The project would use solar power to create steam that would be fed into the existing city-owned power plant. That steam instead of natural gas would power the plant's turbines.
The solar-thermal energy project would provide one megawatt of electricity without emitting any carbon.
"Natural gas, as with other fossil fuels, is non-renewable so over time we're going to have to figure out a way to do things different than we do them today," said Russ Smith, the city's environment manager and the driving force behind the idea.
Smith said Medicine Hat is the perfect place for the project, even though it sits on huge reserves of natural gas.
"We've been aware for quite a while that the Medicine Hat area has some of the highest, if not the highest, solar radiation in Canada, which means we get the most sunlight hours of anywhere in Canada," Smith said.
"As we started to assess the potential for renewable energy in the Medicine Hat area, solar kept coming to the top of the pile as one of those resources that we need to understand a little bit better."
Guillermo Ordorica-Garcia, with the Alberta Research Council, said the benefit to the environment is sizeable. "There are no fossil fuels being burned at any stage of the process," he said.
While this technology has been successful in California and Spain, Medicine Hat would be the first city in Canada to be powered by solar thermal energy.
The $9 million project has already received $3 million in funding from the city, but will go ahead only if the federal and provincial governments provide the additional $6 million needed.