India’s Geothermal Energy Policy 2025: Tapping Heat Beneath the Earth

India’s Geothermal Energy Policy 2025: Tapping Heat Beneath the Earth

Explore India’s first geothermal energy policy: potential, pilot sites, global collaborations, and how it diversifies India’s renewable portfolio.

India’s renewable energy journey has so far been dominated by solar and wind power, both of which have grown at a rapid pace over the last two decades. However, in September 2025, India took a historic step by launching its first-ever National Geothermal Energy Policy, aiming to diversify its clean energy mix by tapping into the enormous heat reserves beneath the Earth’s crust.

This move signals not just technological innovation but also a shift in India’s climate strategy: while solar and wind are intermittent, geothermal energy provides steady baseload power, potentially strengthening the reliability of India’s grid.

The Estimated Geothermal Potential in India

• According to the Geological Survey of India (GSI), India has 381 mapped hot springs, with surface temperatures ranging from 35°C to 89°C.

• The International Energy Agency (IEA) estimates that India could harness ~4 GW of geothermal energy by 2035 and as much as 100 GW by 2045.

• Policy projections suggest a near-term potential of 10 GW, provided adequate investments and pilot projects succeed.

Why geothermal is a game-changer

• Baseload Renewable Power: Unlike solar and wind, geothermal plants operate 24/7, ensuring grid stability.

• Low Carbon Footprint: Produces negligible greenhouse gas emissions compared to coal or natural gas.

• Repurposing Resources: Abandoned oil and gas wells can be converted into geothermal wells, reducing exploration costs.

Objectives of the National Geothermal Energy Policy 2025

The new policy lays out a clear roadmap for geothermal development:

1. Demonstrate Commercial Feasibility

   • Through pilot projects and R&D programmes, India aims to test whether geothermal energy can be scaled up for commercial production.

2. Financial Support via Viability Gap Funding (VGF)

   • Exploration costs are very high—around ₹36 crore per MW. To offset this, the government will provide VGF to de-risk private investment.

3. Repurposing Abandoned Wells

   • Oil & gas giants like ONGC, Cairn-Vedanta, and Reliance are exploring pilots to convert abandoned wells into geothermal producers.

4. Multi-agency Coordination

   • The policy mandates cooperation between the Ministry of New and Renewable Energy (MNRE), Petroleum Ministry, state governments, and private players.

5. Enhanced Geothermal Systems (EGS)

   • The policy promotes EGS technologies—which involve artificially fracturing rocks to improve heat extraction—for large-scale deployment.

Regions Identified for Geothermal Pilots

India has multiple geothermal provinces, each with unique potential:

1. Himalayan Geothermal Province

   • Puga and Chumathang (Ladakh): Considered the most promising geothermal fields in India.

   • Uttarakhand and Arunachal Pradesh: Attracting investments from Icelandic and Norwegian firms.

2. Cambay Graben (Gujarat)

   • Thousands of abandoned oil wells offer immense potential for repurposed geothermal projects.

3. Andaman & Nicobar Islands

   • Electricity currently costs ₹30–32 per unit; geothermal pilots could cut this to ~₹10 per unit, transforming the islands’ energy security.

4. Barmer Basin (Rajasthan)

   • Collaboration between IIT Madras and Vedanta on a pilot producing ~450 kWh.

5. Telangana Pilot

   • A closed-loop binary cycle demonstration plant showcases indigenous adaptation of global geothermal technologies.

Geothermal Energy and India’s Energy Diplomacy

India’s geothermal push is not just about domestic energy—it strengthens energy diplomacy and technology collaborations.

Diversification of Clean Energy Portfolio

• By adding geothermal to its portfolio, India enhances credibility in global climate negotiations and signals leadership in renewable diversification.

Bilateral and Multilateral Engagements

• Iceland: MoU since 2007 on geothermal exploration and technology transfer.

• Saudi Arabia: Cooperation under a 2019 MoU includes geothermal energy.

• United States: Under the 2023 Renewable Energy Technology Action Platform (RETAP), geothermal is a key area of joint R&D.

FDI and Joint Ventures

• The new policy allows 100% Foreign Direct Investment (FDI) in geothermal projects, encouraging global capital and partnerships with India’s oil, gas, and mining industries.

Advanced Exploration and Drilling

• India is collaborating with international experts to improve deep drilling techniques and reservoir management.

Closed-Loop Binary Cycle Plants

• The Telangana demonstration is a first step toward commercial replication of this technology at scale.

Strengthening Research Ecosystem

• Under MNRE’s Renewable Energy R&D Programme, public research receives up to 100% funding, while private entities receive up to 70%.

• Collaboration with GSI and Directorate General of Hydrocarbons aims to build a national geothermal data repository.

Benefits of Geothermal Policy

1. Energy Security: Adds a stable renewable source to reduce dependency on coal and imported fuels.

2. Cost Reduction: Especially transformative for remote regions like Ladakh and Andaman & Nicobar.

3. Climate Commitments: Supports India’s Net Zero 2070 pledge by diversifying renewable energy.

4. Employment Generation: Creates new technical jobs in drilling, reservoir management, and renewable energy operations.

5. Regional Development: Brings clean energy to underserved regions, supporting balanced growth.

Challenges Ahead

• High Exploration Costs: At ₹36 crore/MW, geothermal remains capital-intensive.

• Technical Complexity: Requires advanced drilling and heat-extraction technologies.

• Environmental Concerns: Risk of induced seismicity and groundwater contamination must be carefully managed.

• Policy Integration: Needs alignment with state-level policies and coordination across ministries.

Conclusion

The National Geothermal Energy Policy 2025 marks a bold step in India’s clean energy transition. By targeting geothermal pilots in Ladakh, Gujarat, Andaman, and Rajasthan, the policy demonstrates intent to move beyond conventional renewables into baseload clean energy solutions.

With global collaborations, FDI opportunities, and indigenous innovations like closed-loop binary systems, geothermal could emerge as a pillar of India’s energy future. Success will depend on sustained financial support, strong R&D, and effective risk management.

In the long term, geothermal energy has the potential not just to power homes and industries, but to reshape India’s renewable energy landscape—ensuring a stable, low-carbon, and inclusive future.

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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH