Exploring Geothermal

This is one of several posts on new areas we are exploring for USV’s Climate Fund.

Geothermal energy has massive potential: just 0.1% of the Earth’s heat content could supply humanity’s total energy needs for two million years. Geothermal power is essentially inexhaustible and resilient; unlike solar and wind, it can run as baseload power around the clock, and uses a reliable, onsite resource not subject to surface climate conditions or fuel-price volatility.

Geothermal energy also uniquely unlocks power density (the land surface area needed to produce a given amount of energy). Wind and solar have relatively low power density compared to fossil fuels – the former requires up to ten times more land area per unit of power produced. Geothermal energy at scale has the potential to push renewable energy sources to fully replace fossil fuels.

There are two ways geothermal power can be deployed: for producing electricity, or for heating and cooling. Both have some history in the United States.  The Geysers, built in 1960 in California, is one of the world’s largest geothermal fields and produced 20% of California’s renewable energy in 2019. Geothermal heat pumps (GHPs) have been in use since the 1940s for residential space heating and cooling. Geothermal developers today include Cyrq Energy and Ormat.

However, geothermal has failed to break out of its niche and scale at the pace of other renewables.


There are several reasons why: 

  • Identification. It’s much easier to determine where and how much the sun shines, wind blows, or water flows than where heat content is easily found beneath the earth’s surface. Furthermore, publicly available solar and wind data is already collected by weather stations and satellites unlike geothermal data. Most of the identified hydrothermal systems in the United States have surface expressions of thermal features (geysers, hot springs) but undiscovered resources lack these physical manifestations.
  • Risk factor. Some level of penetration of the Earth’s surface— usually drilling wells—is required to access and efficiently extract geothermal resources. This creates an inherent upfront resource cost and risk compared to other renewables. Project risk decreases as drilling is farther along, but development timelines can be up to 7-10 years.  There has also been some controversy over whether certain types of drilling (EGS), like natural gas fracking, will have the same issues (earthquakes, leakage, spills, groundwater contamination), creating some regulatory uncertainty.
  • Capital costs. Geothermal power projects have higher capital and financing costs than other energy projects. The initial cost for a geothermal field and power plant ranges from $3-6k per installed kW in the US. In comparison, land-based wind or utility-scale solar have an initial capital cost of $1.7-2.1k per installed kW.

Even with these challenges, the prize of getting geothermal right is too great to ignore. It is one of the first areas we set out to explore in our new Climate Fund. Geothermal energy is “an engineering problem that, when solved, solves energy.”  As in many areas of climate tech, the technologies needed for geothermal power are rapidly improving. 

One of the first questions we set out to understand is how deep you need to drill in order to cost-effectively harness geothermal energy. We want to situate this in the context of the  temperature gradient needed to make electricity with different kinds of technology, including thermoelectric, or solid state cooling.

One interesting fact we learned from Jamie Beard at the University of Texas at Austin’s Geothermal Entrepreneurship Organization is that around 65% of US land mass is economically viable for geothermal development with current technologies at less than 7km. One of our initial hypotheses is that the most interesting investment opportunities lie in near term geothermal solutions – projects that are viable in the here and now, which are most likely at shallower depths than 7 km, or 150°C and higher:


One idea that is particularly interesting to us is community scale electricity production from geothermal. The concept of modular, distributed geothermal technology in the vein of community scale solar (such as Arcadia) is one we are eager to explore further as it may enable unique operational flexibility that can mitigate resource risks and increase success for geothermal projects.

We are spending time looking at four broad areas of geothermal technology: 

  • New exploration tools – identifying and optioning the most promising land for geothermal projects is the first step to accelerating growth of geothermal development.
  • New ways to drill drilling companies and full-stack developers (this might include a data platform, drilling, and land development) are working on cheaper and faster ways to build the wells needed to harness geothermal power.
  • New geothermal systems – closed loop systems with no fracking, where fluids circulate underground in sealed pipes, picking up heat by conduction and carrying to the surface.
  • New financing opportunities – multiplayer fintech, or other ways to offset high upfront capital costs with the right business model. These could also include community scale production. 

In future posts, we plan to write more about what we have been exploring around geothermal technology applied to both heat and electricity. In the meantime, we would love to meet anyone working in this space – we are eager to learn more.

Here are several other charts from the DOE that lay out the current landscape in geothermal technology: