Geothermal energy, the heat source beneath the earth’s surface, is capable of supplying up to 30% of Europe’s district heating needs, between 10-15% of total heating and cooling demand and “at least” 10% of electricity consumption by 2050, Marianna Jakab, policy officer at the European Commission’s Energy Directorate, declared at this year’s Geothermal Energy Summit in Budapest on Sep. 14.
EU member states can point to 44 GW of installed capacity in 2024, although the vast majority (43 GW) is for heating, she noted. Yet, despite geothermal’s obvious advantages in affordability, energy security and decarbonization value, development is mixed, and numerous barriers to expansion remain, not least the various regulatory frameworks across the European Union.
“The regulatory framework is really heterogeneous in member states. We are in the European Union, but still [have] many different solutions,” Jakab said, summarizing the results of a recent survey by her directorate.
As she stressed: “The permitting procedures are long and very complex, even more complex that in other renewable technologies where people are always complaining! But for geothermal, these are even more with the inclusion of environmental, water management and other authorities.”
The barriers also include ignorance among supposed professionals in the energy sector, according to Tatiana Mindekova, a policy adviser with the Brussels-based Ember European Energy think tank.
“One of the most common assumptions I have encountered is that the majority of policymakers and energy experts are still under the impression that geothermal is only for heating […]. We want to make policymakers focused on electricity a bit more excited. Geothermal generation already exists in many countries, not just Iceland,” Mindekova told the summit.
“We [in Hungary] are not Iceland when you dig down in your farm or in your backyard, and you find fantastic geothermal energy. We are different. So, we have to find the reservoir where the heat is okay, everything is fine.” Gergely Domonkos Horváth, CEO, MVM (Green Generation)
But aside from regulatory and awareness issues, the biggest barrier to exploiting geothermal sources, as was emphasized repeatedly, is the huge, front-loaded investment starting with seismic mapping, permitting, well-drilling, and evaluation before there’s any chance of beginning to make a return.
For Miklos Antics, president of the European Geothermal Energy Council (EGEC), the sector can only progress adequately with state support.
“You need a subsidy system. You don’t need to give too much money to develop geothermal, but all these [successful] countries give a subsidy or incentive. In some countries you have a VAT incentive, in some a heat fund, which gives you some money for the production infrastructure [or] for the renovation of the district heating grid,” he said.
Without some such support, given the risk and limited returns, investors will shy away, Antics reasoned. So, within this complex matrix of needs, returns, risk and regulations, how is Hungary managing GT development?
Bence Gonda, vice president for strategic affairs at the Supervisory Authority for Regulatory Affairs (SARA), drew audience applause with his opening statement.
“At SARA, we believe that geothermal energy should, can and must be an important pillar of European and Hungarian energy security, and that’s why we have committed to supporting it from the very beginning,” he said.
Hungary, where geothermal sources meet around 8% of heat demand, was doing “a little bit better” than Europe as a whole, where the corresponding share is about 0.2%, although Gonda admitted, “We still have a long way to go.”
“We have all experienced this extreme hot summer, [but] unfortunately, as some of the speakers have said, we might expect that this will be the standard, not an exception in the future. So, we have to prepare for this. [But] I think the role of geothermal in cooling is very much underestimated at the moment.” Annamária Nádor, senior geologist at SARA Hungary
But 2023 reforms that improved data availability and streamlined regulation and permitting processes, which have drawn praise in European Commission evaluations, have stimulated investor interest and action.
Gonda pointed to a flurry of developments since then, with 148 exploration license applications, of which 95 were accepted, with 29 still ongoing.
“Companies have drilled 20 wells, we have signed two utilization contracts so far, and we hope to have a few more signed by the end of this year,” he said.
Not that everything is perfect. When it comes to using geothermal as a source for cooling, for which there is increasing demand in Europe, especially given the fast-developing data center segment, regulation is notably lacking.
“In Hungary […] it’s an unregulated area. There is no license, no tariff framework, no defined service, so it needs to be written,” Mátyás Gáti, president of the Geothermal Committee of the Association of Hungarian District Heating Enterprises noted in a panel discussion.
SARA’s Gonda will surely have taken note. As he put it earlier when speaking of attracting investors: “The aim is a coordinated and predictable [licensing] process, while maintaining the necessary environmental and resource protection […] because it’s very important to think [about] how we can maintain this energy source for the long term.”
Challenged in the summit’s first panel discussion to highlight a country that has “got it right” when it comes to a national geothermal energy policy, Marit Brommer, chief executive of the International Geothermal Association (IGA), first identified the fundamental condition for broad success at the national level.
“It’s always the countries that look at geothermal as a system. Of course, there are individual projects [everywhere] that have managed to get a job done. But [national success] is only [possible] because governments have been looking and mapping geothermal [resources] as their critical infrastructure,” she said, naming Iceland and New Zealand as the “usual suspects” in this regard.
However, she had special praise for Turkey as an example of a country coming late to the opportunities, only to “nail it” inan impressively short timespan.
“If I take Turkey, […] it has a phenomenal geothermal story to tell. It had almost nothing in the early 2000s, and it’s now number four [globally] when it comes down to installed capacity electricity-wise, but it also sources and serves a lot of heating projects,” she noted.
Moreover, it did so in a decade. “That’s a phenomenal achievement!” Brommer declared.
The obvious question is how Ankara managed such rapid development, which she put down to a combination of factors, starting with the national government’s political will, accompanied by “structuring incentives from a policy and regulatory framework.” It then makes sense for entrepreneurial companies to take the risk in order to make the money necessary for a return on investment, she argued.
This article was first published in the Budapest Business Journal print issue of October 2, 2026.
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