(Bloomberg) -- Denmark’s second-biggest city is set to warm its homes with heat from below the Earth’s surface after parliament signed off on new rules for geothermal energy. 

The venture in Aarhus, nearly 200 kilometers (124 miles) west of Copenhagen, could be the first in a series of Danish projects that tap into naturally occurring heat below ground. While geothermal energy is established in volcanic regions in Iceland and the Philippines, the plant in Denmark would show the green energy source could be applied economically elsewhere.

Read: Geothermal Power Keeps Iceland Warm as Europe Shivers 

Parliament agreed to new rules that will allow Danish geothermal developer Innargi A/S to go ahead with an investment of as much as 2 billion Danish kroner ($285 million). The 110-megawatt plant would provide as much as a fifth of the city’s heat by 2030. Funding will come from the company’s shareholders AP Moller Holding A/S, Danish pension fund ATP and utility NRGi, according to Innargi’s Chief Communications Officer Asbjorn Haugstrup. 

Beyond Aarhus, Innargi is in active discussions with district heating operators in the country’s capital city, Copenhagen, that could lead to the construction of a geothermal plant with as much as twice the capacity. They are also looking at the possibility of doing a project in Poznan, Poland, where the subsurface is similar to Denmark’s.

“There is quite a huge potential for geothermal delivering baseload heat into district heating,” Haugstrup said.

Geothermal projects work by drilling down deep below the Earth’s surface and pumping down water that gets heated up and then brought back to the surface. Unlike wind and solar, geothermal sources produce energy constantly and so can be relied on regardless of the weather, a crucial attribute for a heating system. 

In Aarhus, Innargi will drill as much as 3 kilometers (1.9 miles) down where the temperature is about 80C (176 degrees Fahrenheit). The heat is then harvested on the surface and sent into a network of pipes that connect to homes and businesses throughout the city to provide heating. The system, known as district heating, is common in parts of Europe. 

Innargi will start drilling the first of 17 wells this summer, with the first heat generated in 2025.

Innargi has a 30-year contract with the operator of the city’s district heating system. The project will replace existing heat at a lower cost than the current supplies that come from a biomass plant owned by Orsted A/S. 

©2023 Bloomberg L.P.