The £200,000 from the Department for Energy & Climate Change will pay for feasibility studies into the exploration of deep geothermal in the Leighton area of Crewe.
Cllr Michael Jones, council leader, said: "This is fantastic news and we can now begin to undertake further research and understand this incredible energy resource deep beneath the ground here in Cheshire East.
"Low-carbon technologies, such as geothermal, are the way forward and will enable local energy solutions and self-sufficiency.
"The grant will be used to verify the benefits of drilling down as far as 5km to extract water at temperatures in excess of 100 degrees centigrade.
"If this is indeed successful, we could be looking at an opportunity to heat new homes in the area with this new technology as well as using heat exchange technology to create electricity.
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