The company behind the project, which has the full backing of the council, last night disclosed details of its proposals at a public meeting in Killarney, which aims to be among the first towns in Ireland to have such a system.
The tourism industry and dozens of Killarney hotels are expected to benefit from a lower-cost alternative energy source to oil.
A biomass combined heat and power facility, using locally-sourced woodchip from forest thinnings to produce green electricity, would provide enough renewable energy to supply around 5,000 homes and also businesses, according to the council.
Up to 150 jobs could be created during the construction phase and 20 jobs when the system comes into operation.
Killarney Renewables Ltd has a commercial agreement to secure a private industrial unit, in the Ballycasheen area, from where the system would operate.
Principal backers of the project are Con McCarthy, a native of Drimoleague, Co Cork, and Padraig Hanley, of Nenagh, Co Tipperary, who is managing director of Geo Thermal Energy and Liffey Developments Ltd.
The company met with Killarney Chamber of Commerce and tourism and council officials, who attended last night’s meeting in the Malton Hotel.
The town council has set up a sub-committee, including mayor Sean Counihan, Donal Grady and Sean O’Grady, to help progress the project.
Senator Tom Sheahan (FG), who recently met a delegation from the company, has urged full support for the project.
Town manager John Breen said Killarney was particularly suitable for such a project, with so many hotels clustered closely together. The need for hot water to service thousands of hotel and guesthouse bedrooms during the summer season was a key issue, he felt.
The possibility of obtaining EU funding and, furthermore, the council entering into a partnership with a private agency is also being examined.
The council has emphasised it would be seeking full control over the pipe network to guarantee any future extensions in the system.