Geothermal's new momentum and old hurdles

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."