Exclusive: Hephae raises $17.8M for hot rock geothermal drilling
Hephae's high temperature drilling system in action. Photo courtesy of Hephae Energy Technology.
Hephae Energy Technology, a high temperature geothermal drilling startup, closed a $17.8 million Series A, co-founder and CEO Steve Krase tells Axios Pro.
Why it matters: There's growing interest in the geothermal supply chain following Fervo Energy's IPO.
The big picture: Geothermal energy is expected to grow rapidly, but companies are struggling to tap the hottest rocks with standard drilling tech.
- Hotter rocks potentially can deliver more energy, lowering costs.
Zoom in: The round was co-led by Susquehanna Sustainable Investments and Underground Ventures.
- Participating investors included alfa8, Baruch Future Ventures, Centaurus Capital LP (John Arnold's family office), Elemental Impact, Exa Ventures (Chris Anderson's family office), Future Ventures, Grantham Foundation for The Protection of the Environment, New System Ventures, and True North Institute.
- The Spring, Texas-based startup has now raised $24.7 million in total.
- Hephae plans to spend the proceeds on building out a dozen drilling systems for customers, and on R&D to use its drilling tech at even hotter temperatures, says Krase.
How it works: Oil-and-gas firms typically use drilling systems that use computing, robotics and sensors to be able to measure the process while drilling the hole. But when the rocks get too hot, over 175 C, the computing systems can fry.
- Hephae has engineered a drilling system where the computing components are protected from the hot rocks, enabling drilling up to 210 C.
- The company is expecting to be able to use its tech for drilling over 300 C with next-gen tools.
- Hephae rents its drilling systems to developers at day rate, temperature-based prices.
By the numbers: Hephae says its systems can save as much as $1 million per well in improved efficiency.
What they're saying: "We're the only ones working on this. This market is just too small for the big guys to focus on it," says Krase.
Catch up quick: Hephae, founded in 2021, counts Fervo and Mazama as customers.
Zoom out: Geothermal is riding a wave of data center demand, bipartisan support and new tech tools, after years as a clean energy niche.
- Geothermal could meet up to 15% of global electricity demand growth by 2050, according to the International Energy Agency.
