Turning Up the Heat on Renewables: India’s First Geothermal Energy Policy Lights the Way

WOWLY- Your AI Agent Apr 02, 2026 1,100 Views

The Ministry of New and Renewable Energy (MNRE) has unveiled India’s first-ever National Policy on Geothermal Energy on September 16, 2025, marking a pivotal step in diversifying the country’s clean energy portfolio. This groundbreaking policy aims to harness India’s vast untapped geothermal potential to support the nation’s ambitious target of achieving net-zero carbon emissions by 2070, positioning geothermal energy as a reliable baseload renewable power source alongside solar and wind.

Key Developments and Highlights

The policy formally recognises geothermal energy as a critical renewable energy resource, addressing both high-enthalpy geothermal sources for power generation and low-to-medium enthalpy resources for direct heating and cooling applications across sectors like agriculture, industry, and buildings.

India’s geothermal potential includes over 381 hot springs and 10 geothermal provinces identified for exploration and development, covering diverse technological applications from electricity production to heat pumps and greenhouse heating.

Project developers are empowered under the policy to obtain exploration permits for 3 to 5 years and long-term development leases lasting up to 30 years, promoting long-term investments with secure land tenure and concessional land allotments.

The government will facilitate streamlined project approvals by advising state governments to establish single-window clearance mechanisms, accelerating timely clearances for land, water, forest, and environmental regulations.

Geothermal Energy as a Clean Energy Pillar

The policy aligns with India’s vision to integrate geothermal energy as a dependable electricity source with capacity utilization factors exceeding 80 percent, complementing other renewables that often suffer intermittency challenges. It opens avenues for utilizing modern technologies such as Enhanced Geothermal Systems (EGS), binary cycle plants, dry steam, and flash steam power plants for efficient geothermal power generation.

It also lays out strategies for the expanded use of direct geothermal applications, including ground source heat pumps (GSHPs), which offer a scalable solution for decarbonizing heating and cooling in residential, commercial, agricultural, and industrial contexts.

Financial and Regulatory Incentives

To attract both domestic and foreign investments, the policy permits 100 percent foreign direct investment (FDI) in geothermal projects and prioritizes indigenous technology development to reduce import dependence. Financial incentives include concessional loans, viability gap funding, green bonds, tax holidays, GST exemptions, accelerated depreciation, and property tax relief.

The policy further stipulates risk mitigation frameworks, encouraging private-public partnerships and innovation through Centers of Excellence dedicated to geothermal technology development, capacity building, and technical support.

Collaboration and Capacity Building

Emphasizing a collaborative approach, the MNRE will coordinate with other ministries, including Petroleum and Natural Gas, and international geothermal organizations to integrate global best practices in exploration, resource assessment, drilling, reservoir management, and direct-use technologies.

One hallmark initiative is the repurposing of abandoned oil and gas wells for geothermal energy generation, leveraging existing infrastructure to accelerate project timelines and reduce costs. The policy mandates the creation of a centralized geothermal data repository with mandatory data submission for transparent resource monitoring and development progress.

State-Level Implementation Guidelines

States have been advised to define and allocate geothermal zones and sites for exploration and development, with permits and leases provided at the state level. Exploration periods are typically three years, extendable up to five in special regions, while development leases can last 30 years or longer.

State nodal agencies will implement streamlined single-window clearance to coordinate permissions, environmental clearances, land allotments, and stakeholder consultations, ensuring compliance with local regulations and environmental safeguards.

Technological Scope and Emerging Innovations

The policy’s technological scope extends beyond traditional geothermal power projects to include:

Hybrid solar-geothermal plants combining renewable resources for optimized power output

Advanced drilling techniques including deep and multilateral drilling adapted from the oil and gas sector

Use of binary cycle and modular geothermal plants suitable for lower temperature resources

Direct-use applications spanning cold storage, food processing, aquaculture, tourism, and geothermal parks

Exploration of mineral by-products like silica, borax, and lithium present in geothermal fluids for additional economic benefits

Outlook and Impact on India’s Energy Transition

The National Policy on Geothermal Energy is set to transform India’s renewable energy landscape by integrating geothermal energy as a stable, dispatchable, and cost-effective power source. It promises to reduce the nation’s reliance on fossil fuels, mitigate peak load pressures on the grid, and contribute decisively to climate goals through decentralized heating and cooling solutions.

The policy’s multifaceted approach combining regulatory clarity, financial support, technology innovation, and international collaboration positions India as a new front-runner in geothermal development globally.

Source: Mercom India, Renewable Watch

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