India’s Largest Geothermal Energy Technology Pilot Project

India’s Largest Geothermal Energy Project: A Bold Step or an Overestimation?

On November 6, 2025, Energy Efficiency Services Limited (EESL) announced its plan to establish India’s largest geothermal energy technology pilot project in Araku Valley and Visakhapatnam, Andhra Pradesh. While the move seeks to tap into India's geothermal potential of 10,600 MW—estimated in the Geothermal Atlas of India, 2022—the announcement raises critical questions about the viability and execution of geothermal energy in a country with medium to low-enthalpy zones.

The choice of Araku Valley, a picturesque region in the Eastern Ghats with favorable geological features, aligns strategically with the Geological Survey of India’s identification of geothermal hot springs. However, policy history and global experiences caution us against prematurely celebrating geothermal endeavors in such provinces. Is this project a prudent investment, or merely a symbolic one?

EESL as Lead Agency: Institutional Promise and Challenges

EESL, established as a joint venture under the Ministry of Power backed by NTPC, Power Finance Corporation (PFC), REC, and Power Grid Corporation, is no stranger to ambitious energy initiatives. With flagship initiatives like UJALA (LED bulb distribution) and Smart Metering nationwide, the agency has demonstrated operational capability for scale. However, geothermal energy does not fall neatly within its existing portfolio of mature technologies.

Geothermal energy projects are not just about technological accessibility; they tackle what could be termed institutional overstretch. As a ‘Super ESCO’, EESL has succeeded in deploying scalable projects when regulatory frameworks and demand-side factors align. But geothermal projects face unique hurdles—a high upfront drilling cost, long lead times for data validation, and dependency on precise geological assessments. What challenges stand before the agency?

• High exploration costs: Advanced drilling in geothermal hotspots requires funding upwards of ₹12,000–₹15,000 crore for even mid-scale operations.
• Capacity utilization risks: While geothermal systems promise high utilization rates (>80%), long-term reliability for a medium-enthalpy region like Araku may remain untested.

EESL could remain stretched thin, particularly when its energy performance contracts are rooted in technologies vastly different from geothermal processes. The Ministry of Power and project proponents must bring expanded cross-agency participation involving bodies like GSI (Geological Survey of India) and the private drilling sector to de-risk structural dependencies.

India’s Geothermal Landscape: A Gap Between Aspiration and Implementation

The Geothermal Atlas of India, 2022 estimates geothermal potential at 10,600 MW but acknowledges the country's medium-low enthalpy zones, ranging between 100–180°C geological gradients. Such zones are not suited for large-scale electricity generation without expensive Enhanced Geothermal Systems (EGS) or carbon-heavy Advanced Geothermal Systems (AGS), which are still development-stage technologies globally.

Despite geothermal energy being a renewable source, reliance on solutions like shallow heat pumps—already deployed in high-income nations—may lack the scale to address India’s base-load electricity demands. Consider this: the United States, a geothermal pioneer with 3.7 GW of capacity, leverages volcanic high-enthalpy zones like those in California and Nevada. Even after decades of policy support, geothermal energy contributes less than 0.5% to the U.S. energy mix.

India faces a steeper climb—it does not possess volcanic zones, and its geothermal infrastructure remains embryonic even in hotspots identified since 1973. Enhanced resource mapping and cost-reduction technologies remain prerequisites before large commitments like this pilot project.

Structural Tensions: Financing, Federal Conflicts, and Governance Gaps

From a governance perspective, this initiative illuminates recurring structural tensions in India’s energy transition efforts:

• Budgetary Overcommitment: The capital-intensive nature of geothermal energy complicates government-led models reliant on public funding through agencies like EESL, NTPC, or GSI. Pilot projects in past renewable energy schemes have failed to scale due to underestimated costs.
• Centre-State Friction: Andhra Pradesh must coordinate closely with Union entities to ensure smooth implementation. However, India’s episodic history of resource project delays—ranging from hydroelectric dams to wind energy sites—underscores the difficulty of sustained centre-state cooperation.
• Technological Import Over Dependency: Advanced drilling tools and Enhanced Geothermal Systems (EGS)—both essential for medium-enthalpy provinces—are imported technology intensive, affecting both project timelines and financial feasibility.

If federal modeling continues to rely predominantly on large PSUs without private-sector partnerships, geothermal energy risks becoming an announcement-heavy but result-scarce addition to India’s renewable energy arsenal.

Lessons from New Zealand: Tailoring the Scale

New Zealand’s geothermal portfolio, contributing over 15% to its national energy mix, provides direct lessons for small-scale geothermal feasibility over hypothetical large-scale ambitions. The country, with its volcanic high-enthalpy zones, first focused on modular pilot plants before scaling policy frameworks. It invested heavily in upfront geological surveys (funded by $15 million annually for five years, government-enabled) before greenlighting resource-intensive installations. India must adapt rather than replicate New Zealand’s success in geothermal energy generation.

What Would Real Success Look Like?

For this initiative to avoid symbolic success and demonstrate actual impact, policymakers must focus on measurable outcomes, including:

• Completing enhanced surveys and proving capabilities before constructing permanent plants;
• Reducing drilling exploration costs through private-sector technology partnerships;
• Designing modular demonstration plants adaptable to medium-enthalpy zones.

Moreover, state-level implementation quality will define the pace and relevance of delivering geothermal capacity in India, where energy priorities remain locked into large-scale solar and wind frameworks.

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