Building of Germany’s Federal Council (Bundesrat), Berlin (source/ copyright: Bundesrat)
The proposal of a geothermal discovery insurance fund is once again being discussed by German lawmakers after initial efforts were stymied by external factors.
The proposal for a discovery insurance for geothermal projects in Germany is now back on the agenda of lawmakers, as discussed in a recent federal budget debate. A sum of EUR 50 million has been earmarked for this as commitment appropriations over the next four years.
The proposal for a risk protection mechanism was first announced as a joint loan programme of federal development bank KfW and insurance company Munich Re during last year’s Praxisforum Geothermie Bayern held in Pullach. Although the insurance had already been fully developed and coordinated for a launch in January 2025, it had to be suspended due to the early end of the legislative period of the previous coalition government.
According to the German Geothermal Association (BVG), the current draft budget for the insurance totals almost EUR 50 million. This is intended to cover a total of 65 projects over the next four years, with an investment volume of EUR 2 to 3 billion.
Encouraging geothermal growth through risk mitigation
Matthias Tönnis of Munich Re emphasizes the need for an insurance scheme to protect municipalities from the cost of failed geothermal drilling. “By the time the first well is drilled, a municipality can incur upfront costs of 20 to 30 million euros,” explains Tönnis. “If the drilling doesn’t deliver what it expected, the money is gone.”
The proposal of a geothermal discovery insurance fund addresses one of the major hurdles of geothermal development in Germany. This complements well with current efforts to expedite approvals and other bureaucratic processes, as proposed by The Geothermal Energy Acceleration Act (GeoBG). A draft of this act has just been published by the Federal Ministry for Economic Affairs.
Source: Tiefe Geothermie