Jan 9, 2026
Portugal obtains funding from the EU Modernization Fund for a geothermal incentive program.
The Directorate-General for Energy and Geology (DGEG) of Portugal has announced that its application to the European Union’s Modernization Fund has been approved, securing €15 million in funding to establish a financial incentive system for utilizing geothermal energy in mainland Portugal.
The Modernization Fund aims to support investments in renewable energy, energy efficiency, and grid modernization across 13 lower-income EU Member States. Established in 2018 for the period from 2021 to 2030, the fund is designed to help these Member States meet their climate goals and adhere to the objectives of the European Green Deal.
This project marks the first instance in Portugal of funding being allocated from this mechanism after the country was recognized as eligible in January 2024. The initiative seeks to encourage the sustainable use of natural mineral waters with temperatures of 25 °C or higher.
Initially, the focus will be on decarbonizing thermal spas; however, the fund will also support projects aimed at establishing or expanding geothermal power plants and related systems. In instances involving public entities, the fund will facilitate the construction of small geothermal heat distribution networks. These initiatives align with two of the EU Modernization Fund's priority areas:
Generation and use of energy from renewable sources, including renewable hydrogen
Heating and cooling from renewable sources
With a budget of €15 million covering all eligible costs at 100%, this initiative reinforces Portugal's commitment to energy transition and contributes to a broader European effort that has already mobilized over €20.7 billion for 294 clean energy projects. The Modernization Fund is financed through proceeds from carbon emission allowance auctions.
Geothermal energy development in Portugal has primarily taken place in the Azores, particularly at the Pico Vermelho and Ribeira Grande geothermal fields operated by EDA RENOVAVEIS. In mainland Portugal, geothermal energy is also used for heating, especially in the Algarve region, where it provides year-round heating for tourism.
The Modernization Fund aims to support investments in renewable energy, energy efficiency, and grid modernization across 13 lower-income EU Member States. Established in 2018 for the period from 2021 to 2030, the fund is designed to help these Member States meet their climate goals and adhere to the objectives of the European Green Deal.
This project marks the first instance in Portugal of funding being allocated from this mechanism after the country was recognized as eligible in January 2024. The initiative seeks to encourage the sustainable use of natural mineral waters with temperatures of 25 °C or higher.
Initially, the focus will be on decarbonizing thermal spas; however, the fund will also support projects aimed at establishing or expanding geothermal power plants and related systems. In instances involving public entities, the fund will facilitate the construction of small geothermal heat distribution networks. These initiatives align with two of the EU Modernization Fund's priority areas:
Generation and use of energy from renewable sources, including renewable hydrogen
Heating and cooling from renewable sources
With a budget of €15 million covering all eligible costs at 100%, this initiative reinforces Portugal's commitment to energy transition and contributes to a broader European effort that has already mobilized over €20.7 billion for 294 clean energy projects. The Modernization Fund is financed through proceeds from carbon emission allowance auctions.
Geothermal energy development in Portugal has primarily taken place in the Azores, particularly at the Pico Vermelho and Ribeira Grande geothermal fields operated by EDA RENOVAVEIS. In mainland Portugal, geothermal energy is also used for heating, especially in the Algarve region, where it provides year-round heating for tourism.