Croatia Signs Grant Agreement to Drill Four Geothermal Wells for Urban Heating Croatia has approved a major new investment to expand the use of geothermal energy for district heating in four cities. Velika Gorica, Osijek, Vinkovci, and Zaprešić are set to receive an additional EUR 35.3 million for geothermal development, including the drilling of four new wells that could support urban heating systems by 2030. The funding marks the second phase of a broader geothermal program designed to convert Croatia’s underground heat resources into reliable, domestic energy for homes, public buildings, businesses, agriculture, and industry. Across the two phases, the total investment in the four locations is expected to reach approximately EUR 86 million. The project is significant because it moves Croatia’s geothermal strategy beyond exploration. The country is now preparing the infrastructure needed to create production-and-injection well pairs, establish closed geothermal systems, an...
Croatia Signs Grant Agreement to Drill Four Geothermal Wells for Urban Heating
Croatia has approved a major new investment to expand the use of geothermal energy for district heating in four cities. Velika Gorica, Osijek, Vinkovci, and Zaprešić are set to receive an additional EUR 35.3 million for geothermal development, including the drilling of four new wells that could support urban heating systems by 2030.
The funding marks the second phase of a broader geothermal program designed to convert Croatia’s underground heat resources into reliable, domestic energy for homes, public buildings, businesses, agriculture, and industry. Across the two phases, the total investment in the four locations is expected to reach approximately EUR 86 million.
The project is significant because it moves Croatia’s geothermal strategy beyond exploration. The country is now preparing the infrastructure needed to create production-and-injection well pairs, establish closed geothermal systems, and connect renewable heat sources to existing district-heating networks.
EUR 35.3 million grant signed in Zagreb
The grant agreement for the project titled “Investment in the Development of Geothermal Energy” was signed at the National and University Library in Zagreb. Croatia’s Minister of Economy Ante Šušnjar, Croatian Hydrocarbons Agency Management Board President Marijan Krpan, and Central Finance and Contracting Agency Director Dragan Jelić took part in the signing ceremony. Prime Minister Andrej Plenković also attended the event.
The project includes EUR 30 million from the European Regional Development Fund under Croatia’s Operational Programme Competitiveness and Cohesion 2021–2027. The remaining funding forms part of the broader EUR 35.3 million grant package allocated for the second phase of development.
The money will finance four additional geothermal wells:
- Velika Gorica GT-2.
- Osijek GT-2.
- Vinkovci GT-2.
- Zaprešić GT-2.
The new wells are planned for locations where earlier exploration confirmed the presence of geothermal reservoirs. Their purpose is to create production-injection pairs that can support the controlled and sustainable use of geothermal fluids.
This arrangement is essential for long-term geothermal operations. A production well brings hot water to the surface, where its heat can be transferred to a district-heating system. The cooled water is then returned underground through an injection well, helping maintain reservoir pressure and reducing the risk of resource depletion.
Four cities identified for geothermal heating
The four participating cities occupy important areas of Croatia’s Pannonian Basin, a geological region known for elevated temperatures at relatively accessible depths. The geothermal gradient in the Croatian part of the basin is reported to be approximately 60% higher than the European average, according to Croatia’s Ministry of Economy.
That geological advantage creates opportunities for direct heat applications. Unlike geothermal power projects, which usually require higher temperatures and suitable electricity-generation conditions, district-heating projects can use moderate-temperature resources to supply hot water to buildings.
The four cities are expected to use geothermal energy primarily for heating households and public institutions. Depending on the final resource characteristics and infrastructure design, the projects could also serve commercial facilities, greenhouses, industrial users, and other consumers requiring continuous thermal energy.
Velika Gorica
Velika Gorica, located near Zagreb, is one of the most important targets in Croatia’s geothermal heating program. Its proximity to the capital and existing urban infrastructure could make it a strategically valuable location for demonstrating how geothermal energy can be integrated into municipal heating systems.
The city’s geothermal development will require the completion of the second well, surface facilities, heat-exchange infrastructure, and connections to potential heat consumers. If the reservoir delivers the expected temperature and flow rate, geothermal energy could reduce the role of fossil fuels in local heating.
The project may also provide Croatia with practical experience in managing geothermal resources close to a major metropolitan area. Such experience could be relevant to other cities considering the use of underground heat for district heating, public buildings, and urban redevelopment.
Osijek
Osijek is one of eastern Croatia’s largest urban centres and has been included in the country’s geothermal heating plans following successful exploration. The city’s location within the Pannonian Basin gives it access to geological conditions that are favourable for direct-use geothermal projects.
The planned well will help transform exploration results into a working geothermal system. Once drilling, testing, and surface development are complete, geothermal heat could be used to support public facilities and potentially connect with existing or upgraded district-heating infrastructure.
Osijek’s project also has broader regional importance. Eastern Croatia has significant agricultural and industrial activity, both of which can benefit from stable supplies of renewable heat. Geothermal energy could support greenhouse cultivation, food processing, drying, and other applications that require heat throughout the year.
