Mar 8, 2023 - Energy & Environment

Geothermal's new momentum and old hurdles

Photo of Eavor geothermal site

Photo courtesy of Eavor

HOUSTON — Next-wave geothermal startup Eavor on Tuesday finalized a contract for roughly $96 million in grant financing from the EU Innovation Fund for a project in Germany, CEO John Redfern said in an interview.

Why it matters: It's the latest sign of growing support abroad and in the U.S. for geothermal power and heat.

  • Geothermal is a lower-profile and currently far smaller source of climate-friendly energy than wind and solar, but it's increasingly on policymakers' and financiers' radars.
  • "I am obsessed with geothermal," U.S. Energy Secretary Jennifer Granholm told a gathering of geothermal execs and advocates Tuesday in Houston.

Driving the news: Eavor's development outside Munich is the first commercial-scale project for its "closed loop" system of deep wells with lateral connections (we covered their tech in 2021).

  • The total cost for the project, which broke ground last year, is over $300 million, with planned finance also coming from other banking and equity sources, Redfern said.
  • It's slated to produce enough heat and power to supply the equivalent of 20,000 households, according to Redfern.

The big picture: Geothermal is an old heat and power source getting new attention as startups advance drilling and conduction tech to tap its immense theoretical potential.

  • U.S. backing includes extended tax credits in the climate law and $74 million of Energy Department support in the 2021 bipartisan infrastructure law.
  • DOE last year launched an "earthshot" to drive down costs of emerging tech as companies look to better exploit high-temperature underground aquifers and rock formations.
  • Some companies are experimenting with "supercritical" resources at massive depths and temperatures.

Yes, but: At Tuesday's event with Granholm at Rice University, the trade group Geothermal Rising gave her a wish list of ways DOE can greatly bolster support.

  • They range from unlocking funding for tech like "supercritical hot rock" via DOE's multi-billion dollar Office of Clean Energy Demonstrations to working with Congress to create a dedicated DOE "Office of Earth Energy."

Zoom in: Redfern said Eavor has been in discussions with DOE's loan programs office and intends to apply for financing for one of its U.S. planned commercial projects.

  • They include a power purchase agreement with Nevada's NV Energy and work with Sonoma Clean Power in California.
  • He said that while support in Germany and elsewhere in Europe for low-carbon sources existed before Russia's invasion of Ukraine, the push to replace Russian gas "really speeds up the clock on everything."

What's next: Eavor's fundraising continues after it announced $40 million in finance in 2021 from backers including the venture arms of Chevron and BP.

  • Overall, the Calgary-based firm has raised roughly $220 million to date in VC and grant finance, and is now raising a $145 million Series B round, Redfern tells Axios.

The bottom line: Redfern said one goal is simply raising geothermal's profile.

  • "Otherwise, our real danger is that people don't even notice us. We just get rolled over like by an elephant, whether it's big oil or big solar or big wind."
Go deeper