There’s been a lot of buzz about geothermal energy recently. Where is this new excitement coming from?

Michael Campos: As we decarbonize the electricity system, baseload power sources, like coal and gas, will come offline. Batteries are coming online, but it’s not enough to stabilize the grid fully. There’s significant demand for a flexible, clean source of power, particularly for things like data centers. Both Microsoft and Google announced significant partnerships in geothermal – they need baseload power 24/7 and they’ve made clean power commitments. Frankly, they have limited options and geothermal is one.

At the same time, technologies are maturing and investment is following – for the first time ever, VCs have invested over $200 million into geothermal three years running.

Joselyn Lai: The Inflation Reduction Act certainly helps as well. Incentives for the full spectrum of geothermal have increased within the past couple years. Utilities are also exploring networked geothermal systems, which enable them to provide clean heat as an alternative to providing gas – that’s a business model they can take into the energy transition.

A recent DOE report found “enormous potential” for advanced geothermal to provide clean electricity that is available anytime, for any duration. What do you think of this analysis and the next steps?

MC: We’re seeing hundreds of megawatts to low-digit gigawatts in development now, but the potential is obviously massive. What needs to happen to help get us from here to there? Lots of geothermal ideas look good on paper, but proving them out in the subsurface is very challenging and expensive. The most important next step is demonstrating these new concepts at something close to full scale. But project financiers typically won’t invest in the first project of its kind, so to make this happen, companies will need to get creative about sources of capital. A combination of equity, debt, and grants can be helpful, along with things like the DOE’s Loan Programs Office.

What are some of the encouraging new developments in geothermal for power generation? Where are investors gravitating?

MC: Fervo, a next-generation geothermal power startup, announced a $244 million fundraise earlier this year – that’s significant and will help them execute on their first commercial projects. Elsewhere, we're seeing developments in categories like exploration, getting better at finding the best “hot spots,” and advanced drilling technologies from companies like Quaise Energy. There’s also interest in closed-loop geothermal, companies like Eavor and XGS, where instead of fracturing, you drill a heat exchanger to harvest heat. Some of these technologies are getting close to deployment, so it's an exciting moment.

Companies like Bedrock and Dandelion are using geothermal technology to deploy more efficient heating and cooling systems for buildings. What challenges do they need to overcome to accelerate uptake?

JL: The number one challenge is upfront installation cost. Other barriers include the physical footprint needed for subsurface construction, and risks in the long-term performance of the underground energy system. At Bedrock, our technology overcomes those barriers to make geothermal heating and cooling a type of energy that’s affordable, space efficient, de-risked, and guaranteeable for wide scale.

Along with tech giants and the federal government, oil and gas companies are increasingly interested in geothermal energy. Is that a good or bad thing?

JL: It's always a good thing when there is attention and interest in a clean energy solution. The oil and gas industry is, for better or worse, the best in the world at scaling large infrastructure, and that’s a skill the geothermal industry needs.

On a people level, talent from the oil and gas industry is a huge boon to geothermal. Over 50% of our team is former oil and gas. This ranges from technologists to drilling and completions engineers to field operational folks.

With so much interest from different actors, what do startups need to do in the next year to scale geothermal technologies?

MC: A couple things I like to see as startups scale: one, taking advantage of government funding to do drilling or component testing at scale. And two, showing an ability to iterate, and iterate as cheaply as possible.

JL: That’s important because deploying and iterating are ways to gather data, and data is how we de-risk. So much of these early years is about getting data to show the industry that this is an increasingly understood and underwritable value proposition. That brings in both project financing dollars and customer interest.

It also helps build the foundation for workforce development – people who are going to be in the field in the future getting hands-on experience and creating operational processes so when you’re ready to scale up, training and onboarding are faster.

Anything else you want to cover?

MC: Actually, Jos, I’m curious for your take on why it seems like there are dozens of geothermal startups focused on electricity production, but far fewer focused on HVAC?

JL: Geothermal heating and cooling benefits from the fact that the technology has been around for decades. It de-risks the concept but we often hear, “What innovation needs to occur then?” If we were done innovating, then adoption would be a lot higher than less than 1% of HVAC. So, our innovation is not to prove feasibility, our innovation is to prove scalability.

This interview has been edited and condensed for clarity.