Vinkovci
Vinkovci is another eastern Croatian city selected for geothermal development. Earlier exploration identified geothermal potential in the area, and the additional well is intended to establish the production-injection configuration required for future heat use.
The project could help diversify the city’s energy supply while reducing exposure to fluctuations in imported fossil-fuel prices. Geothermal heat is available continuously and does not depend on sunshine, wind conditions, or seasonal electricity production.
For local authorities, the main challenge will be coordinating well development with the distribution network and the city’s existing heating demand. The project’s economic value will depend not only on the characteristics of the reservoir but also on the cost of connecting geothermal production to consumers.
In the longer term, Vinkovci could use geothermal energy as a platform for local economic development. Low-carbon heat may attract greenhouse operators, manufacturers, food companies, and other businesses that value stable and predictable energy costs.
Zaprešić
Zaprešić, located northwest of Zagreb, is the fourth city included in the program. Its geothermal project will also receive an additional well to complement earlier exploration and establish a closed-loop production system.
The city’s proximity to Zagreb could create opportunities for cooperation in technical planning, procurement, energy management, and investment. It may also increase the visibility of the project as an example of how geothermal energy can support municipalities outside major urban centres.
Zaprešić’s future system could supply heat to public buildings and other local consumers. The final scope will depend on drilling results, reservoir performance, environmental permitting, and the availability of district-heating infrastructure.
Exploration phase prepared the ground
The new investment follows an earlier exploration phase financed through Croatia’s National Recovery and Resilience Plan. That phase focused on preparing and investigating geothermal potential in the context of centralized heating.
Croatia allocated substantial public funding to geothermal exploration near several cities. The Croatian Hydrocarbons Agency carried out exploration drilling in areas including Velika Gorica, Osijek, Vinkovci, and Zaprešić, while other locations such as Vukovar and Sisak were also assessed under the broader national program.
Exploration drilling is one of the most important stages in geothermal development because it reduces uncertainty before large-scale infrastructure is built. Data from the wells can reveal underground temperature, pressure, flow rates, rock properties, water chemistry, and the sustainability of the resource.
For cities, this information is critical. A promising geothermal reservoir must produce sufficient heat at an economically viable flow rate, and the resource must be compatible with the planned heating network. The exploration phase therefore provides the technical foundation for investment decisions.
Why production-injection pairs matter
The next phase is designed to create closed production-injection systems. This approach is central to responsible geothermal development because it allows operators to extract heat while returning the cooled geothermal fluid to the underground reservoir.
A typical system includes:
- A production well that pumps hot geothermal water to the surface.
- Heat exchangers that transfer thermal energy to a clean district-heating circuit.
- A return system that sends cooled geothermal water to an injection well.
- Monitoring equipment to track pressure, temperature, chemistry, and reservoir performance.
The geothermal fluid may remain separate from the water circulating through buildings. This is especially useful where the underground water contains dissolved minerals or gases that could cause corrosion, scaling, or environmental concerns.
Closed systems can also improve resource management. By reinjecting the geothermal fluid, operators can reduce surface discharge and help maintain the pressure and long-term productivity of the reservoir.
However, reinjection must be carefully designed. The injection well needs to be located at a suitable distance from the production well to prevent premature cooling. Operators must also monitor the reservoir to ensure that extraction and reinjection remain balanced.
Geothermal energy and district heating
The Croatian government views geothermal energy as particularly valuable for district heating because it can provide a continuous heat supply throughout the year. Minister Ante Šušnjar emphasized that geothermal resources are available regardless of weather conditions, unlike solar and wind generation.
District-heating networks are well suited to geothermal energy because they distribute heat from a central source to multiple users. A single geothermal installation can therefore serve apartments, schools, hospitals, municipal offices, and commercial buildings.
The technology can also work alongside other energy sources. Geothermal heat may provide the baseload portion of a heating system, while heat pumps, solar thermal systems, biomass boilers, waste heat, or gas-fired units provide additional capacity during periods of peak demand.
This hybrid approach can improve reliability and reduce emissions. Geothermal energy supplies steady heat, while other technologies help manage short-term variations in demand or resource availability.
The success of the Croatian projects will depend on the condition and capacity of local heating networks. In some cities, pipelines and substations may require modernization before geothermal energy can be integrated efficiently.
Reducing fossil-fuel dependence
Croatia’s geothermal investment is part of a wider effort to strengthen energy security and reduce dependence on imported fuels. Prime Minister Andrej Plenković highlighted the domestic nature of geothermal energy, stating that Croatia has geothermal resources that can serve as a strategic national asset.
Heating is one of the most difficult sectors to decarbonize because demand is seasonal, infrastructure is long-lived, and many buildings require high-temperature heat. Electrification through heat pumps can help, but it may require major upgrades to power grids and building systems.
