Enhanced geothermal power is finally a reality

Geothermal developer Fervo Energy has successfully brought online
the first ever full-scale commercial power plant sourcing from
enhanced geothermal systems (EGS) — a groundbreaking development
both literally and figuratively. In this episode, Fervo CEO Tim
Latimer discusses the company’s accomplishment and where flexible
geothermal is headed.


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transcript)


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transcript)


Text transcript:


David Roberts


Traditional geothermal power, which has been around for over a
century, exploits naturally occurring fissures underground,
pushing water through them to gather heat and run a turbine.
Unfortunately, those fissures only occur naturally in particular
geographies, limiting geothermal’s reach.


For decades, engineers and entrepreneurs have dreamed of creating
their own fissures in the underground rock, which would allow
them to drill geothermal wells almost anywhere.


These kind of enhanced geothermal systems (EGS) have been
attempted again and again since the 1970s, with no luck getting
costs down low enough to be competitive. Despite dozens of
attempts, there has never been a working commercial enhanced
geothermal power plant.


Until now.


Last week, the geothermal developer Fervo Energy announced that
its first full-scale power plant passed its production test phase
with flying colors. With that, Fervo has, at long last, made it
through all the various tests and certifications needed to prove
out its technology. It now has a working, fully licensed power
plant, selling electricity on the wholesale market, and enough
power purchase agreements (PPAs) with eager customers to build
many more.


EGS is now a real thing — the first new entrant into the power
production game in many decades.


Here at Volts we are unabashed geothermal nerds, so naturally I
was excited to discuss this news with Fervo co-founder and CEO
Tim Latimer, an ex-oil-and-gas engineer who moved into geothermal
a decade ago with a vision of how to make it work: he would
borrow the latest technologies from the oil and gas sector. Ten
years later, he’s pulled it off.


I talked with Latimer about how EGS works, the current
geographical and size limitations, how he plans to get his
technology on a rapid learning curve to bring down costs, the
value of clean firm power, the future of flexible geothermal, and
much more. This is a juicy one.


All right then, with no further ado, Tim Latimer. Welcome to
Volts. Thank you so much for coming.


Tim Latimer


Thank you for having me.


David Roberts


Tim, this has been a long time coming. I've been tracking your
adventures from afar for a few years now, and now you've reached
a real milestone here, a real milestone for you, a real milestone
for your company, a real milestone for geothermal power, which
Volts listeners are like me, big fans of. So to help us
appreciate the significance of the milestone in question, I want
to back up a little bit and do some background first for
listeners who have not, for whatever bizarre reason, heard my
previous geothermal pods. So a couple of times we've talked and
you've told me kind of this short, potted history of geothermal,
the last couple of decades of geothermal, the sort of struggle to
align the money and the attention and the technology and
everything.


So maybe by way of starting just share that with our listeners,
sort of like geothermal's struggles to take off in, say, like a
post-2000 context.


Tim Latimer


Absolutely. Well, to do that, I probably have to explain a little
bit about how geothermal works, which is straightforward in the
idea, difficult in the implementation, but geothermal has been
around for forever. The first geothermal power plant was built in
Italy over 100 years ago. Major places like New Zealand, Iceland,
and northern California built massive utility-scale power plants
going back to the 70s and 80s. But essentially what happened is —
as the choicest areas for drilling geothermal, the places that
steam was literally coming out of the ground got tapped — we ran
out of really good resources and technology couldn't keep up with
the challenges needed to go deeper, go into less permeable areas,
and still produce economic electricity.


