Iceland announces recipient geothermal projects for ISK 600 million in grants

The Government of Iceland has announced the list off 11 geothermal projects that will be receiving a total of ISK 600 million (approx. USD 4.82 million) in grants through the Climate and Energy Fund. Initially announced in December 2025, the funding aims to support Iceland’s competitiveness in the field of geothermal energy utilization by promoting innovation and technology development.

The list of supported geothermal projects encompasses a spectrum of deep drilling, technology and materials development, micro-seismic research, improved heat utilization, and the use of heat pumps in geothermal systems.

The projects, proponents, and corresponding grant amounts are as follows:

• Deep drilling at Nesjavellir: IDDP-3 (Reykjavik Energy) – ISK 309,695,500
• Geothermal exploitation in Ísafjörður (Westfjords Energy Company) – ISK 160,617,000
• Mapping of shallow geothermal with seismic measurements (Suðurdalur ehf Skjálfandi) – ISK 27,500,000
• Infrastructure for research and innovation for the multiple use of geothermal fluids (ON Power) – ISK 25,000,000
• Geothermal exploration at Gálmaströnd (Westfjords Energy Company) – ISK 24,000,000
• High-temperature cement materials enabling superhot geothermal wells (Krafla Magma Testbed) – ISK 14,985,000
• Protective lining for high-temperature geothermal wells and deep boreholes (Gerosion ehf) – ISK 14,902,500
• Multiple use and opportunities for value creation from geothermal fluids (ON Power) – ISK 7,300,000
• High-temperature and corrosion-resistant coating material for geothermal wells and equipment (Álvit ehf) – ISK 6,666,667
• Improved efficiency of heat exchangers (ON Power) – ISK 6,000,000
• Material research of geothermal well linings in corrosive geothermal environments (Gerosion ehf) – ISK 3,333,333

The largest grant goes to the IDDP3 project in Nesjavellir, a collaborative project between Reykjavík Energy, Landsvirkjun, HS Orka and the government. The goal is to drill deeper into the earth and utilize geothermal energy at higher temperatures, potentially multiplying the output of each geothermal production well in the coming years. Drilling of IDDP3 is scheduled to begin by the end of 2026.

Another notable amount goes to efforts to utilize geothermal heating at Ísafjörður in the Westfjords region. Test drilling had already been done here, and the results so far support the existence of a viable geothermal resource.

Source: Government of Iceland and Orkuveitan

Note: The full overview on the grants provided can be found in this document (pdf).