National Policy on Geothermal Energy

Why in the News?

The Union Ministry of New & Renewable Energy (MNRE) notified National Policy on Geothermal Energy (2025), India's first such Policy to reinforce efforts for an energy transition.

About Geothermal Energy

• It harnesses heat stored within the Earth's crust. 
• Key Sources and applications-
  • High-enthalpy (~200°C) resources: Like volcanic regions, geysers and hot springs suitable for electricity generation. 
  • Low- to medium-enthalpy (100–180°C) resources: Like hot rocks and shallow ground layers suitable for direct-use applications like heating and cooling, agri-food, aquaculture and geothermal heat pumps.
• Estimated Potential in India: 10,600 MW (Geothermal Atlas of India, 2022)
  • GSI identified 381 hot springs and 10 geothermal provinces (see infographic)

Challenges related to development of Geo Thermal Energy in India

• High Upfront Cost: Exploration and drilling are capital intensive.
• High investment risk: Due to uncertainty of finding commercially viable reservoirs which deter private players.
• Exploration & Data Gaps: Limited deep drilling assessment and data with geological complexity (Himalayas, volcanic zones) making resource assessment more difficult.
• Lack of Commercial Projects: Only one 20 kW pilot plant (Manuguru, Telangana) exists and no utility-scale projects are established yet.
• Technology & Skill Gaps: India lacks indigenous drilling and reservoir management technology and expertise.
• Environmental & Social Concerns: Risks of land subsidence, seismicity, and water contamination if reinjection is not managed.

About National Policy on Geothermal Energy (NPGE, 2025)

• Vision: To establish geothermal energy as a major pillar of India's renewable energy mix, achieving net zero carbon emission by 2070.
• Nodal Ministry for implementation of GE based projects: MNRE
• Goals of NPGE, 2025
  • Improve research on GE development and deployment, advanced exploration, drilling techniques, reservoir management & cost-effective power generation
  • Collaborate with Ministries, international geothermal development bodies and national research institutes to incorporate global best practices
  • Deploy geothermal heating and cooling solutions, and other direct-use applications to decarbonize buildings, agriculture, industries, etc. 
  • Build an enabling ecosystem with public-private partnerships, capacity building, and knowledge sharing.

Key features of the Policy

• Scope of policy: 
  • Geothermal Resource Assessment, Power Production systems, Direct use, Ground (geothermal) Source Heat Pump (GSHP) etc.
  • Emerging Innovative Technologies such as Enhanced Geothermal Systems (EGS), Advanced Geothermal Systems (AGS), geothermal energy storage, offshore geothermal wells etc.
  • Extracting GE from abandoned oil and gas wells.
  • Mineral by-products such as silica, borax, cesium, lithium, etc. subjected to rules and payment of royalty under MMDR Act. 
• Creation of a geothermal resource data repository: Through Intergovernmental/inter-agency collaboration, e.g., with Ministries of Mines, Earth Sciences etc.; institutes like Geological Survey of India (GSI), National Data Repository (NDR), etc.
  • Operators/developers will be permitted to conduct geothermal resource assessment surveys for R&D, assessment etc. 
• Developmental Model 
  • Preference to indigenous geothermal technologies: By encouraging local innovation.
  • Economic feasibility models: like revenue sharing, milestone based payment etc.
  • Central funding assistance: To  Northeastern Region and special category states.
  • Joint ventures: Between oil and gas companies, mineral companies, and geothermal developers 
  • Repurposing oil and gas production facilities: like pipelines, etc.
  • Pilot projects and Centres of Excellence (CoEs) for R&D and training.
• Sustainability
  • Promotion of Technology for safe, non-polluting use of geothermal fluids or by-products.
  • Developing Environmental & Social Impact Assessment guidelines for geothermal projects.
• Financing Mechanisms 
  • Renewable Energy Research and Technology Development Programme (RE-RTD) provides up to 100% financial support to Government/non-profit research organizations and upto 70% to Industry, start-ups, private Institutes, entrepreneur, and manufacturing units
  • Long-term concessional loans, Sovereign Green Bonds, Viability Gap Funding (VGF), etc. 
• Fiscal incentives: GST/Import duty exemptions on equipment, services; Tax holidays etc.
• Support mechanisms: Inclusion in Indian Carbon Credit Trading Scheme; Inter-State Grid Access; Open Access charges waiver; eligibility for Renewable Purchase Obligation (RPO) etc.
• Guidelines for States and Union Territories
  • Responsible for granting geothermal exploration/development permit and land lease
    • Exploration leases may be granted for 3 to 5 years.
    • Lease for development for power generation or direct-use applications for up to 30 years.
  • Single-window clearance mechanisms managed by designated state nodal agencies.
  • Ensure stakeholder consultations and adequate compensatory measures, particularly in tribal and remote areas.

Conclusion

The NPGE, 2025 directly addresses sector challenges by streamlining approvals, encouraging R&D and partnerships, and providing fiscal incentives and financial support. With mechanisms for local innovation, stakeholder consultation, and dedicated pilot projects, the policy creates a strong foundation for sustainable, reliable geothermal growth.