Iceland is strengthening its position as a global leader in renewable energy with a fresh ISK 600 million investment dedicated to innovation and technological development in geothermal energy.
Announced by Jóhann Páll Jóhannsson, Minister of the Environment, Energy and Climate, the funding forms part of the national initiative “Geothermal Levels the Game” and complements the ISK 1 billion already committed to geothermal exploration and utilisation across the country.
This new phase shifts the focus beyond heating solutions in hard-to-reach areas. Instead, it prioritises value creation, advanced geothermal technologies and the multiple-use potential of geothermal resources. The move is designed to accelerate sustainable energy development, boost regional economies and enhance Iceland’s competitiveness in the global clean energy market.
The grants will be available to energy companies and other businesses working with geothermal resources. Priority will be given to projects in three key areas: next-generation geothermal power technologies such as deep drilling, Enhanced Geothermal Systems (EGS) and low-temperature power generation; geothermal energy multiplexing that drives innovation, efficiency and positive climate impact; and new approaches to geothermal heating that improve performance, reduce electricity costs and expand access for users.
Applications will be assessed on macroeconomic efficiency, regional and local impact, and the quality of technical preparation and data. Funding may cover up to one-third of total project investment costs, excluding VAT. The Climate and Energy Fund will administer the programme, with applications open until 20 December 2025.
Jóhann Páll Jóhannsson, Minister of the Environment, Energy and Climate, said,"We have already allocated a billion to explore and exploit geothermal energy in challenging areas, and the projects are moving forward rapidly. But now the next phase of the Geothermal Levels the Game initiative is beginning, and then we will think bigger and harness geothermal energy not only as a tool for equalizing living standards, but also as a driving force for value creation and economic development. This is in line with the policy of Kristrún Frostadóttir's government in energy and employment. The power is present in the country's rural areas, and this additional 600 million will enable us to harness it better and faster. At the same time, we are moving quickly to simplify the regulatory framework: we are raising the limits for the exploitation of geothermal energy so that fewer projects are subject to environmental assessments and we will stop requiring an operating permit for each drilling project. I have already submitted a bill on such changes to the Althingi."