Axios Pro: Climate Deals

May 21, 2024

Axios Pro Exclusive Content

It's the Tuesday before the Memorial Day weekend. Bring it on, summer!

❓ Trivia Tuesday: ETF, which just closed its fourth fund, calls itself Europe's original sustainability-focused VC firm. When did it get its start?

  • Last week's answer: H2B2 last year opened what it said was the first operational green hydrogen plant in North America, in Fresno, Calif.

1 big thing: Hot rocks bankroll

Illustration: Tiffany Herring/Axios

There's growing support for the next generation of geothermal energy tech, which can improve its availability and efficiency, writes Katie.

Why it matters: Companies across sectors, like tech and industrial, are suddenly desperately searching for low carbon 24/7 power.

Driving the news: Geothermal startup XGS Energy closed a $20 million Series A extension round co-led by Valo Ventures and VoLo Earth Ventures. Valo Ventures' investment was the first from its second fund.

  • The funding will primarily be used to get a demonstration project in California up and running.
  • XGS plans to case its wells in steel and then squeeze a highly conductive material around the casing, so it sits in between the rock and the casing. The wells can get 30% higher thermal productivity, says the company.

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 24/7 baseload power, in contrast with 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 so-called enhanced geothermal services use various types of tech to be able to build geothermal projects on many more locations.

State of play: The sector is seeing some major deals:

  • 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.
  • Sage Geosystems has developed a geothermal system that stores and dispatches energy with pressurized water and raised a $17 million Series A round.

The big picture: The combination of new interest from companies and support from the Department of Energy is creating a growing ecosystem for new geothermal innovations.

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