Geothermal power involves drilling and harnessing natural heat flows underneath the earth, turning it directly into energy.

Simon Molesworth, the chairman of Geothermal energy company, Greenearth Energy, confirmed the Latrobe Valley had signs of underground heat.

``I don't think there's a better (geothermal) prospect in Australia. There is very real heat opportunities in close proximity to the brown coal power producers and to the industrial heartland of Gippsland,'' he said.

Recent surveys conducted by the company indicate temperatures were about 150 degrees celcius just three kilometres under the surface.

Only 90 degrees celcius is required to run reliable baseload power from a geothermal generator.

``Unlike all other energy services, geothermal is available for baseload power production and baseload is what a nation needs since you need a certain amount of continuously made power,'' he said.

``If sufficient water can (also) be located at this depth then such temperatures offer the potential for it to be utilised for a range of direct heat uses.''

He said this superheated water could be used for drying brown coal, assisting local industry and further power generation.

``There is a very real prospect that this can assist with the challenges that brown coal producers have by potentially helping to dry brown coal,'' he said.

``Discussions are proceeding with a number of major utilities and industries in the Latrobe Valley that have significant greenhouse gas footprints.''

Mr Molesworth said Greenearth Energy was also building relationships with the region's high energy users and those involved in technical innovation for more efficient brown coal use.

``You really have got the concentration of population, power producers, immediate access to the power grid and major industry producers in one location (Latrobe Valley),'' he said.