Geothermal company Petratherm is set to dig a second deep well at its Paralana South Australian project which it says has great potential to provide clean energy.
The company will spend $26 million to drill near its existing deep well to provide a circulation loop through the hot rocks at a depth of about 3.8 kilometres.
Managing director Terry Kallis says the new work will allow for the commercial production of geothermal power.
"Significantly, once our pilot plant is operational, we'll be able to start generating regular revenue," Mr Kallis said in a statement on Thursday.
The federal government has provided $13 million for the new drilling program under the Emerging Renewables Energy Program.