Germany is home to one of Europe's biggest geothermal reserves, which have been largely untapped due to local opposition and bureaucratic hurdles.
Surging energy prices in 2022 triggered new interest in the renewable energy source, with big municipal utilities, and German and international fossil fuel companies exploring possible investments in the country.
The geothermal energy sector in Europe's biggest economy has been calling for a law to expand the energy source's potential and remove many obstacles, including local opposition against drilling and low government subsidies.
Geothermal energy could cover more than a quarter of Germany's annual heat demand with a production potential of over 300 terawatt hours, a study by Fraunhofer Institute showed last year.
Geothermal energy and lithium producer Vulcan Energy Resources (VUL.AX), opens new tab, , which is listed in both Australia and Germany, called the law a "forward-looking, groundbreaking milestone".
"We believe that geothermal heat and power is not only a cornerstone of Germany's renewable energy future, but also a critical component in achieving energy security, reducing carbon emissions and fostering sustainable economic growth," CEO Cris Moreno said.
The draft law seeks to streamline bureaucratic procedures and address legal barriers to support a faster and more efficient expansion of renewable heat sources.
"As with wind turbines and PV systems, these systems for generating geothermal energy as well as heat pumps and heat storage systems should ... also be given an overriding public interest," the ministry said, adding some approval procedures for geothermal projects currently take years.
Berlin aims to expand geothermal energy generation so it could feed 10 times as much energy into the heating network as it does today by 2030, Scholz said last year, adding that the number of geothermal power stations will rise to 54 from 42 in the future.
"By 2030, 10 terawatt hours (TWh) are to be generated from geothermal energy. The law lays the foundations for this," the ministry added.
