India's Geothermal Revolution: Unlocking Clean Energy Potential

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Key Highlights

Historic Policy Launch: India notifies its first National Policy on Geothermal Energy in September 2025, targeting 10 GW potential across 381 identified hot springs in 16 states
Comprehensive Application Scope: Policy covers electricity generation, Ground Source Heat Pumps (GSHPs), district heating/cooling, agriculture, and industrial applications with 100% FDI allowed
Five Pilot Projects Sanctioned: MNRE approves ₹15 crore Rajasthan project using Vedanta’s abandoned oil wells, plus initiatives in Arunachal Pradesh, nationwide mapping, and hybrid solar-geothermal systems
International Partnerships: Active collaborations with USA, Iceland, and Norway for technology transfer, with researchers already conducting feasibility studies at Indian sites
Financial Support Framework: Policy proposes viability gap funding, tax incentives, concessional loans, and import duty exemptions to address ₹36 crore per MW development costs

India has embarked on a transformative journey in renewable energy with the notification of its first-ever National Policy on Geothermal Energy in September 2025. This groundbreaking policy represents a strategic shift toward diversifying India’s clean energy portfolio beyond traditional solar and wind sources, positioning geothermal energy as a reliable baseload renewable energy source capable of contributing significantly to the nation’s Net Zero 2070 target. pib

The policy addresses India’s vast untapped geothermal potential of 10,000 MW (10 GW), making it a crucial component of the country’s comprehensive renewable energy strategy. Unlike intermittent sources like solar and wind, geothermal energy provides consistent, 24×7 power generation and direct-use applications, offering enhanced energy security and grid stability.

India’s Geothermal Resource Landscape

Geological Foundation and Resource Assessment

The Geological Survey of India (GSI) has identified 381 hot springs distributed across 10 geothermal provinces spanning 16 states and Union Territories. These provinces include the Himalayan region, Sahara Valley, Cambay Basin, Son-Narmada-Tapi (SONATA) lineament belt, West Coast, Godavari Basin, and Mahanadi Basin.

The temperature range of these springs varies from 37°C to 96°C, with prominent locations including Puga Valley and Chhumathang in Ladakh, Manikaran in Himachal Pradesh, Tapovan in Uttarakhand, and Bakreshwar in West Bengal. The Puga geothermal field, located 180 km from Leh, demonstrates particularly promising potential with temperatures reaching 84°C and discharge rates up to 300 liters per minute. smu

Earlier Development Status and Challenges

India’s geothermal energy utilization has remained largely untapped despite significant potential. Currently, only two small geothermal plants operated by ONGC exist in the country – at Parvati Valley, Manikaran in Himachal Pradesh and Puga-Chumathang sites in Ladakh. This minimal development contrasts sharply with global geothermal capacity, which reached 15.4 GW in 2024, led by the United States, Indonesia, and the Philippines.

The Wadia Institute of Himalayan Geology (WIHG) identified approximately 70 hot springs in Uttarakhand and Himachal Pradesh with electricity generation potential, each capable of producing up to 5 MW. However, lack of policy framework, high upfront costs, and exploration risks have hindered commercial development. energywatch

Core Components of the National Policy

Institutional Framework and Objectives

The Ministry of New and Renewable Energy (MNRE) serves as the nodal agency for implementing the policy, with clear objectives focused on exploration, development, promotion, and utilization of geothermal energy. The policy establishes a comprehensive framework for research and development, innovation, and fostering both international and domestic collaborations.

Key institutional stakeholders include the Geological Survey of India, state renewable energy agencies, oil and gas sector companies, research institutions, and private sector developers. The policy promotes inter-ministerial coordination between MNRE, Ministry of Petroleum and Natural Gas, and state governments to streamline project approvals.

Financial Support Mechanisms

The policy proposes extensive fiscal and financial incentives to address high upfront costs and exploration risks. These include concessional loans from public and private financial institutions, sovereign green bonds, viability gap funding (VGF), import duty and GST exemptions, accelerated depreciation benefits, and tax holidays.

100% Foreign Direct Investment (FDI) is permitted in the sector, with support for projects extending up to 30 years with possible extensions based on resource availability. The government is exploring viability gap funding schemes similar to those available for other renewable energy sources.

Applications and Technological Innovations

Power Generation and Direct-Use Applications

Geothermal energy applications extend beyond electricity generation to include district heating and cooling, space conditioning via Ground Source Heat Pumps (GSHPs), agriculture (greenhouse heating, aquaculture), tourism, desalination, and cold storage. GSHPs utilize the earth’s relatively constant temperature between 16-24°C at depths of 6 meters to provide efficient heating and cooling for buildings.

The policy specifically promotes GSHP technology for space conditioning, which can achieve 40% savings on HVAC costs and provide 50-70% energy efficiency. A pioneering 32 TR GSHP system at Dholera, Gujarat, developed by Pandit Deendayal Petroleum University, demonstrates the technology’s viability in Indian conditions.

