Sage Geosystems raises $17M for geothermal energy storage

An emerging crop of startups is trying to unleash the vast potential of geothermal energy. Using next-generation technologies, the companies aim to generate huge amounts of carbon-free electricity that could light up cities, factories and power-hungry data centers around the clock.

Sage Geosystems wants to do all of that — and more.

On Thursday, the Houston-based company announced it raised $17 million in Series A funding to develop its earthen battery system. Sage is exploring whether deep geothermal reservoirs and pressurized water can be used to store energy from intermittent renewable resources. The idea is to pair the technology with, say, a wind or solar farm to provide baseload, dispatchable power when the wind isn’t blowing or the sun isn’t shining.

The investment round was led by Oklahoma-based Chesapeake Energy, the pioneering fracking company that helped spark the U.S. shale gas boom. Sage and many other geothermal startups are helmed or funded by oil and gas industry veterans who are channeling their knowledge of drilling techniques and geosciences to produce energy from heat instead of burning hydrocarbons — the main driver of planet-warming emissions.

Cindy Taff, CEO of Sage Geosystems, said the proceeds will fully fund the startup’s first commercial facility: a 3-megawatt energy storage system to be built somewhere in Texas, which it plans to start building in the second quarter of this year. Sage didn’t announce a customer for the project.

The nearly four-year-old company successfully tested a full-scale commercial pilot system last year in San Isidro, Texas. At an abandoned gas exploration well, the company created a 3,200-foot vertical reservoir deep underground using its novel fracturing technology. Engineers then pumped and stored large volumes of water in the artificial reservoir, which sits in the rock formation at an average depth of 9,500 feet.

Inside the reservoir, water pushes up against the hot rocks around it, building up mechanical pressure in the fracture. When the crew opens a wellhead valve at the top, the pressure releases, pushing out the water with such force that it can drive a turbine and generate electricity. Sage said the pilot produced 200 kilowatts of electricity over an 18-hour stretch and 1 MW of power during a 30-minute period.

The new funding and facility will mark a ​“significant milestone in our mission to make ​‘geopressured geothermal system’ technologies a reality,” Taff said in a statement. She added that the success of the technologies ​“is an essential step in accelerating the development of this proprietary geothermal baseload approach.”

Sage is one of the few companies or institutions to pursue geothermal reservoirs for energy storage. The rest of the fast-growing field is mainly focused on figuring out how to harness the earth’s heat to generate 24/7 electricity in the first place.

Today, geothermal supplies only a tiny fraction — about 0.4 percent — of total U.S. electricity generation every year. That’s because, though the United States has abundant geothermal resources, the vast majority of them are too expensive or technically complex to reach using conventional technologies. So startups are aiming to develop easier and cheaper ways of reaching down into the earth.

Another Houston-based firm, Fervo Energy, is leading the charge on that front.

On Monday, Fervo announced that it had reduced drilling time by 70 percent at its Cape Station project in southwest Utah. The company uses fracking techniques and fiber-optic sensing tools to crack open hot, dry rocks.

Fervo said its results exceed the U.S. Department of Energy’s own expectations for how ​“enhanced” geothermal technology can perform. The shorter drilling time cut costs nearly in half, from $9.4 million to $4.8 million per well for the first four horizontal wells, the startup said, adding that its achievement could ​“pave the way for rapid geothermal deployment.”

Fervo was also one of three companies this week to win a slice of a $60 million award from the DOE. The funding, which came from the 2021 Bipartisan Infrastructure Law, will support three pilot projects for enhanced geothermal, including Fervo’s pilot near Milford, Utah; a project from Chevron New Energies in Sonoma County, California; and Mazama Energy​’s first-of-its-kind demonstration project at the Newberry Volcano in Oregon.

“These projects will help us advance geothermal power, including into regions of the country where this renewable resource has never before been used,” Energy Secretary Jennifer Granholm said on Tuesday in a statement.