So geothermal has been kind of a boom and bust industry. The big
technology push for a long time was the idea of something called
enhanced geothermal systems, which was a DOE-led effort going all
the way back to the 1970s to try to incorporate things like
hydraulic fracturing, advanced drilling techniques, better
subsurface characterization, to try to solve that problem and let
geothermal be a more widespread resource. But many of the early
technical attempts came far short of expectations, and so the
industry had fits and spurts a lot of unrealized promise that
never came about. And kind of the two big waves recently, in the
late 2000s, there was a big push to do more geothermal energy
development. And you always think about what does it take for a
new tech to actually get to market? Well, you got to have the
technology there, you've got to have supportive policy, and you
have to have market conditions that are ready to go. And so in
the late 2000s, the market conditions were there. People started
caring about carbon-free electricity for the first time in a
really meaningful way. We saw state RPS targets come out. We also
were in a world where people thought natural gas prices were
going to be exceptionally high for a long time.


So people were concerned about how we were going to source
electricity. And so there was huge demand for geothermal. And
then between different initiatives like the loan program office
and the R initiatives, putting funding into alternative energy
resources in the late 2000s, geothermal really had a great
moment. But what happened there is it was missing that third
pillar, it was missing the technology area. So there were a lot
of contracts signed, a lot of investment came into the space.
There was supportive policy, but a lot of the visions of
geothermal in the late 2000s sort of petered out as drilling
results were underwhelming.


And as a result, it put us in this decade plus of time where
there was not supportive policy in the US for geothermal, where
there was not investment dollars coming in. And the irony of this
whole thing is all of these drilling and subsurface methods that
people had tried to make work for geothermal for 50 years, all of
a sudden became viable and cheap and cost-effective because of
the shale oil and gas revolution. So all of a sudden it wasn't
expensive to drill horizontal wells and we could image the
subsurface with high degrees of clarity, but for most of 2010s
the new tech showed up and in an inverse of the tech was there,
but there was no policy and there was no financing.


And so it's taken quite some time for this mix of better
technology, supportive policy and market demand to coalesce. And
it's really just been in the last couple of years where
geothermal has finally had all the forces pulling together here.


David Roberts


Yeah, that's what we sort of tried to convey with my last pod
with Jamie Beard on geothermal, just how everything's finally
coming together. Right now, all the pieces of the puzzle are
coming to place. It's a super exciting time. So I think most
people get traditional geothermal power, right? You find an area
where there's some sort of volcanic activity, which just means
sort of tectonic plates rubbing on each other. So you have
fractures underneath the ground and then you have water. When you
push water through those fractures, it heats up. So you have one
well where you push the water down, the water heats up in the
fractured field and then comes back up the other well and you use
it to generate electricity.


That is standard geothermal power. And as you say, that kind of
geothermal power, which has been around for a long time, is
confined to geographical areas where you find these fractures,
where you find this sort of geological activity. So let's talk
briefly about how to distinguish that traditional geothermal from
the various other kinds we're hearing about now. There's a lot of
terms flying around. So there's enhanced geothermal, there's
super deep geothermal, there's closed loop geothermal. Maybe walk
us a little bit through what is the technological landscape of
beyond normal geothermal.


Tim Latimer


Yeah, so the nomenclature here, what the industry has kind of
settled on, and the DOE uses this nomenclature, is that first
type that you described, which is very descriptive, you know,
Iceland, Kenya, northern California geothermal prospects. We call
that hydrothermal. And hydrothermal is those areas that have
natural high temperatures, natural high flow capacity, because
there's these natural fractures and permeability in the reservoir
and there's water to circulate. And those areas can be tapped
with relatively traditional old school technology. That's why
they were drilled out in the 1970s, even though we didn't have
all these technology advancements, because the geology is just
better suited for it.


Now, broadly, the umbrella of next generation geothermal is sort
of any advanced technology method to go beyond those really
shallow, high temperature, naturally high flowing resources and
make them economic.


David Roberts


Is it the case that those natural areas, globally speaking, are
tapped out, or is there runway there? How sort of like how at
capacity are we for that kind of geothermal?


