Summary: This article introduces India’s first national geothermal energy policy, marking a strategic leap in diversifying renewable energy sources. The policy adds immense value by unlocking geothermal’s potential for power, heating, cooling, and industrial use, with support from global standards, fiscal incentives, and oil-gas sector synergies.
The Ministry of New and Renewable Energy (“MNRE”) has introduced a national policy on geothermal energy, dated September 15, 2025 (“Policy”), to strengthen national energy security through diversified renewable energy sources and to accelerate clean energy transition and support India’s ambitious net zero emissions target by 2070[1]. Geothermal energy utilises low to medium-enthalpy resources such as hot rocks and shallow ground layers for direct-use applications, including heating and cooling, agri-food processing, and aquaculture. High-enthalpy resources, including geysers, hot springs, and volcanic regions, are suitable for electricity generation.
The Geological Survey of India has identified 381 hot springs, with surface temperatures ranging from 35°C to 89°C[2]. While the Himalayan belt offers high-temperature reservoirs nearing 200°C, the rest of India predominantly falls within a medium to low enthalpy zone (100°C–180°C). The Policy has also mapped key geothermal prospects across 10 provinces, including the Himalayan Geothermal Province, Naga-Lusai, Andaman Nicobar Islands, Son-Narmada Tapi, West Coast, Cambay Graben, Aravalli, Mahanadi, Godavari, and South Indian Cratonic.
India has launched several geothermal pilot projects, including an initiative in Barmer, Rajasthan, with a project fund of INR 15,00,00,000 to utilise energy from abandoned oil fields. In Tawang, Arunachal Pradesh, geothermal heating is being used at an army base. Other efforts focus on cooling applications, shallow geothermal exploration, and a hybrid solar-geothermal power generation model.
Global Standards
The Policy aligns with the United Nations framework and goals such as Sustainable Development Goal 7[3] and the Paris Agreement[4], integrating clean energy goals with national ambitions for sustainable, low carbon growth and global climate commitments.
Globally, countries including Indonesia, Kenya, Turkey, Iceland, and the Philippines have made significant strides in scaling geothermal energy, driven by robust governmental support and international collaboration and partnerships. As of 2024 end, global geothermal power generation capacity reached 15.4 gigawatts, with the United States leading the sector, followed by Indonesia and the Philippines[5].
The US has established a geothermal data repository (as also proposed in the Policy) to support advanced geothermal initiatives like the Utah FORGE Project, which pioneers enhanced geothermal systems (“EGS”) using deep, angled wells in crystalline rock and Fervo Energy’s 400 MW Cape Station, featuring 21 horizontal wells, which is scheduled to begin operations by 2026.
Oil and gas companies play a significant role in driving the growth of geothermal energy, with major players such as Pertamina Geothermal, Star Energy, and Chevron each operating projects exceeding 200 MW in capacity.[6]
Geothermal energy could approximately lead to 15% electricity demand globally by 2050, with continuous improvement in technology.[7]
Scope and Implementation Roadmap
The Policy contemplates different phases of development of geothermal power plant, which inter-alia includes surface exploration, exploration drilling, pre-feasibility report, environmental assessment, production well drilling, feasibility report, power plant design and construction, testing, commissioning, well monitoring, reservoir management, and operation.
The Policy also includes a broad scope for developing geothermal systems, including provisions for resource assessment through geological, geochemical, and geophysical surveys; modular systems for power production, such as dry steam, flash steam, binary cycle, and organic rankine cycle, along with EGS enabling heat extraction from dry rock. Ground Source Heat Pumps (“GSHP”), effective across all climates, use stable underground temperatures for heating and cooling. It also supports advanced technologies like advanced geothermal systems (“AGS”), hybrid systems with solar integration, closed-loop setups, geothermal storage, offshore wells, and deep direct use for industrial and district heating.
