After the Oil Crises in 1973, which meant higher energy costs, the world started to look for other sources of energy. This led to the development of renewable energy techniques. Because of the intermittent nature of renewable energy, storage systems were also developed. Underground Thermal Energy Storage (UTES) systems spread and are now globally well known. In these systems, excess thermal energy (heat or cold) is stored (short term and/or long term) from the surplus period to periods of higher demand. The storage media in such systems are underground materials, e.g. rock, soil, and/or groundwater. The current study aims to examine the use of underground thermal energy storage systems in arid regions, in order to increase the efficiency of both cooling and heating systems in these regions, such that CO2 emissions and consumed electricity for these purposes are reduced. Three main parameters determine which type of Underground Thermal Energy Storage (UTES) systemis most suitable. These are site, design, and operation parameters. The site-specific parametersinclude soil properties and all geo-hydrological, environmental, geological, metrologicalconditions. Therefore, the site parameters cannot be changed after installing the storage system,since they majorly depend on the location, while the other parameters (design and operation) canbe changed after construction. The first primary goal of this study is to find how and what site parameters involved to specify the most suitable type of UTES systems in arid regions. Thus, the suitable type of UTES systems can be decided. The second primary goal is to answer how and where to select the best location to install the adopted system. To achieve the goals of the study, two arid regions within Iraq were used as case studies. They are Babylon and Karbala, where the former is characterized by its shallow aquifer, while the latter is characterized by a relatively deeper aquifer. The ArcMap-GIS software was used to prepare the relevant digital maps, e.g. maps of hydraulic conductivity, population, type of soil, aquifers, groundwater elevation, transmissivity, and slope. Then, the vulnerability (readiness for being polluted by the surface contaminants) maps of the available aquifers were determined, followed by finding the seepage velocity of the groundwater. Depending on the outputs of the vulnerability and the seepage velocity, the most suitable type of Underground Thermal Energy Storage (UTES) systems can be decided. This study, also, includes developing/inventing a general methodology that can be used to determine the best location to install Underground Thermal Energy Storage (UTES) systems, including Aquifer Thermal Energy Storage (ATES) systems. The last part of this study includes applying the suggested methodology to determine the best location to install the suitable type of Underground Thermal Energy Storage (UTES) system in the study area. The first study was in the Babylon Province. Here, groundwater table is very shallow (less than 2 m depth in some regions). The crystalline bedrock is at a depth of 9-12 km below the ground surface, overlaid by 9-12 km of sedimentary rocks on which there is a 2-50 m thick layer of alluvial silty clay sediments. The groundwater moves slowly in this aquifer (2.12*10-6 - 1.85*10-1) m/d, and it is brackish having salinity of 5000-10000 mg/l. The susceptibility (vulnerability) of the aquifer in northern part of Babylon province is low to very low having ranges from 80 to 120 on Drastic model scale, which has the overall range of 26 – 226 (i.e. 0.27- 0.47 on normalized vulnerability). The second study area was a part of Karbala Province. This area can be divided into two regions based on the geology and geo-hydrological conditions. An eastern part is located on the Mesopotamian plain, and a western part is located in Western Desert. In both parts, the groundwater table is relatively deeper than the Babylon province. In the eastern part, it is generally more than 4 mbgs (meter below ground surface). While, in the western part it is deeper and reaches to 48 mbgs in depth. The soil in the eastern part is alluvial silty clay, while the western part consists of gypcrete sandy deposits. The groundwater, which flows towards the east, has a seepage velocity range from 0 to 0.27 m/d. The salinity of the groundwater changes from slightly brackish (1000-3000) mg/l in the western parts to highly brackish (5000-10000) mg/l in the Mesopotamian parts of the province. By comparing the site parameters of each province with the different UTES systems, the type of thermal energy storage system was decided. The most important site parameters are the depth of the water table and the aquifer characteristics. For Babylon Province, the expected suitable underground thermal energy storage system is an aquifer thermal energy storage system in silty clay. For Karbala Province, two systems are suggested: for the eastern part, aquifer thermal energy storage system in silty clay is recommended, while for the western part, a deep (10-30 m depth) sandy aquifer thermal energy storage system is recommended. After that, a methodology was developed and used to determine the suitable location in which to install the Aquifer Thermal Energy Storage (ATES) system. For Babylon province, the site selection index ranges between 2.9 and 5.3 on 1 to 10 scale. About 71% of the region has a site selection index ranges between 4.71 and 5.3. Concerning Karbala study area, the site selection index ranges between 3.1 and 9.1. About 15% of the region has a site selection index between 8.1 and 9.1.The energy saving in neighboring countries to Iraq by using the Aquifer Thermal Energy Storage (ATES) system ranges from 55% to 72%. It is also expected that using a ground sink heat pump instead of a conventional air-to-air heat pump increases the COP (Coefficient Of Performance) of roughly (10) to (-17). The negative sign means that the heat is injected into the ground. More theoretical and field studies are required to cover the different aspects of the subject of potential use of Aquifer Thermal Energy Storage (ATES) system in an arid region, and to verify the improvement of COP (Coefficient Of Performance) due to using these systems.