Tim Latimer


Well, the traditional geothermal industry, it's not small, but it
is small relative to the total extent of the global power system.
So less than 1% of global electricity, but really meaningful in
certain markets. It's around 20 gigawatts installed. It grows by
5% to 10% a year. So it's not over by any means. And there's a
lot of great investment in projects going on. But whenever you
plot it against a resource like solar or wind and the growth that
have occurred in those industries over the last decade plus, you
can't even see that the line is moving because the axes are so
different.


So always an important resource. It's certainly not tapped out
globally. But when you look at the places that are on accessible
land close to power demand that have the right natural resources,
it's an industry that can produce a 5% to 10% per year growth
rate, not an exponential rapid, world changing growth rate like
we've seen in other renewables.


David Roberts


So then all the advanced is beyond that. And so what are the
relevant categories there?


Tim Latimer


Right, so you mentioned super deep, for example. So geothermal
economics are all dictated by at the end of the day it's how much
flow rate can you get out of a well and how high temperature is
that flow rate?


David Roberts


And flow rate is just how much water you can push through it for
a given time period.


Tim Latimer


Exactly. And so if you want to make geothermal projects more
economic, you have to figure out how to lower the cost of
drilling or you have to figure out how to make the temperature
you're working with hotter, or you have to get the flow rate
higher. So those are sort of the three levers you can pull. One
of the things you mentioned there was super deep geothermal,
which is interesting, which is trying to change one of those
levers, which is temperature. Can you go so deep that rather
than, let's say, 200 C, which is a reasonable temperature for
modern geothermal, can you do 500 C or 800 C and improve the
economics through drilling ultra deep and having very high
temperature output?


So that's sort of one way. And there's super deep there and then
there's enhanced geothermal systems, which is what the DOE
through the Utah Forge project and their research projects and
then us at Fervo have been working on for a long time, which is,
can you use methods that incorporate directional drilling,
advanced drilling tools and well stimulation, principally through
application of hydraulic fracturing, to improve the flow rates?
So the way you improve the economics of projects is you drill
wells still targeting that same temperature resource, but you do
it in a way where you get so much more flow per well that it
improves the economics and unlocks a much broader resource.


So all of these things are next generation geothermal and the
extent that it's tech that unlocks a new class of geothermal
resource that goes beyond that traditional older style technology
that's been around for decades.


David Roberts


How do you slot closed loop geothermal? So the traditional
geothermal and enhanced geothermal, both sort of they inject the
water, in the ground, and then out of a pipe, and then collect
the water at the other side into a new pipe. But then there's
also this new closed loop, which is just the water stays in the
pipe the whole time. Is that meaningful enough to be its own
category?


Tim Latimer


Yeah, it is, because it's quite distinct from traditional
geothermal or enhanced geothermal. It is definitely its own
category where you're just flowing and recirculating through
pipes in the ground and not through these large and extensive
geothermal reservoirs. That's definitely a different category.


David Roberts


Right. And so is it fair to say that enhanced geothermal, which
is fracturing more of the ground and improving flow rate, that's
the one you're doing and that's the one that's right on the verge
of commercial production. The other two are where in the cycle of
things?


Tim Latimer


Both the other two — the nice thing about enhanced geothermal
systems and the applications there is these are technologies that
are very advanced and far along in their technological know-how.
These are the technologies, like I say, that the Utah Forge site,
which is supported by the Department of Energy, are proving out
in real time. If you follow that project, every month there's a
new advancement of that tech and they are commercially viable
today, which is, I think, some of what we're going to talk about
later, the results of our pilot project. The other technologies
are both ones that still rely on radical technology breakthroughs
in drilling technology.


So if you're talking about an enhanced geothermal system where
you're drilling to 3000 meters depth and targeting 200 degrees C,
which is really the area that the Department of Energy and Fervo
is going after, we can do that today with existing technology.
Getting the right cost structure or drilling down to 10,000
meters depth or 800 degrees C like some of these other projects:
Very promising, lot of potential, there a lot of upside. But
those are things that would require radical technology step
changes in performance that put it more akin to the way that we
look at fusion technology breakthroughs, where it's a big prize,
it's worth pursuing, but we're certainly talking about deployment
timelines that are ten plus or potentially several decades in the
future to get those kinds of results.


