Bishop's Castle Town Council is looking at installing a central ground-source heat pump which could potentially provide heat to all homes and community buildings in the town.
Residents are invited to a public meeting to discuss the plan on Thursday night.
David Luckhurst, of Bishop's Castle Climate Action Group which has been asked to carry out a consultation on behalf of the council, said it would make it one of the biggest schemes in the UK.
He said at the moment the town was "off the gas grid", meaning most buildings were heated with either liquid petroleum gas, oil or coal, adding greatly to its carbon emissions.
Mr Luckhurst said under the scheme, heat would be extracted from boreholes deep underground. The pump would then compress this heat into a form that could be piped through the town to supply energy to homes, the community college and leisure centre.
Ideally, he added, the pump would be powered by electricity from a wind turbine.
"This scheme would provide a sustainable source of heat, ensure the energy source is renewable and prices should remain stable for decades," said Mr Luckhurst.
"It would dramatically cut the carbon emissions for Bishop's Castle."
The plans will be outlined at a public meeting at the Three Tuns pub tomorrow, starting at 7.30 pm.
Dave Green of Sharenergy and Martin Crane of Carbon Alternatives will be among the speakers. Mr Luckhurst advised anybody who was interested to arrive early as space was limited due to Covid restrictions.
Mr Luckhurst said he spoke to a number of people on Friday last week, and everyone was supportive of the idea.
He said if support for the scheme could be demonstrated, it would be added to the town's neighbourhood plan, which was due to be finalised in October by the town council.