In February, Spa*ark Energy applied for a geothermal exploration license covering around 850 square kilometres between Singleton and Muswellbrook.

Spa*ark chairman Dr John Bishop said the company is currently working with the NSW Government to establish final lease boundaries, a process complicated by the area largely overlapping existing coal leases.

According to Dr Bishop, geothermal energy could play an important role in Australia's renewable energy mix moving forward.

"Retirement of coal fired power stations is being taken up largely by variable renewables," Dr Bishop said.

"But we will still require a significant amount of reliable baseload type generation and geothermal could fit that bill."

Geothermal energy uses the earth's heat to generate electricity. While there are a number of systems used internationally, some of which are not suited to Australian conditions, Dr Bishop said the system he intends to use is a "closed loop system".

"Think of a U-shaped hole dug to a depth of several kilometres," he said.

"You pour cold water down one side of the hole and as it warms it rises through a thermosyphon up the other side. That then transforms another liquid into gas which is used to turn turbines similar to a coal fired power station."

As well as potentially being used as a source of both baseload and dispatchable energy, Dr Bishop said geothermal has the "smallest environmental footprint".

"It's all below ground so the infrastructure itself has a very small footprint on the land," he said.

"The closed loop system is particularly good in terms of emissions because nothing enters and nothing leaves the loop."

According to an Australian Renewable Energy Agency (ARENA) report, the first geothermal exploration lease granted in Australia was in the Hunter in 1999.

ARENA also states that while Australia has considerable geothermal energy potential, "the electricity produced is not financially viable" due largely to the costs of finding resources and infrastructure construction. However, ARENA research and funding continues in the field.

Dr Bishop said interest in geothermal energy died off in the early 2010s due to the wrong models being employed to begin with, but said "it's a 24/7, high capacity factor generator that deserves another chance".

"With the region's infrastructure and the thermal anomaly produced by the insulating properties of coal, the Hunter is perfectly placed."

Dr Bishop anticipates drilling geothermal wells to a depth of five kilometres or more. He said the plan is to start generation in the "tens of megawatts before ramping up to hundreds of megawatts, potentially gigawatts".

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