VentureBeat

Google.org, Google’s philanthropic arm, has taken a number of stakes in solar and wind startups over the past year, most recently joining a $115 million investment in solar thermal firm BrightSource Energy. It now seems to be focusing its attention on the bustling geothermal energy sector, with Google co-founder Sergey Brin recently expressing a strong interest in Ormat, a geothermal startup headquartered in Reno, Nevada.

During an interview with the Israeli newspaper, The Marker, Brin confirmed that his company was in discussions with Ormat to collaborate on several clean energy projects, calling the startup a “great company” and praising it for its potential to turn geothermal energy “into a big business.” Though he wouldn’t say whether Google was in talks to purchase any Israeli cleantech companies, he did say that the conditions were good for his firm to buy companies in 2009. He said there were a lot of interesting companies that worked in renewable energy and electric cars — perhaps a nod to Shai Agassi’s Project Better Place.

According to Haaretz, senior executives at Google have already met with their counterparts from Ormat twice, and Larry Page recently visited one of the company’s plants in Steamboat Hills, Nevada. Ormat chairman Lucien Bronicki said he and Google officials were pushing legislation in the U.S. advocating more R&D for advanced geothermal technology. Ormat announced in February that it would work with the DOE and several geothermal companies — GeothermEx and Pinnacle Technologies — to test Enhanced Geothermal Systems (EGS) technology at its 11 megawatt Desert Peak facility.

The DOE has committed $1.6 million to support the project, which could eventually yield over 50 MW of power. The partnership will test hot fractured rock (HFR) technology to attempt to increase the output of its geothermal wells. Sydney, Australia-based Geodynamics, which I wrote about a few weeks ago, has been on the forefront with this technology and is nearing the completion of a 50 MW demonstration plant to supply up to 75,000 people by 2012.

Ormat has several existing projects in Guatemala, Kenya and Nicaragua is considered the world leader in geothermal energy.

In addition to making a series of high-profile investments in eSolar, BrightSource and Makani Power as part of its RE<C initiative, Google has also donated over $1 million in grants to support plug-in vehicle adoption. The foundation’s RechargeIT initiative recently gave $200,000 to CalCars.org. Page said Google.org’s goal is to produce 1 gigawatt of renewable energy capacity from wind, geothermal and solar thermal sources cheaper than coal, an objective he and Brin are optimistic will be met in years, rather than decades.

Houston, Texas-based EnLink Geoenergy Services is tapping into investors’ growing appetite for geothermal energy to ramp up its development of geothermal heat pump (GHP) installations for residential, commercial and institutional settings.

EnLink, which was founded in 1995, has developed over 75 projects in 14 states — the majority of which, 69 percent, are in schools. GHP systems, which have been in use for over half a century, have been installed in more than 750,000 buildings in the U.S.

The company claims its technology helps reduce the costs of installation for commercial-scale GHP projects and improves the quality of underground vertical loop field systems — what it calls Earth Heat Exchangers (EHX) — which transfer heat in the air from the building to the ground during the summer and vice-versa during the winter.

EnLink’s highly adaptable drill can be fitted to any EHX design, and its loop insertion and grouting systems stabilize soil conditions to secure its installation. CEO Ray List claims these systems help significantly reduce the installed cost of EHXs and bolsters their performance.

Heat pumps, the other components to GHP installations, control air movement to the EHX and can be used in multiples to minimize heating/cooling losses. List hopes these installations will appeal to commercial and institutional users in states like California, which have laws mandating that buildings reduce their carbon footprint. The efficiency boost these installations impart to buildings’ heating, ventilation, air conditioning and cooling (HVAC) systems could help them cut costs.

Because of the savings it incurs, EnLink says its system would pay for itself in 4 years. With energy prices on the rise, the company’s technology could provide a tried, low-cost way for businesses to reduce their bills over the long term — and an appealing opportunity for investors.

Last year, private equity firms invested over $400 million in geothermal energy. According to New Energy Finance, a total of $3 billion was invested in the sector — a 183 percent surge from 2006. About half of these new investments were made in the American market, in companies like Ormat and US Geothermal, which have a number of geothermal energy generation projects in the U.S.

According to VentureWire, EnLink raised almost $30 million in private equity funding from Craton Equity Partners and Medley Partners LP. The funds will be used to reorient the company’s business model around services rather than products.

While most of the investment community’s attention stateside remains squarely focused on solar, wind and biofuels, adventurous types in Australia have been dabbling in the nascent, and promising, field of hot fractured rock (HFR) geothermal energy. The pioneer in this sector has been Geodynamics, which is nearing completion of a 50 MW demonstration plant to extract energy from a fracture network 4,200 meters below ground.

This “hot dry rock” technology is used to draw energy from underground areas where geothermal heat is plentiful but water is not. In order to tap into this vast supply, wells are drilled into the rock, and highly pressurized water is injected to create fissures; the resulting water-impregnated fractured rock becomes a geothermal reservoir from which steam of up to 250ºC can then be drawn — essentially forming an underground heat exchanger.

The idea is to transfer that water to a power plant, which will extract its heat to produce electricity. The now cool water would then be pumped back into the ground. Because HFR requires the direct injection of water, unlike other geothermal technologies that tap into existing reservoirs of steam or hot water, its costs and associated risks tend to run higher.

Geodynamics completed the drilling of its third well in late January, marking a crucial landmark in its efforts to become the first company to build a commercial-scale geothermal power plant using hot dry rock technology. It is now conducting open circulations tests between its first and third wells to verify the efficiency of the heat-drawing process — cycling hot water piped out of Habanero 3 through a conventional steam generator and then returning it underground through Habanero 1.

The next step will be developing a demonstration 50 MW geothermal power plant, enough to supply roughly 75,000 people, by 2012. Geodynamics plans to produce over 500 MW by 2016. It claims its eventual output will reach 10,000 MW — the equivalent of 10 to 15 coal-fired power plants. CEO Gerry Grove-White recently estimated there could be at least 50-60 years’ worth of energy buried underneath the basin.

Given geothermal’s appeal — zero emissions and little to no water requirements, for one thing — it’s not surprising that other HFR projects are currently underway in France, Germany, Japan and California. The recently enacted energy bill contains several provisions to support advanced geothermal research and development over the coming decades. The DOE has joined the fray, armed with an annual $95 million budget, and is undertaking an ambitious new research program to promote the clean energy source.

It has formed a partnership with several research institutions and companies, including Ormat, GeothermEx and Pinnacle Technologies, to test HFR technologies at a commercial 11 MW geothermal power plant near Reno, Nevada. The Desert Peak facility, which is owned by Ormat, is thought to have the potential to produce over 50 MW of power; the DOE has pledged $1.6 million to support the project. Ormat has several ongoing projects in the U.S., Guatemala, Kenya and Nicaragua. GeothermEx, a Richmond, Calif., startup, has projects in The Geysers, California (which contains the world’s largest group of plants), the Azores Islands, Nicaragua and Nevada.

Despite its promise, geothermal energy can be a tough sell — not only because of its high upfront costs but because, quite simply, it won’t work in most places. Geodynamics, for example, had to delay the completion of its Habanero 3 well after it was forced to abandon Habanero 2 due to technical complications. That failure led to the ousting of then CEO Bertus de Graaf.

As of late last year, geothermal power was still only supplying less than 1% of the world’s energy. And, if specific sites eventually cool down, companies will lose that capacity. Some have also raised environmental concerns, arguing that the construction of HFR plants could disrupt land stability in surrounding regions by injecting water into vast subterranean areas where none was present before.