The aim of the study was to analyse the possibilities of reform in the Hungarian district heating sector such that it will facilitate district heating generation capacity investment, with a focus on geothermal district heating projects. We have reviewd the current Hungarian district heating price regulation and compared to the European price regulation practices. We have also considered tools of support for renewable heat generation. Based on the reviews, we have conculded a critical evaluation of the Hungarian district heating regulation, and came up with our ideas of reform for the price regulation and possible tools of support. Our recommendations include the possible regulatory tools to ease the technlogy specific obstacles of geothermal projects.