A SPIN-OFF of civil engineering firm Liffey Developments is spending €100 million on building a system that will use geothermal energy to provide heating and hot water to 60,000 homes.

Geothermal Energy (GT Energy) said yesterday that it intends developing a district heating network on Dublin's south side in the first project of its kind in Ireland or Britain.

District heating is a system that distributes heat generated at a central location to homes and businesses in a particular area. GT Energy intends using geothermal energy, that is, heat which is naturally generated between 2,500m and 6,000m under the earth's surface, to power the system. Countries such as the US, Germany, France and Iceland are already successfully exploiting this.

The company will invest €100 million in the project. The plans include building plants at Grangecastle, Newcastle and Tallaght.

GT Energy is an independent company that grew out of Liffey Developments, a civil engineering firm whose clients have included Ballymore Properties, Ellier Developments and Iarnród Éireann.

GT believes it will produce enough power to provide the heating and hot water needs of the equivalent of 60,000 homes.

Commercial director Pádraig Hanly said that work will begin on the Tallaght facility in 2009, and that it should be operating fully in three to four years. The remaining plants should be on line by 2016.

The company has already done the exploration work needed to identify suitable plant sites. Sustainable Energy Ireland (SEI) supported the final phase of this work.

Mr Hanly suggested that the system could prove a draw to mobile investors. "With the introduction of carbon taxes in 2012, access to renewable energy sources is becoming a key site-selection factor for companies, especially major multi-nationals."

He said the system could also provide a market for the residual heat produced by manufacturers.