David Roberts


Got it. So the advantage enhanced geothermal has is it is going
to depths that are familiar to the oil and gas industry. And thus
the drilling technology has been worked on and perfected
absolutely by the oil and gas industry. Whereas you drill deeper,
you start getting hotter, you start basically having to design
new kinds of drilling equipment.


Tim Latimer


Exactly. And I can tell you Fervo in a lot of ways came from
ideas that myself and my co-founder and other folks in the
Stanford Geothermal Research Group started batting around over a
decade ago. And one of the constraints we gave ourselves when we
launched the company in 2017 is what is the most optimized,
effective design that would produce attractive economics today
with off-the-shelf oil and gas technology. Because anytime that
you want to build a new tool to go down hole, you extend your
development timeline by years or decades. And so what we were
looking at is the performance curve of oil and gas drilling,
because it did get ten times better in the last decade because of
how many technological advancements there were in the oil and gas
unconventional world.


We were looking at what you can do off-the-shelf, and has that
off-the-shelf performance from existing oil and gas tech gotten
so good that you can drill wells in an effective and economic
manner for geothermal? And that was what we set out with our
thesis to prove.


David Roberts


Which probably explains why you're the kind of first to the
finish line. The starting line? I'm not sure.


Tim Latimer


The finish of the start line, I guess you could say.


David Roberts


Yeah, exactly. The end of the beginning.


Tim Latimer


The end of the beginning.


David Roberts


Let's talk then about what Fervo does. So, as we said,
traditional geothermal finds these areas where there are
fractures in the rock where you can squirt water through it and
the water heats up. The whole idea behind enhanced geothermal is
you make your own cracks in the rock. Basically, you fracture the
rock, which is the same thing fracking does. Natural gas fracking
cracks the rocks apart and natural gas seeps out. In your case,
you just want to fracture the rock so you can squirt water
through. So maybe walk us through kind of what the Fervo power
plant looks like.


Tim Latimer


Yeah. So the idea behind enhanced geothermal, it works roughly
the same as traditional geothermal, where you have those wells,
where you pump cold water down injection wells and to calibrate
here we are talking about wells that are 2000, 3000 meters depth.
They're seven to 10,000ft deep, or in some cases, deeper. So
these are really deep wells.


David Roberts


Yeah, you say shallow relative to the deep — but that's not all
that shallow.


Tim Latimer


Yeah, shallow relative to deep. And this is one thing I've had to
learn is these depths are quite different. And if you're not in
the drilling world, we can often make the mistake of just
assuming everybody knows what we're talking about. So I can be
quite explicit. We're talking about wells that are 10,000ft deep
here, which is mind-boggling in certain senses when you think
about it, but very achievable when you think about the fact that
the oil and gas industry has been doing this for 150 years, and
that's what they've gotten exceptionally good at.


David Roberts


Yeah. So you have one well, the injection well that basically
squirts water 10,000ft deep, cold water 10,000ft deep, then what
happens to the water?


Tim Latimer


So, in a traditional geothermal system, it then finds that
natural flow paths between the wells heats up to near the
reservoir, temperature gets produced up the production wells, and
then gets captured at the surface. And that heat is then used to
power a turbine and generate electricity. And because you're
using the natural heat of the earth to capture that energy, and
you're not combusting something like coal or natural gas, there's
no emissions associated with geothermal power.


David Roberts


Let's pause there for a second because I want to press on that a
little bit. When we say no emissions, do we mean literally no
emissions? Like, just how clean is all this? Is it literally just
water and steam and there's no environmental externalities at
all?


