Ormat Backs Next-Generation Geothermal Startup That Taps Hot Dry Rocks

(Bloomberg) -- Ormat Technologies Inc., one of the world's biggest geothermal energy developers, co-led a $97 million Series B funding round for a company that’s tapping hot rocks to generate electricity. 

The startup, Sage Geosystems, is one of the companies leading the push to utilize innovative technology to harness energy from the ground and meet surging power demand from artificial intelligence.  Its goal is to lower costs while expanding the range of places where geothermal systems can be built.

Unlike traditional geothermal systems, which tap underground steam, enhanced geothermal systems (EGS) like the kind Sage is building only require hot, dry rocks. Sage’s approach to accessing geothermal energy involves creating underground fractures to make an artificial reservoir where it can pump water that’s heated and then recirculated to the surface to generate electricity.

The deal with Ormat allows Sage to expedite its project timeline by 12 to 24 months, according to Sage Chief Executive Officer Cindy Taff.

“Ormat is one of the largest conventional operators in the world,” said Taff. “They know the subsurface, they know the power plants, they know the permitting. For us to partner with them and be able to not only prove our technology, but scale our technology with them is huge.”

For Ormat, investing in new technology like Sage’s is critical to growing its portfolio. “The goal of this collaboration is to significantly reduce the time and costs needed to bring EGS to market,” said Ormat CEO Doron Blachar in a November call with investors explaining the partnership with Sage, which was announced before the new Series B round co-led by Ormat and Carbon Direct Capital.

While geothermal meets a sliver of US power demand, the Energy Department projects that next-generation systems have the potential to provide up to 120 gigawatts of capacity by 2050, enough to power 90 million homes. For now, though, EGS remains expensive; building next-generation geothermal systems costs roughly eight times the amount of similarly sized solar projects in 2022, according to BloombergNEF.

Sage’s first commercial project will likely produce a modest output of four to six megawatts when complete, and the company is aiming to deliver power to the local Nevada grid in 2027, said Taff. The startup previously signed a 150-megawatt deal with Meta Platforms Inc. in 2024 to power the tech giant’s data centers.

Sage’s project at the Ormat facility will help it prepare for the bigger Meta one. “It validates the technology and allows us to scale it quicker,” Taff said.

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