Japan's Economy, Trade and Industry Ministry says it will support companies that invest in geothermal power generation projects.
Geothermal generation uses high-temperature steam produced by underground water heated by volcanic activity.
The ministry predicts that geothermal generation will be a key source of renewable energy in Japan, which has many volcanoes.
A semi-governmental body will offer grants or investment money to firms looking for suitable sites.
Companies need to raise huge amounts of money for the initial stages of these projects. Drilling a well for underground steam is said to cost 5 to 10 billion yen, or 65 million to 130 million dollars.
The ministry also plans to guarantee firms' debt to help them obtain loans for the projects from financial institutions.
It will allocate the necessary amount for the plan in the next fiscal year's draft budget.
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