The Policy casts an obligation on MNRE to establish a streamlined single-window support system to facilitate all necessary permissions and clearances, ensuring timely execution of geothermal projects. Additionally, state governments may allocate geothermal sites for exploration for an initial period of three years, with a possible extension of up to two more years. Furthermore, an additional two-year extension is envisaged for geothermal projects located in high-altitude areas.
The MNRE is also required to set up a geothermal data repository, by collaborating with key national agencies (including the ministry of mines, the ministry of earth sciences, geological survey of India, national data repository, central ground water board, etc). Developers will have access to valuable data and be allowed to conduct geothermal resource assessment surveys and detailed assessments for project planning.
Support mechanisms for power generation, transmission, and distribution, such as inter-state grid access, inter-state transmission system transmission waivers, open access charge exemptions, RE Must-Run Rules[8], renewable purchase obligation eligibility, and inclusion in the Indian carbon credit trading scheme will also apply to geothermal projects. Additionally, environmental and social impact assessment guidelines for geothermal projects will be introduced by the MNRE, along with the Ministry of Environment, Forest and Climate Change, for geothermal projects, in accordance with global best practices and case studies.
Fiscal Incentives
The government is considering a range of fiscal incentives to support the geothermal energy sector. These may include import duty exemptions on geothermal equipment, machinery, and related services, GST exemptions on similar items, tax holidays for geothermal projects, accelerated depreciation benefits, and property tax exemptions for users of GSHP and heating/ cooling systems. Implementation of these measures will be subject to further recommendations and approvals from the relevant ministries or departments.
Funding
Currently, the government is also exploring appropriate financing mechanisms for geothermal energy projects, including but not limited to long-term concessional loans from public and private sector financial institutions, sovereign green bonds, viability gap funding, loans or grants for risk mitigation, and feed-in-tariff. The Policy provides for setting up of geothermal energy centres of excellence for providing technical expertise, training, and project support.
While the government already allows 100% foreign direct investment in the renewable energy sector under the automatic route, preference will be accorded to indigenous geothermal technologies to reduce reliance on imported equipment. Central funding support will be preferentially extended to the Northeastern region and other special category states. Additionally, the government also plans to explore mechanisms for sharing geological exploration risks with developers to encourage greater private sector participation.
Conclusion and Vision
The Policy marks a significant step in diversifying India’s renewable energy portfolio. While solar, wind, bioenergy, battery storage, and hydropower dominate today’s capacity, geothermal energy will prove to be an important addition to the renewable energy mix. Its comprehensive framework tackles traditional barriers through risk mitigation, fiscal incentives, and streamlined regulatory processes.
With the advancement in technologies such as EGS and AGS, potential new sites for geothermal are expected to open. The Policy’s success will depend on effective coordination between central and state governments, international collaboration, and sustained investment in research and development. By establishing geothermal energy as a reliable baseload renewable source, India can enhance energy security whilst contributing meaningfully to its climate commitments and sustainable development goals.
[1] Press Release dated September 17, 2025, Ministry of New and Renewable Energy https://www.pib.gov.in/PressReleasePage.aspx?PRID=2167657
[2] National Policy on Geothermal Energy dated September 15, 2025 issued by Ministry of New & Renewable Energy.
[3] Sustainable development goal: Ensure access to affordable, reliable, sustainable and modern energy for all: https://sdgs.un.org/goals/goal7
[4] https://unfccc.int/sites/default/files/english_paris_agreement.pdf
[5] India’s geothermal opportunity as a renewable energy resource, Economic Times https://energy.economictimes.indiatimes.com/news/renewable/indias-geothermal-opportunity-as-a-renewable-energy-resource/123500295
[6] The future of Geothermal Energy by International Energy Agency : https://www.iea.org/reports/the-future-of-geothermal-energy/executive-summary
[7] The future of Geothermal Energy by International Energy Agency : https://www.iea.org/reports/the-future-of-geothermal-energy/executive-summary
[8] India’s Electricity (Promotion of Generation of Electricity from Must- Run Power Plant) Rules, 2021