Enhanced Geothermal Systems and Innovation

The policy encourages development of Enhanced Geothermal Systems (EGS) and Advanced Geothermal Systems (AGS), which can harness geothermal energy from hot, dry rock formations lacking natural permeability. EGS technology involves hydraulic stimulation to create artificial fracture networks, expanding the geographical applicability of geothermal energy beyond natural hydrothermal systems.

Retrofitting abandoned oil and gas wells represents a significant innovation opportunity, particularly in regions like the Gulf of Cambay, Rajasthan, and Gujarat, where thousands of unproductive wells could be repurposed for geothermal energy extraction. This approach leverages existing drilling infrastructure while reducing development costs.

Hybrid Technologies and Integration

The policy promotes hybrid geothermal-solar integrated power plants, combining the baseload reliability of geothermal with solar energy’s peak generation capabilities. One of the five sanctioned pilot projects demonstrates integrated solar-geothermal power generation, exploring synergies between these complementary renewable sources.

Grid integration follows established renewable energy protocols, including must-run status, open access waivers, and inclusion under the Indian Carbon Credit Trading Scheme. This ensures geothermal projects receive similar support mechanisms as other renewable energy sources.

Current Developments and Pilot Projects

Five Sanctioned Pilot Initiatives

MNRE has sanctioned five pilot projects representing diverse geothermal applications and technologies. The flagship initiative is a ₹15 crore pilot project in Barmer, Rajasthan, where Vedanta’s abandoned oil fields will be retrofitted for geothermal energy production, targeting 450 kWh electricity generation.

Other projects include geothermal heating for an army base in Tawang, Arunachal Pradesh, demonstrating military applications in harsh climatic conditions. Osmania University in Hyderabad is validating geothermal cooling concepts, while IIT Delhi is mapping shallow geothermal potential nationwide.

International Collaborations and Technology Transfer

India is actively exploring partnerships with leading geothermal nations including the United States, Iceland, and Norway. Researchers from Norwegian and Icelandic companies have already conducted pilot studies at potential sites in the Gulf of Cambay, Arunachal Pradesh, and Uttarakhand.

These collaborations focus on technology transfer, best practices adoption, and joint research initiatives to accelerate India’s geothermal development. The partnerships aim to leverage international expertise while building domestic capacity in geothermal exploration and development.

Key Stakeholders and Implementation Framework

Government Agencies and Research Institutions

MNRE serves as the primary coordinating body, working closely with the Geological Survey of India for resource assessment and Defence Research and Development Organisation (DRDO) for strategic applications. Research institutions including IIT Delhi, IIT Madras, Osmania University, and regional universities are conducting technical feasibility studies.

State governments play crucial roles in project implementation, with Rajasthan, Arunachal Pradesh, Uttarakhand, and Gujarat leading pilot initiatives. Uttarakhand has already developed its own Geothermal Energy Policy 2025 to strengthen its renewable energy portfolio.

Private Sector Engagement

Major corporate players including Vedanta Ltd, Reliance Industries, and ONGC are actively participating in geothermal development. Reliance Industries has announced plans to leverage its oil and gas exploration business to expand into geothermal energy.

Specialized companies such as Rosemex Ecotech, Green India Buildings Systems and Services (GIBSS), Geothermal India, and Geoclinic Private Limited provide technology solutions and installation services. Most providers fall under the Small and Medium Enterprise category, indicating significant growth potential for the domestic industry.

End-User Communities

Rural and remote communities represent primary beneficiaries, particularly in regions like Ladakh, Andaman and Nicobar Islands, and northeastern states where conventional power costs are extremely high. In Andaman and Nicobar Islands, power currently costs ₹30-32 per unit, which could be reduced to below ₹10-11 with geothermal energy.

Industrial sectors including manufacturing, fisheries, horticulture, aquaponics, hospitals, hotels, and SMEs are potential users of GSHP systems with capacities ranging from ₹5-500TR. The cumulative installed GSHP capacity was approximately 15,000TR in 2019, indicating substantial room for growth.

Challenges and Critical Considerations

Technical and Exploration Challenges

High upfront costs and exploration risks represent the primary barriers to geothermal development, with approximately ₹36 crore required to develop one MW of capacity. Site-specific nature of geothermal resources requires extensive geological surveys and drilling programs before commercial viability can be established.
Technology maturity varies across applications, with conventional hydrothermal systems being well-established while EGS and AGS technologies require further development and demonstration. Resource variability and uncertainty in reservoir characteristics add complexity to project planning and financing.

Financial and Investment Barriers

Limited funding options from both private and public sector banks specifically for geothermal projects create financing challenges. While institutions like IREDA and State Bank of India have broader renewable energy mandates, specialized geothermal financing mechanisms are still developing.
Risk mitigation strategies are essential given the high probability of unsuccessful exploration wells and unpredictable reservoir characteristics. The policy’s proposed viability gap funding and grants for failed drilling efforts aim to address these concerns.

Regulatory and Coordination Issues

Inter-ministerial coordination between MNRE, Ministry of Petroleum and Natural Gas, and state governments requires streamlining for efficient project approvals. Regulatory frameworks for geothermal development need harmonization with existing oil and gas exploration regulations.
Environmental clearances and land acquisition processes may create project delays, particularly for EGS projects requiring hydraulic stimulation. Induced seismicity management represents a critical challenge for EGS deployment, requiring robust monitoring and mitigation protocols.

