Collaborative Framework on Enhancing Dialogue on High Shares of Renewables in Energy System: Workstream on Strengthening of Energy Markets and Regulations with Focus on Geothermal Energy

The eleventh technical meeting of the Collaborative Framework on Enhancing Dialogue on High Shares of Renewables in Energy Systems was organised around the work stream on Energy Markets and Regulations with focus on geothermal energy.

This Collaborative Framework meeting serves as a common forum for dialogue, experience-sharing, and technical exchange among Members and key relevant stakeholders addressing the complex challenges of integrating high shares of renewable energy into power systems.

As a key driver of clean energy transition, achieving high shares of renewable energy in the energy mix would require rethinking the energy markets in various aspects. Strengthening regulations and market structure would facilitate the penetration of variable renewable energy (VRE) while securing stable enabling frameworks that contribute to long-term investment security.

Experience of IRENA Members shows that regulations governing the energy markets must adapt to the rapidly evolving needs and conditions in a timely manner. Market rules and regulatory frameworks must reflect each country’s circumstances, ensuring reliable services at reasonable prices while sharing system costs and benefits fairly and equitably. Market integration could be a cost-effective way to ensure secure and affordable energy supplies. Through coordinated energy market rules and cross-border infrastructure, energy can be produced and delivered to consumers on a national and regional basis.

As more countries pursue net-zero energy targets, the integration of geothermal energy into national energy systems has become increasingly relevant, particularly as a means to improve system reliability and flexibility that complements variable renewable energy. Countries are in an effort to build robust frameworks that address key dimensions, such as, resource tenure and permitting, risk-mitigation and concessional drilling, and market-integration mechanisms (Power Purchase Agreements (PPAs) and Contracts for Difference (CfDs)—which guarantee fixed prices for geothermal electricity, providing revenue stability and reducing investment risk —capacity remuneration, heat offtake).

IRENA's report on Global Geothermal Market and Technology Assessment revealed that the successful integration of geothermal energy into markets relies on clear and supportive regulations, such as dedicated geothermal laws and sector-specific policies, and financial incentives (Feed-in tariffs (FiTs), tax breaks, risk mitigation). For instance, Türkiye introduced measures such as FiTs in 2005 which helped encourage geothermal development, contributing to a drastic increase in electricity installed capacity from 15 MWe to over 1.7 GWe in 2024, an increase of more than 11,000%, supported by complementary tax incentives, regulatory reforms, and market mechanisms that encouraged investment and project development. Similarly, countries like Kenya, Indonesia and the Philippines have implemented policies and market mechanisms to facilitate project development and attract large scale investment. Indonesia introduced the Geothermal Fund Facility in 2014 to support early-stage drilling, while the Philippines’ 2008 Renewable Energy Act provided tax incentives to encourage private sector participation.

This event was by invitation only.