The geothermal plant would generate heat and electricity.
Plans to develop the UK's first commercial-scale geothermal power station in Cornwall have secured nearly £1.5m of government funding.
The power plant - using "hot rocks" technology - is to be based at Redruth and would provide electricity and heat for homes and businesses.
Geothermal Engineering Ltd (GEL) has gained the grant from the Department of Energy and Climate Change.
The total cost of building the plant will be about £40m.
The power plant will work by pumping water deep underground to be warmed by the earth's natural heat and then returned to the surface.
The heated water would power turbines, generating electricity and heat.
GEL, based at Gwennap, is hoping to work with Cornwall Council to deliver some of this heat back to the local community.
The sustainable energy plant would provide 55MW annually for local use and 10MW for the national grid.
A similar project has also been put forward by the Eden Project.
Ryan Law, Managing Director of GEL, said: "We are delighted to receive this initial funding which, subject to planning, we will use to start the drilling process in 2010.
He said: "DECC's investment is certainly a step in the right direction but the UK must be more ambitious in funding renewable energy projects."
The £1.475m grant is from the first tranche of the government's Deep Geothermal Challenge Fund of £6m, which was launched in October.
Wells 5km (3.1 miles) deep would be drilled into the ground where temperatures reach 170C (338F).
If the plans are approved by Cornwall Council, it is estimated the plant would be operational by 2013.
Geothermal energy is already used in Australia, Iceland and America as an alternative to fossil fuel.