The Ministry of New and Renewable Energy (MNRE) has announced the release of India’s first-ever “National Policy on Geothermal Energy.” This landmark policy is designed to facilitate the exploration and development of the country’s largely untapped geothermal resources, positioning them as a significant pillar of India’s renewable energy landscape and a contributor to the nation’s 2070 Net-Zero emissions goal. This notification was issued on September 15, 2025.
The policy’s vision is to create a sustainable, secure, and responsible geothermal energy sector. It outlines several key goals, including improving R&D capabilities, collaborating with international and national research bodies, and building a robust public-private ecosystem for long-term development.
Geothermal Potential and Applications
India’s unique geological formations, including 381 hot springs identified by the Geological Survey of India (GSI), provide vast potential. The country largely falls within a medium- to low-heat enthalpy zone, making it particularly suitable for a wide range of applications beyond traditional electricity generation. These include:
- Direct-Use Applications: Geothermal heat can be used for district heating and cooling, agricultural activities like greenhouse heating and produce drying, cold storage, and even geo-tourism.
- Ground Source Heat Pumps (GSHPs): The policy promotes the use of GSHPs, which leverage the earth’s shallow, constant temperatures for energy-efficient space heating and cooling.
- Innovative Technologies: The policy encourages the development of cutting-edge technologies like Enhanced Geothermal Systems (EGS) and the retrofitting of abandoned oil and gas wells for geothermal production, leveraging the expertise and infrastructure of the oil and gas industry.
Developmental and Financial Framework
Acknowledging that geothermal projects are capital-intensive, the policy proposes several mechanisms to attract investment and mitigate risk. The government may explore financing options such as:
- Long-term concessional loans from financial institutions.
- Viability Gap Funding (VGF) and grants for risk mitigation.
- Sovereign Green Bonds and a Feed-in-tariff.
On the fiscal front, the policy may explore incentives like import duty and GST exemptions for geothermal equipment, as well as tax holidays and accelerated depreciation. The government has also stated a preference for indigenous technologies to reduce import dependency and will explore mechanisms to share geological exploration risk with developers.
Implementation and Regulatory Role
The MNRE will serve as the nodal agency for the policy’s implementation, coordinating with various ministries and international partners. State Governments are tasked with allocating geothermal sites for exploration (for up to three years) and further development (for up to 30 years). They are also encouraged to designate a nodal agency to act as a single-window support system for project developers, facilitating necessary clearances and permissions.