Geothermal district heating offers another pathway. It can replace part of the gas, oil, or coal used for heating without requiring every building to install an individual system. The emissions profile of the system will depend on electricity consumption, pumping requirements, auxiliary fuels, and the treatment of geothermal fluids.
The projects could also make local energy systems more resilient. Domestic geothermal resources are not affected by international fuel supply disruptions in the same way as imported gas or oil. Once the wells and network are operating, the main costs are associated with maintenance, electricity for pumping, financing, and system management.
Target for operation by 2030
According to Marijan Krpan, the four projects could be operational by 2030 if implementation proceeds according to plan. Construction and related works are expected to begin approximately two years earlier.
The timeline will require close coordination among national authorities, municipalities, drilling contractors, regulators, heating companies, and potential users. Geothermal projects can face delays if permitting, procurement, land access, drilling, or network construction falls behind schedule.
The most technically uncertain stage is drilling the additional wells. Even after exploration confirms a geothermal reservoir, the production well must deliver adequate flow and temperature. Well design, drilling conditions, formation pressure, and water chemistry can all affect the final result.
Once drilling is complete, the wells will need to undergo testing. Engineers will assess sustainable flow rates, pressure behaviour, temperature recovery, and the chemistry of the geothermal fluid. Those results will determine the design and capacity of the surface heating system.
Additional cities under development
Croatia’s geothermal ambitions extend beyond the four cities covered by the new grant. Geothermal potential has also been identified in Karlovac and Virovitica, while Križevci, Bjelovar, and Lipik are reportedly among the locations closest to implementing new geothermal projects.
The government is preparing a public call to allocate approximately EUR 26 million through the Modernisation Fund for Križevci, Bjelovar, and Lipik. The funding is expected to support projects aimed at using geothermal energy to heat public buildings.
This pipeline could help Croatia develop a portfolio of geothermal heating projects rather than relying on a single demonstration system. Multiple projects would create opportunities to standardize well designs, improve procurement, train specialized workers, and strengthen the domestic geothermal supply chain.
Municipal projects could also serve as stepping stones toward larger commercial applications. Once the technology and regulatory framework are tested, geothermal heat may be expanded to greenhouses, industrial parks, thermal tourism facilities, and other users.
Opportunities for agriculture and industry
District heating is only one possible application for Croatia’s geothermal resources. The government has also identified agriculture, greenhouse production, industry, and other thermal-energy uses as potential beneficiaries.
Greenhouses can use geothermal heat to maintain stable growing conditions during colder months. This can extend growing seasons, reduce fuel costs, and support local food production.
Industrial users may apply geothermal heat for drying, washing, pasteurization, food processing, and other operations. The suitability of each application will depend on the temperature available from the resource and the required temperature of the industrial process.
Cascaded use can improve project economics. In such a system, the hottest geothermal water is used first for an application requiring higher temperatures. The remaining heat is then used for district heating, greenhouse production, aquaculture, or other lower-temperature purposes before the fluid is reinjected.
This approach can increase the total amount of useful energy extracted from each well. It can also create several revenue streams, reducing dependence on a single heat customer.
Challenges facing the projects
Despite Croatia’s strong geothermal potential, the projects will face several challenges. Drilling remains capital-intensive, and actual well performance may differ from the results of preliminary exploration.
The main risks include:
- Higher-than-expected drilling costs.
- Lower flow rates or temperatures than forecast.
- Delays in permits and environmental approvals.
- Corrosion and scaling caused by geothermal fluid chemistry.
- Insufficient demand near the well site.
- High costs for district-heating network connections.
- Delays in public procurement and construction.
- Difficulties securing long-term heat purchase agreements.
The financial structure will also be important. Public grants can reduce exploration and drilling risk, but municipalities may still need additional financing for pipelines, heat exchangers, pumping equipment, substations, and building connections.
Long-term contracts with heating utilities and large consumers could improve bankability. Clear tariffs and transparent ownership arrangements will also be necessary to attract private investment into future projects.
A national test for geothermal heating
The projects in Velika Gorica, Osijek, Vinkovci, and Zaprešić represent more than four isolated drilling campaigns. Together, they form a test of whether Croatia can develop geothermal energy as a practical urban-heating solution.
The first phase confirmed geothermal potential. The second phase will determine whether that potential can be converted into reliable heat delivery. Success will depend on the performance of the wells, the quality of the surface infrastructure, and the ability of municipalities to connect geothermal resources with consumers.
If the projects meet their targets, Croatia could establish a replicable model for geothermal district heating across the Pannonian Basin. Other cities would benefit from technical data, regulatory experience, procurement knowledge, and operational lessons from the first four locations.
The new grant agreement therefore represents an important transition from geological exploration to energy infrastructure development. By targeting production-injection systems and urban heating networks, Croatia is positioning geothermal energy as a stable domestic resource capable of supporting decarbonization, energy security, and local economic development by 2030.
Source : Balkan Energy
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