Abu Dhabi Future Energy Company (Masdar) plans to use the earth’s energy to provide heat and power for its $20bn zero-carbon city.

Iceland’s Reykjavik Geothermal won a €1.6m ($2.3m) contract to provide drilling services on a pilot geothermal energy scheme in August, sources at both companies confirm.

Reykjavik will drill two holes, one to a depth of 3km and the other 4km, to test the feasibility of the scheme in the first and second quarters. Masdar hopes to have results of the study by the end of the second quarter.

If the scheme proves viable, water will be passed through two pipelines at depths of 3km and 4km, where the earth’s core will heat it beyond boiling point. The heat and steam produced will be used to generate up to 5MW of power.

“This is the pilot stage of the scheme,” says a senior Masdar source. “We would expect to be able to move ahead with the main development later on in 2010.”

The project is a renewed focus on the use of alternative energy in the emirate, which is committed to producing 7 per cent of its power using renewable sources by 2020.

The zero-waste, zero-carbon Masdar city development will provide homes for 5,000 people and house 1,500 businesses. Previous plans showed it would use only solar and hydrogen energy to generate power.

The UK’s Foster Wheeler was scheduled to complete a front-end engineering and design (Feed) contract for the world’s first hydrogen power plant and desalination plant in August 2009.