The use of cavern thermal energy storage (CTES) systems offers a promising solution for the long‐term storage of thermal energy, especially excess heat from industrial processes, contributing to the reduction of CO emissions. In the case of Graz, the potential of this technology is examined with a focus on geological, hydrogeological, and rock mechanical criteria. Geological analyses identify solid rock formations, particularly carbonates and crystalline rocks in the western and north‐western areas of the city, as suitable storage sites. Challenges such as the distance to district heating networks and the risk of karst phenomena were considered, with the Karolinensteinbruch site being recommended as particularly suitable. Conceptual storage designs focus on modular and expandable geometries to adapt to the fluctuating urban energy demand. The results indicate that CTES is a feasible solution for Graz, although further investigations, such as detailed analyses of geotechnical and geological properties, are necessary to ensure its successful implementation.