A novel LiNO3-KNO3-Mg(OH)NO3 ternary molten salt system is used as electrolyte with Li-Mg-B alloy/MnO2 couples for possible use as a power source for geothermal borehole applications. Chemical-compatibility studies of these materials are conducted using simultaneous differential thermal analysis (DTA) and thermo gravimetric analysis (TGA). The ionic conductivity of the new electrolyte has been evaluated by electrochemical impedance spectroscopy (EIS) and its value range from 0.107 to 0.457 Scm−1 in the temperature range from 150 to 300°C. The discharge behavior of the system is studied over a temperature range of 150 to 300°C at current densities from 10 to 30mAcm−2. At 200 to 300°C, discharge behavior seems unaffected by discharge rate. However, the system has some specific restrictions associated with temperature.