 $/MWh)
Conventional Coal 100.1
Advanced Coal 123.0
Advanced Coal with CCS 135.5
Conventional Combined Cycle 67.1
Advanced Combined Cycle 65.6
Advanced CC with CCS 93.4
Conventional Combustion Turbine 130.3
Advanced Combustion Turbine 104.6
Advanced Nuclear 108.4
Wind (Offshore) 221.5
Solar PV 144.3
Solar Thermal 261.5
Note that this data is an estimate for cost, including well / plant development, averaged over the electricity produced (kWh). While I can't speak to the metrics used in board rooms, I believe this to be fundamentally better than the $/kW capacity data featured in this answer. That data cannot provide a basis for comparison between sources like wind and geothermal, because geothermal plants can run at 90%+ capacity continually, while wind farms do not (wind is inherently variable).
So, geothermal is already a cost-competitive technology.
I'm certainly a proponent of geothermal energy, and I think its future looks bright.
P.S. I read your question to be about large-scale energy production, but geothermal is also a legitimate small-scale solution, too.
† - of course, as with most green energy utility programs, my electricity is the same as that of my neighboor, who doesn't participate in the program. My utility payments simply subsidize renewable projects (such as Raft River geothermal).