US Geothermal Tax Credits in 2026: What Is Actually Still Alive After OBBBA For an industry that spent more than a decade building financial models around a stable federal incentive structure, 2026 has been a year of whiplash. The 30% federal geothermal tax credit that developers and homeowners built forecasts around is gone in one form and still alive in another, and even the IRS’s own public guidance has been confusing enough to trigger uncertainty across the market. That confusion is not a minor clerical issue. It is shaping investment decisions, contractor sales pitches, homeowner timelines, and project finance assumptions right now. If you work in geothermal, the key question is no longer whether federal incentives exist, but which incentive applies, to which project type, and under what ownership structure. The law that changed the timeline To understand where things stand in 2026, you have to start with the Inflation Reduction Act of 2022, which created a long runway for clean e...
Himachal Pradesh is taking bold steps to unlock its geothermal energy potential, positioning itself as a pioneer in India's renewable energy landscape.
By: Robert Buluma
Chief Minister Thakur Sukhvinder Singh Sukhu recently announced during a high-level review meeting with senior officers that the state is actively pursuing the harnessing of geothermal resources. This move forms a critical part of the government's long-term strategy to combat climate change, achieve energy security, and reduce dependence on fossil fuels.
The announcement, made on January 22, 2026, in Shimla, underscores Himachal Pradesh's ambition to become India's first Green Energy State by 2026. The target is clear: meet over 90% of the state's energy needs—currently around 13,000 million units annually—through renewable sources. While the state has long excelled in hydropower, generating substantial clean power from its rivers, it is now diversifying its portfolio by integrating solar, and now geothermal, into a comprehensive renewable framework.
Geothermal energy, derived from the Earth's internal heat, offers unique advantages in a mountainous, tectonically active region like Himachal Pradesh. Unlike solar or wind, which are intermittent and weather-dependent, geothermal provides reliable base-load power available 24/7, regardless of day or night, season or weather. This makes it particularly valuable in the Himalayas, where harsh winters and remote terrains often challenge traditional energy supply.
The state's geothermal promise is concentrated in several key hotspots, primarily tied to natural hot springs. Prominent sites include Manikaran and Kasol in Kullu district, and Tattapani in Mandi district. These areas boast surface temperatures ranging from 57°C to 97°C, accompanied by high geothermal gradients that indicate deeper, hotter reservoirs suitable for energy extraction. Manikaran, for instance, is famous for its boiling hot springs along the Parvati River, where temperatures have historically reached near-boiling points, attracting pilgrims and tourists alike. Tattapani similarly features intense thermal activity with hot pools and springs, offering both energy and recreational potential.
CM Sukhu emphasized that these resources remain largely untapped not only in Himachal but across India. While the country has identified hundreds of geothermal sites—over 300 hot springs, with many in the Himalayan belt—commercial geothermal power production remains minimal, with only small experimental plants like a 5 kW binary cycle pilot at Manikaran in the 1990s and more recent low-capacity demonstrations elsewhere. The Himalayan Geothermal Province, encompassing Himachal, Ladakh, and Uttarakhand, holds significant promise due to tectonic activity from the collision of the Indian and Eurasian plates, which drives heat upward.
The chief minister highlighted multiple benefits of geothermal development. Small-scale geothermal plants could deliver electricity directly to remote villages in districts such as Kullu, Mandi, and Lahaul-Spiti, where grid extension is costly and unreliable. In colder high-altitude towns like Shimla, Manali, and Keylong, geothermal could serve as a stable power source for heating and electricity, reducing vulnerability to seasonal disruptions.
Beyond power generation, the initiative promises environmental and socioeconomic gains. By providing an alternative to wood and fossil fuels for heating and cooking, it would help curb deforestation a persistent issue in the Himalayas,and lower greenhouse gas emissions. Electricity costs for homes, hotels, and businesses could drop significantly, improving affordability in a state with challenging terrain and high living expenses.
Agriculture stands to benefit as well. In colder regions, geothermal heat could enable year-round cultivation through greenhouses or soil warming, extending growing seasons for vegetables and cash crops, boosting farmer incomes, and enhancing food security.
Tourism, a major economic driver for Himachal Pradesh, would receive a major boost. The development of geothermal spas, resorts, and wellness centers around sites like Manikaran and Tattapani could transform these natural hot springs into world-class eco-tourism destinations. Visitors seeking therapeutic baths, relaxation, and sustainable experiences would flock to these facilities, creating new revenue streams while promoting eco-friendly practices. This aligns with the state's vision of responsible tourism that preserves natural beauty and cultural heritage.
Local employment would surge through opportunities in exploration, drilling, plant construction, operations, maintenance, and tourism services. Skilled jobs in geothermal technology could empower youth in remote areas, reducing migration to urban centers.
Himachal's geothermal push fits into a broader national context. India's National Policy on Geothermal Energy, released in September 2025 by the Ministry of New and Renewable Energy, aims to accelerate exploration, research, and deployment. It identifies Himalayan sites like Manikaran, Kasol, Tattapani, and others as priorities, alongside regions in Ladakh (Puga Valley) and Uttarakhand. While most of India's geothermal resources are medium-to-low enthalpy (suitable for direct-use applications like heating), Himalayan zones offer higher temperatures—potentially exceeding 200°C at depth—for electricity generation.
Challenges remain, including high upfront costs for drilling and reservoir assessment, technological expertise, and environmental safeguards to protect fragile ecosystems. However, the state's leadership in renewables—bolstered by ongoing solar targets of 500 MW in the coming years and green hydrogen initiatives—provides a strong foundation. Partnerships with central agencies, research institutions, and private players could accelerate progress.
CM Sukhu's vision positions geothermal as a complementary pillar alongside hydropower (Himachal's traditional strength) and expanding solar. By blending these sources, the state minimizes risks from climate variability, such as reduced river flows due to glacial melt or erratic monsoons affecting hydro output.
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This announcement signals a forward-thinking approach to sustainable development in one of India's most ecologically sensitive regions. As Himachal Pradesh advances toward its 2026 Green Energy State goal, geothermal energy could emerge as a game-changer—delivering clean, constant power while fostering economic growth, environmental protection, and community resilience. The hot springs of Manikaran and Tattapani, long revered for their spiritual and healing qualities, may soon power homes, heat greenhouses, and welcome global visitors in a truly sustainable era.
Source: India Times
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