Tim Latimer


Generally, yes, there's obviously risk to projects that
developers like us have to be very attentive to. But when we're
talking about carbon emissions from modern geothermal power
projects, and I'll explain that distinction in a second, we're
talking about a system that is truly a zero-emission resource.
And the reason I distinguish this modern geothermal is the other
surface technological breakthrough that has become mature now and
unlocking the resource that we're going after is the advancement
of binary cycle power generation technology. So the vast majority
of new geothermal that's built in the United States now is this
binary cycle.


So if you go back to that first power plant in Italy 100 years
ago, they had steam coming out of the ground and they slapped a
turbine onto that steam and they generated electricity from that.
And many of the power plants built through 2000 looked kind of
similar to that.


David Roberts


Right. The steam itself was turning the turbine.


Tim Latimer


Yes. And in those more old, I'd call them old school, geothermal
power plants that were very high temperature, the consequence of
that steam powering the turbine is then as the steam would be
flashed on the other side. If there were things in that
geothermal brine that was deep in the earth that were produced,
those would cause emissions. So in nearly all cases, we're
talking about stuff that's dramatically lower carbon emissions or
other emissions from coal or natural gas power plants. But in
this older style design for geothermal, there would be some
operational emissions just dependent on whatever's in your
geologic fluid there.


Now, more modern binary cycle power plants are a very different
design. And so rather than using the steam from the geothermal
wells to power a turbine, what you use is heat exchangers at the
surface that are closed loops. So the geothermal fluid is never
exposed to the atmosphere at all, and it heats up a different
working fluid. That working fluid then goes through a continuous
cycle to power the turbine and the power cycle for geothermal.
And then the geothermal brine is reinjected back down those
injection wells with no losses and no emissions so if you look at
the history of geothermal, one of the enablers of recent growth
and one of the enablers of the technology approach Fervo is
taking is these binary cycle power plants which have multiple
benefits.


They allow you to do lower temperature geothermal than those
traditional resources and still be cost-effective. And they also
eliminate the issues related to emissions of any kind, including
carbon emissions from geothermal plants. So when we're talking
about modern binary cycle geothermal plants, we're talking about
a very clean resource that has no operational emissions of any
kind.


David Roberts


Truly zero. And the water, how sort of like closed loop are you
on the water? Do you have water requirements? Like, do you
require a constant supply of water or is it just you're just
recirculating forever?


Tim Latimer


It's a very minimal amount because you are really recirculating
forever. You know, people that are maybe familiar with the
geysers in Northern California know that it declined and has
water issues and has to source water from the local counties to
make up for that depletion. But that's because it's using that
system that has evaporative losses at the surface. Whenever you
talk about a binary cycle system, it's much different because
you're injecting all the fluid that you take up, so you're not
losing fluid through that system. And so in general, you're
talking about reservoirs that are fairly well connected in the
subsurface, no water losses at the surface.


Once you go to sufficient depth anywhere in the world, the
reservoirs are always what we call saturated. They're always
filled with fluid. And so these geothermal systems, by and large,
all we're doing is taking the fluid that's already in the
geothermal reservoir and we're recirculating it over and over
again. The only change that's happening is it goes down cold,
picks up heat in the reservoir, releases that heat at the surface
to create electricity, and then goes back again. But we're really
just recirculating that same fluid flow for decades.


David Roberts


Do you deplete the heat at any rate? Or is the heat sort of
eternally renewing? Is there such a thing as a decline in
production in a geothermal well over time?


Tim Latimer


It's a good question, and the short answer is yes. But it's
something that is sort of manageable and can be designed for. So
you think about the actual — I'm an engineer so maybe I'll go
engineer for a moment — you think about your actual energy
balance of what's going on. There's a fixed quantity of heat in
that block of rock that you're accessing with these wells.
There's also a constant flow of new heat replenishing that. So
your energy balance here is basically what are you extracting?
What was there to begin with and how quick is it replenishing?


David Roberts


Right.


