Granite Power, headed by former Midwest Corp chief executive Stephen de Belle, is sounding out investors about a possible IPO which could have the company raise up to $50 million, making it the largest new Australian listing so far this year.

Geothermal energy works by pumping water into hot spots several kilometres underground, where the natural warmth created by the decay of uranium, thorium and potassium isotopes heats the water. It is then pumped back to the surface, where the resulting steam is used to create electricity.

Australia's existing crop of geothermal players is concentrated in the north-east of South Australia, where geological conditions are well suited to geothermal activity but where energy infrastructure is comparatively sparse.

In contrast, Granite Power has secured projects already on the national energy grid and close to major energy markets. The company's most advanced projects are Narracun, 60 kilometres east of Melbourne, and Nagoorin, near Gladstone in Queensland.