GT Energy will build the UK's largest geothermal heating plant in Manchester to support the development of a low carbon economic zone.
The project will tap into one of the UK's largest geothermal resources, located beneath Manchester called the Cheshire Basin. This natural energy reservoir equates to the heating consumption of approximately 7m homes.
Energy and Climate Change Minister Greg Barker said: "I was delighted to hear about the launch of this exciting geothermal heat project in Manchester. This is exactly the sort of innovative green project we want to see sprouting up across the country.
"This builds on the Coalition's ambitious heat strategy published in March, and I wish the project every success."
The project will be the largest commercial development of geothermal heating in the UK and follows the introduction of the government's Renewable Heat Incentive (RHI), the world's first financial incentive scheme designed to encourage the development of renewable energy for heating.
Administered by the UK's Department of Energy & Climate Change (DECC), the RHI scheme can draw on funds of £70m during 2012/13 to support the development of renewable heat projects.
Padraig Hanly, CEO of GT Energy, said: "At present, energy for heating is almost entirely fossil-fuel based, but as geothermal energy is abundant we believe that we can utilise this resource in an economical and efficient way for the benefit of the citizens of Manchester.
"The RHI is a world leading initiative from the UK government and will boost the development of renewable energy, and GT Energy we will be at the forefront of this."
The heat plant will be based on two wells, approximately 3,000 metres deep, at a half acre site in the Ardwick district of the city.
Leigh Stringer, Edie Newsroom