Policy and Tech Drive Geothermal Growth

India's geothermal energy landscape is shifting from a focus on exploration challenges and uncertain returns to a more practical, investment-ready prospect. Decades of limited pilot projects, due to high upfront exploration risks and a lack of clear government policies, are now being addressed by technological progress and a dedicated national strategy. This change puts geothermal energy not just as another renewable option, but as a vital part of energy security and economic development across sectors like agriculture and industry.

New Policy and Tech Unlock Potential

India's geothermal sector is transforming thanks to better drilling technologies and a structured policy environment. The National Policy on Geothermal Energy 2025 provides a detailed plan to encourage exploration, develop local technology, and attract investment. It offers 100% Foreign Direct Investment (FDI) under the automatic route, plus financial incentives like tax holidays and support to bridge cost gaps. Advances in drilling, using technology similar to that in the oil and gas sector, allow for deeper and more efficient access to underground heat. This technological leap reduces past barriers related to difficult geology and high costs, making projects in previously hard-to-reach areas potentially viable. The policy also aims to simplify development by using abandoned oil and gas wells.

Vast Resource Potential, Global Standing

India's subsurface holds an estimated 450 GW of electricity generation potential, far larger than the world's current geothermal capacity of around 16 GW. While countries like the United States and China lead in next-generation geothermal potential, India's vast untapped resources place it in a significant global position. Unlike variable sources like solar and wind, which typically operate at 15-25% efficiency, geothermal power plants can achieve over 80% utilization rates, providing consistent baseload power. This reliability is key for India's energy security goals, complementing its growing solar and wind energy projects. Beyond electricity, the potential for 11,000 GW of industrial heat and over 1,500 GW of cooling capacity offers substantial ways to reduce carbon emissions for manufacturing, food processing, and agriculture sectors that are hard to power directly with electricity.

Challenges and Risks in Geothermal Development

Despite promising policy shifts, significant challenges remain. Geothermal exploration inherently involves substantial upfront capital and geological risks; historically, only about one in five wells yields a profitable geothermal reservoir, leading to high exploration costs and uncertain returns. Installation costs for geothermal plants are considerable, often higher than for wind and solar, contributing to more expensive electricity over time. Past environmental issues, such as toxic fluid leaks in the Puga Valley, highlight concerns that require strict management and strong plans to mitigate damage. Furthermore, the established infrastructure, rapidly falling costs, and faster deployment rates of solar and wind energy present strong competition, making it challenging for geothermal to scale quickly despite its constant power advantage. Navigating the newly defined, yet complex, rules under the National Policy on Geothermal Energy 2025 also presents a hurdle for developers.

Economic Boost and Job Creation Ahead

The effective rollout of the National Policy on Geothermal Energy 2025 is expected to drive substantial economic benefits. Projections suggest geothermal development could create between 350,000 and 700,000 jobs, while stimulating economic activity, particularly in the agricultural industry through direct heat applications. The market for geothermal energy in India is forecast to grow, rising from USD 405.17 million in 2024 to USD 860.11 million by 2035, at an annual growth rate of 7.08%. As India works toward its Net Zero 2070 commitment, geothermal's ability to provide stable, clean, and varied energy will be critical. Ongoing advancements in technology and a supportive regulatory environment position geothermal as an important tool for diversified energy security and sustainable industrial growth.