Geothermal energy startups are on the increase, thanks to energy-hungry AI

The rise in energy demand to power AI systems has spurred a new breed of investments – geothermal energy startups to complement energy supplies.

According to a Reuters report, geothermal energy startups are on the increase as big tech firms are looking at feeding their power-intensive data centers. Despite this surge, long-term investments in the sector remain uncertain as oil majors double down on gas. Simply put, geothermal energy is heat energy from the earth.

Geothermal energy startups increased in the last two years

According to Bryant Jones, the executive director for the industry association Geothermal Rising, the environment has been improving lately, in terms of ease of doing business which has seen more than 60 startups spring to life in the last two years.

“Texas is becoming the ‘place to be’ for geothermal exploration and development across the board,” said Matt Welch at the Texas Geothermal Energy Alliance (TxGEA).

“Much of this is due to an abundance of identified geothermal resources, 1-stop shopping permitting process, and our regulatory certainty.”

Welch.

According to an industry report published last year, at least 10 of the geothermal startups launched between 2016 and 2022 in the US were headquartered in Texas.

Now, the obtaining lower commodity prices might encourage more shale companies to diversify their revenue streams and tap into geothermal power.

The Enhanced Geothermal Shot analysis in 2022 confirmed the potential for more geothermal electricity generating capacity – 90 gigawatts by 2050.

These developments also come as AI data centers have emerged as high-energy consumers, forcing big techs to look elsewhere for alternative energy sources to keep their data centers running with sufficient and sustainable power.

“We believe geothermal, along with abundant natural gas, can be part of the all-of-the-above energy mix we need to meet the demand,” said Trey Lowe, chief technology officer at U.S. shale gas producer Devon Energy (DVN.N), an investor in geothermal startup Fervo Energy.

Big techs back the geothermal energy startups

According to a Reuters report, social media giant, Meta and search engine giant Google rank among the tech firms that are partnering with these startup companies offering to produce geothermal electricity, to power their data centers.

The report further highlights that geothermal energy has been promoted as a faster way to generate carbon-free power compared to nuclear and without the intermittency of wind and solar. However, the new startups do not have it easy as they face high upfront costs, especially for drilling coupled with long project approval times.

These high costs have dampened the initial zeal, with limited investment so far, analysts estimate just over $700 million in financing as been contributed to overall geothermal power projects since 2020.

But the sector is also receiving bipartisan interest with the CLEAN Act and HEATS Act recently passing the House and now awaiting Senate approval. If these become law, this will, according to Reuters, make it easier to set up geothermal projects across the US.

The sector is receiving increased bipartisan interest as well. The CLEAN Act and HEATS Act recently passed the House and are awaiting Senate approval. If they become law, it would make it easier to set up geothermal projects in the country.

Now, top shale oil producers Chevron, Diamondback Energy, and Exxon Mobil have started advocating for gas as the mainstay fuel for electric power, offering to work with utilities to add to their power plants with carbon sequestration that generates greenhouse emissions.

“In general, (there is) a lot more interest from smaller oil and gas producers as well as service companies … we’ve talked to Chevron and Shell (SHEL.L), opens new tab but the supermajors seem to be taking more of a wait-and-watch view,” said Cindy Taff, CEO of Sage Geosystems, which is developing energy storage and geothermal baseload technologies deep in the earth.

According to Reuters, Sage recently completed a $30 million fundraising which was led by Expand Energy – a US shale gas producer. The company plans to launch the Series B round in January.

Colorado-based Gradient Geothermal -which generates geothermal energy using existing oil and gas infrastructure – announced it was providing Chord Energy services to help generate power at one of its oil and gas in North Dakota.

Johanna Ostrum, Gradient CEO said most mid-size and smaller independent energy firms were interested in geothermal energy for their own needs, not to create electricity for resale.

A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.