Scientists from Durham University are looking at the possibility of using naturally hot water from Teesdale to heat homes.
Geologists believe the Butterknowle Fault, a 50 mile-long seam previously mined for coal, could hold geothermal energy.
They hope to find naturally heated water about 1.4 miles (2km) beneath the ground.
Dr Charlotte Adams said it would reduce the use of fossil fuels.
She said: "We would be looking for water within rocks, we would bring that to the surface, take the heat out of it and send the water back underground.
"We'd expect temperatures of up to 70C (158F) which is hot enough for domestic use, a third of our energy demand in the UK is used up to make heat."