Awareness and Capacity Building

Limited public awareness about geothermal energy benefits and applications creates market development challenges. Technical expertise shortage in geothermal exploration, reservoir engineering, and system installation requires comprehensive capacity building programs.
Skills development across the value chain, from geological assessment to operation and maintenance, needs systematic attention to support industry growth. Academic curricula integration and professional training programs are essential for building a skilled workforce.

Strategic Implications and Opportunities

Energy Security Enhancement

Geothermal energy provides reliable baseload power complementing intermittent renewable sources like solar and wind. This grid stability contribution is particularly valuable for remote and strategic locations where energy security is paramount.

Reduced fossil fuel dependence through geothermal deployment supports India’s Net Zero 2070 commitments while enhancing domestic energy resource utilization. Import substitution benefits are particularly significant for regions currently dependent on expensive imported fuels.

Rural Development and Employment Generation

Direct-use applications in agriculture, aquaculture, and space conditioning can significantly improve rural livelihoods and productivity. Greenhouse farming enabled by geothermal heating can extend growing seasons and increase agricultural yields.
Employment opportunities across the geothermal value chain, from exploration and drilling to manufacturing and maintenance, can support local economic development. Skill development programs can create sustainable employment in rural and remote areas.

Technology Leadership and Export Potential

India’s entry into geothermal development positions the nation to become a regional leader in geothermal technologies. Indigenous technology development in EGS, hybrid systems, and GSHP applications can create export opportunities.

South-South cooperation with other developing nations possessing geothermal resources can facilitate technology transfer and joint development programs. India’s experience in renewable energy scaling can inform geothermal development strategies globally.

Way Forward and Policy Recommendations

Strengthening Research and Development

Enhanced geological mapping and resource assessment require significant investment in advanced exploration technologies including 3D seismic surveys, geochemical analysis, and electromagnetic surveys. National geothermal resource database development will support informed decision-making by developers and investors.
Technology demonstration projects across different geological conditions and applications will build confidence and attract commercial investment. Public-private research partnerships can accelerate innovation while sharing risks and costs.

Financial Framework Development

Specialized financing institutions or dedicated geothermal funds within existing institutions can address sector-specific funding needs. Risk insurance mechanisms for exploration failures and reservoir performance can encourage private investment.
Blended financing models combining public grants, concessional loans, and private equity can optimize capital structure for geothermal projects. Green bonds and climate finance mechanisms can provide additional funding sources.

Regulatory Streamlining

Single-window clearance systems for geothermal projects can reduce approval timelines and administrative burden. Harmonized regulations between renewable energy, petroleum, and mining sectors will eliminate regulatory conflicts.
Standard operating procedures (SOPs) for different geothermal applications will provide clarity to developers and regulators. Performance standards and safety protocols for EGS and GSHP systems need development and implementation.

Capacity Building and Awareness

National geothermal training institute establishment can systematically develop skilled human resources. University partnerships for geothermal research and education will build long-term technical capacity.
Public awareness campaigns highlighting geothermal benefits and applications will create demand and social acceptance. Demonstration projects in public buildings and institutions can showcase technology performance and benefits.

International Cooperation Enhancement

Technology collaboration agreements with leading geothermal countries can accelerate capability development. Joint research programs and scientist exchange initiatives will facilitate knowledge transfer.
Multilateral financing through institutions like World Bank, Asian Development Bank, and Green Climate Fund can provide large-scale project financing. Regional cooperation with neighboring countries possessing geothermal resources can create economies of scale.

Conclusion

India’s National Policy on Geothermal Energy 2025 represents a watershed moment in the nation’s renewable energy journey, unlocking a reliable, clean, and baseload energy source that complements existing solar and wind capabilities. With 10 GW of identified potential distributed across diverse geological formations, geothermal energy offers unique advantages in providing 24×7 power generation and versatile direct-use applications.

The policy’s comprehensive framework addressing exploration, development, financing, and international cooperation creates a conducive environment for rapid sector growth. Five sanctioned pilot projects demonstrate the government’s commitment to moving beyond policy formulation to practical implementation, with innovative approaches like retrofitting abandoned oil wells and hybrid system development.

Success in geothermal development will require sustained collaboration between government agencies, research institutions, private sector, and international partners. The policy’s emphasis on technology transfer, capacity building, and financial support creates a foundation for India to emerge as a significant player in global geothermal energy markets.

As India accelerates toward its Net Zero 2070 target, geothermal energy’s baseload characteristics and grid stability contributions will prove invaluable in creating a resilient, diversified renewable energy portfolio. The policy’s transformative potential extends beyond energy generation to rural development, employment creation, and technological leadership in clean energy solutions.

What are your thoughts on India’s geothermal energy potential? Do you think this policy will successfully unlock the country’s 10 GW geothermal resources? Share your views on how geothermal energy can complement solar and wind in India’s renewable energy mix! Let’s discuss the challenges and opportunities in the comments below.