Why is Geothermal So Hot Right Now?
Photo by Matt Palmer on Unsplash
You might have noticed that a lot of excitement is building around geothermal energy. Just this past week, two Activate cohort companies — Fervo Energy (Tim Latimer & Jack Norbeck, Cohort 2018) and Zanskar (Joel Edwards & Carl Hoiland, Cohort 2020) — announced new investments totaling $150M.
At $138M, Fervo’s new investment round might be the largest to date in the geothermal sector. More importantly, the funding will allow the company to keep developing its advanced drilling and sensing technology and build out the projects already in its pipeline, which could total 100 MW of clean, 24/7 energy. Fervo is striving toward that goal, with a 5-MW site in Nevada to support Google data centers and 40-MW site in California for East Bay Community Energy.
Meanwhile, Zanskar is focused on discovery. Most commercial-grade utility-scale geothermal resources are still undiscovered and using its platform that combines AI, big data, and advanced sensing techniques, Zanskar is already finding geothermal resources at an unprecedented pace. Hoiland and Edwards have closed a $12M Series A investment and are growing their team. The goal: discover all of the imminently-developable commercial-grade geothermal resources in the USA within five years. They estimate this could grow the pipeline enough to 10x geothermal development by 2030.
“There’s enough energy in the Earth’s crust to power billions of electric vehicles, heat pumps, and data centers, if only we could locate it,” Chris Sacca, managing partner for Lowercarbon Capital and Zanskar investor told Bloomberg. “Enter Zanskar.”
And Fervo and Zanskar are just two startups that are gaining traction. Bloomberg New Energy Finance expects geothermal output could grow from 16 gigawatts today to 27 gigawatts by 2030. So why is geothermal gaining so much steam? Many reasons.
It’s carbon-free and always on. As Fervo, Zanskar, and other startups in the space advance geothermal technology, its costs—much of them tied to the complexities of finding and leveraging the resource—will fall.
It’s getting support. The Department of Energy has committed $165 million toward geothermal energy deployment. California has mandated 1,000 MW of firm or non-weather-dependent zero-emissions energy by 2026, and solar and wind are weather-dependent. And the Inflation Reduction Act gives a major boost to federal loan programs, which geothermal developers are eager to leverage. “It’s been the talk of the geothermal industry,” Latimer told the New York Times.
It’s not just electrons. As Zanksar’s manifesto points out, geothermal can provide industrial-scale heat; it can “accelerate the kinetics of geologic sequestration” in some carbon dioxide removal methods; and in some places, it offers a pathway to extracting critical minerals like lithium with less environmental impact than traditional mining methods. Axios notes that Climateworks’ Orca plant for direct air capture runs on geothermal energy, which allows it to capture CO2 without emitting it.
It’s a job-grower. Latimer is a Texan and got his start in the oil & gas industry. He is a big champion of geothermal’s potential to provide a path for the oil & gas workforce to transition to new roles in clean energy. “Oil companies say they care about their workers and about the planet. This is their chance to finally show it,” Latimer and Jigar Shah wrote in Utility Dive in 2020, estimating that the geothermal industry could employ tens of thousands of oil & gas workers. (Jigar Shah was president of Generate Capital at the time and now directs the DOE’s Loan Program Office.)
DCVC led the Fervo Energy investment, with contributions from the Canada Pension Plan Investment Board, Liberty Energy, Macquarie, Grantham Foundation for the Protection of the Environment, Impact Science Ventures, and Prelude Ventures. Existing investors Capricorn’s Technology Impact Fund, Breakthrough Energy Ventures, Congruent Ventures, 3X5 Partners, Helmerich & Payne, and Elemental Excelerator also contributed to the round.
Zanskar’s Series A financing was co-led by USV and Lowercarbon, with participation from new and existing investors, including Munich Re Ventures, Safar Partners, Grantham Foundation, and First Star Ventures.