Exclusive: XGS raises $20M for geothermal tech
Illustration: Tiffany Herring/Axios
Geothermal startup XGS Energy has closed $20 million primarily to get a demonstration project up and running, the company tells Axios.
Why it matters: There's large potential in geothermal energy, and companies are hoping to use tech innovations to improve its availability and efficiency.
Zoom in: Valo Ventures and VoLo Earth Ventures led the Series A extension that also included B Current Impact Investment, MIH Capital and Thin Line Capital.
- Other investors in XGS include Constellation Technology Ventures and Anzu Partners. The company's entire Series A round was $34.5 million.
- Valo Ventures' investment was the first from its second fund.
What's next: XGS Energy plans to build out a demonstration project in California (the exact location is undisclosed) at a shut-in geothermal well that was originally drilled in the 1980s.
Catch up quick: Traditional geothermal energy is produced by drilling holes down into hot rock, pumping water into the wells and bringing the heated water back to the surface.
- Energy companies have long been interested in geothermal because it can provide baseload power by operating 24/7, in contrast to wind and solar, which are intermittent.
- But the geothermal sector has faced slow growth due to a lack of appropriate sites that meet all of the qualifications and are able to get permitted.
- New enhanced geothermal services use various types of tech to be able to build geothermal projects on many more locations.
How it works: XGS says it will case its wells in steel and then squeeze a thermally conductive material around the casing, so it sits in between the rock and the casing.
- The material is highly conductive — 50 to 60 times more conductive than the rock itself — and the company says its wells can get 30% higher thermal productivity.
- XGS CEO Josh Prueher wouldn't elaborate on what the material was made of, only saying it's "a naturally occurring mineral."
- Prueher told Axios that the company's process has "a very low and predictable life-cycle cost," compared with the "really bad life-cycle cost profile" for much of traditional geothermal.
Flashback: Prueher is a serial entrepreneur who founded battery storage provider Broad Reach Power (bought by Engie) as well as storage systems integrator FlexGen Power Systems (backed by Apollo).
State of play: There's growing momentum around deploying more enhanced geothermal power projects.
- Fervo Energy, based in Houston, uses drilling tech from oil and gas sectors and just closed on $221 million.
- Eavor, which has a unique brand of closed-loop geothermal tech, recently raised C$182 million.
- Quaise Energy, which is using emerging drilling and conduction tech, closed $21 million in March.
