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A Quiet Breakthrough in Geothermal Energy

The Pohutu Geyser in Te Puia,  Rotorua, New Zealand

Photograph by Marco Simoni

The Pohutu Geyser in Te Puia, Rotorua, New Zealand

Not a lot of startups tackle the field of geothermal power, which entails tapping into hot rocks deep in the earth to produce energy and electricity. That’s because it can be an expensive proposition, and can require extensive permits and environmental reports. But a rare startup called AltaRock Energy has recently delivered a promising breakthrough that it says can lead to the commercialization of its next-generation geothermal technology.

AltaRock Energy—which has backing from venture capitalists, as well as Google (GOOG) and Microsoft (MSFT) co-founder Paul Allen’s investment firm—has been working on enhanced (sometimes called engineered) geothermal tech. This technology drills wells deep into the ground, injects them with cold water to fracture the hot rocks, and creates a geothermal source of power where none was naturally occurring. Traditional geothermal systems, in contrast, tap into naturally occurring geothermal reservoirs (you know, the kind you see on the side of the road in Yellowstone National Park).

Geothermal power has massive potential in many areas of the U.S. but it has long remained a niche technology. A study that came out a few years ago from MIT found that enhanced geothermal system technology could create 100 GW of electricity by 2050 if the technology got reasonable investment in R&D—100 GW is equivalent to the power produced by 100 large coal power plants. But given that traditional geothermal systems are the only ones in use, geothermal power sources have been stuck in isolated areas that have geothermal activity.

Geothermal power is also the holy grail of clean power because it’s not intermittent like solar or wind power. Geothermal power can produce electricity 24/7—including at night—while wind power drops off when it isn’t windy, and solar power ends when the sun goes down. Constant power like this is called baseload power, and it’s one of the reasons why coal and natural gas are so widely used.

AltaRock Energy said that it has reached a milestone at its demonstration site in Bend, Ore., which it believes is a good sign that it’ll be able to commercialize its enhanced geothermal tech. AltaRock Chief Executive Officer and founder Susan Petty told me that the company has been able to create multiple, stimulated geothermal areas, from a single drilled well. “This has never been done before,” said Petty, who has been involved with geothermal stimulation since the 1970s.

Creating multiple geothermal zones from one well is important, because it means more geothermal power can be produced and the process becomes a lot cheaper in the long run. Enhanced geothermal systems in the past have created a single stimulated zone, but none—until now—has created multiple zones. While traditional geothermal can be cheaper than coal power, enhanced geothermal systems are generally more expensive than traditional ones. But being able to create multiple geothermal zones from one well brings down the overall cost of enhanced geothermal by 50 percent, Petty said.

The site in Bend was an area where geothermal developer Davenport Newberry had already drilled a well and the site had no stimulated geothermal area before AltaRock installed its technology. Davenport Newberry gave AltaRock access to the well and agreed to share data with the startup. The Department of Energy also gave AltaRock a $21.4 million grant to work on the project. Petty said the well was the equivalent of “a blank slate.”

AltaRock is still in the testing and research phase. Now that it’s stimulated multiple geothermal zones at the site, it still needs to run injection tests and test the heat exchange areas. It also needs to drill a production well in the stimulated zones, which could happen by the end of this year or early 2014. Enhanced geothermal sites need at least two wells, one for injecting and one for producing the power.

After this testing phase, and if everything is on track, AltaRock plans to build a demonstration-size power plant on the site, and eventually a utility-scale power plant there, too. Larger plants need more permitting, and more money. So this could take many more years. Petty said the company is now looking to raise project financing from strategic partners that are interested in seeing this brand-new next-gen tech commercialized.

AltaRock has already raised $26 million from Google, Kleiner Perkins, Khosla Ventures, and Vulcan Capital, the investing arm of Vulcan, which was founded by Microsoft co-founder Allen. But VCs probably won’t want to back this kind of capital-intensive project, particularly now that greentech investing has gone out of vogue in the Valley.

Despite the breakthrough, AltaRock still faces hurdles. The company was originally working on a demonstration project in Northern California back when it was founded in 2007. Technical problems with drilling through hard rocks prompted the company to give up that project in 2009.

That California project also faced protests from residents living nearby who were worried about seismic activity created by the drilling. Rock fracturing creates disturbances deep inside the earth, and some critics say the technique could create earthquakes powerful enough to threaten the safety of nearby residents. Such a concern shut down an enhanced geothermal project in Switzerland.

But Petty said that at its project in Bend, the company created a dialogue with residents and protesters in the community, and it did constant testing and monitoring of the system throughout the stimulation work. The seismic activity was so small as to be virtually undetected by nearby residents—snow falling and trains running through the area had higher seismic activity than the geothermal site, said Petty.

These new geothermal projects also generally take a lot longer than expected to build. Just getting permits for this initial phase of the Bend project took AltaRock two and a half years, when Petty said she expected it to happen in closer to one year. But if there’s anything we’ve learned from the cleantech boom and bust of the last six years, it’s that clean power innovation takes time.

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Katie Fehrenbacher is a Senior Writer & Features Editor for GigaOM.

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