Eavor Technologies has received funding from the Canadian Government in support of the closed-loop geothermal system development.
The government has agreed to provide funding of C$6.7m ($4.9m) to the company.
Eavor Technologies’ geothermal system will have the ability to generate renewable energy using the Earth's natural heat.
Canada Minister of Natural Resources Amarjeet Sohi said: "This innovative project demonstrates that we can build upon, and transfer, expertise from the oil and gas sector to supply cleaner forms of energy, leading to potential new export markets for Canada.
"The Government of Canada will continue to make smart investments in research and innovation to develop new clean energy technologies, meet our climate goals and create economic growth that benefits everyone."
Funding will be provided to the company by Natural Resources Canada's Clean Growth Program and Sustainable Development Technology Canada.
It will be used for construction of a demonstration facility for this technology near Rocky Mountain House, Alberta.
The Eavor-Lite facility will be a collaborative effort with various organisations, including Precision Drilling, Shell New Energies, the University of Alberta, the University of Toronto, and GLJ.
Eavor Technologies president and CEO John Redfern said: "We look forward to the construction and completion of the demonstration facility right here in Alberta this summer.
"The demonstration of our technology and solution will provide the validation needed to unlock Eavor's already-identified commercial opportunities at home and around the world."