This feasibility study investigates extracting thermal energy from the Bedretto tunnel in the Swiss Alps, which benefits from subsurface heat flux and rock overburden insulation. Using the simulation software COMSOL Multiphysics, we created a numerical model of the tunnel environment to evaluate which medium between rock, air, and water serves as the most effective heat source. Our findings indicate that flowing water is the most effective heat source. Potential applications include distributing the water to nearby villages and storing remaining heat in the subsurface. Estimates indicate that the total extractable thermal energy ranges between 0.8 MW_th and 1.5 MW_th after reducing the water temperature to 4 °C via a heat pump. The study identifies the most suitable energy sourcing locations based on efficiency and investment costs. Circulating water to individual heat pumps in Bedretto, with the natural elevation difference, enables water transport without a pump. Cost analyses reveal that the investment in piping and heat pumps can be amortized within the equipment’s lifespan with appropriate economic models. With the same initial investments, district heating systems are viable in villages with over 30 connections. The payback periods are 10 years for 60 connections, 4.5 years for 90 connections, and immediate for 200 connections.