Tim Latimer


It turns out most geothermal systems, you could design them to
only be produced at the replenishment rate with no decline period
over time. But then you'd be sacrificing a lot on the power
output to be doing sort of flow that's that level, and in
general, the quantity of heat and we'll talk about this, I'm
sure, later. But the geothermal reservoir that we're talking
about, we're talking about cubic kilometers worth of reservoir,
very hot rock. So that heat resource can last for many, many
decades. So, in general, you do design these systems to have some
temperature decline because that's a more economically optimum
way to operate it, because you can get higher production results,
but it's not a very significant decline.


Right. In a well-managed reservoir, this will be on the order of
1% to 2% a year. And you can always recover that either by
drilling more and drilling deeper, and drilling and doing makeup
drilling, or just slowing down fluid flow at some point in the
future and allowing that replenishment to catch up. So geothermal
is considered a renewable resource because the combination of how
much heat content there is plus the replenishment means that
these are extraordinarily long-life assets.


David Roberts


Got it. And so explain how you create fractures in the rock.


Tim Latimer


Yeah. So again, we're not the first to do this, and it's probably
worth maybe reflecting a little bit on the original 1970s Fenton
Hill experiments done by the Department of Energy, where there
was always this concept that if you injected at sufficient rates
into injection wells, even in areas that did not have all that
natural permeability, that you could create fractures that could
then carry the fluid from one well to the next. And so this is
something that's been trialed for a very long time. But the
distinction is that in those first tests that the DOE did in the
1970s and then in the subsequent let's call it 50 or so tests
that have been done around the world, many here in the US some in
Japan, New Zealand, you name it. Any country that's a big
geothermal producer has usually run some sort of test on enhanced
geothermal systems. The vast majority, actually, all of those
were done in relatively simple vertical well configurations
because that's all that the technology would allow for. And so,
by and large, the metrics that we look at to be commercially
viable are things like how much surface area are you accessing
there for the equivalent of what your radiator is down there in
the subsurface, and how much volume for flow can you get? And
what volume of that heat through the rock are you actually able
to access?


And doing it through a simple vertical well and a single zone
approach just turned out to not come anywhere close to the
metrics we needed to see to say, yeah, this is worth drilling.
The output per well you got could not cover the expensive costs
of drilling.


David Roberts


I suspect this is a dumb question, but my brain rebels a little
bit at the thought of water pressure fracturing solid rock. It
just seems like rock is real solid and water is just water. So
what types of pressure are we talking about here?


Tim Latimer


Well, I'll say a couple of things on this. First off, are you a
hiker? Do you ever go hiking?


David Roberts


I've been hiking before.


Tim Latimer


Yeah. So if you ever go hiking and you can sometimes look, and if
you haven't looked closely at it, I encourage you to. Whenever
there's, like, an exposed rock outcrop there, a lot of times
you're going to see major fractures and faults just exposed in
that rock outcrop. And the thing that's fascinating about
geology, that's not just something that happens when that rock
outcrop is exposed at the surface. You go 10,000ft down, and rock
kind of looks the same way. There are these fractures and faults,
and it's complex, and there are major forces down there in a way
that can really just create these different shapes and fractures
and faults in the subsurface either naturally or through some
sort of design.


So it's something that happens all the time. And I don't know,
since you asked the question, I guess I'll keep going down the
engineering bent, which is when you look at actually how that
rock breaks, what we're actually talking about is what we call
tensile failure. So you're not actually crushing the rock right.
You're actually creating enough pressure that it pulls the rock
apart. And it's somewhat fascinating. Rock turns out to be
extraordinarily strong in compression. You can stand on it. You
can build pyramids out of it —


David Roberts


Right.


Tim Latimer


It's really strong that way. But then for a lot of rocks, you can
just pull them apart with your hands because they actually have
much less tensile strength, we call it.


And so what ends up happening in these systems is we can pump
water down, and water is an incompressible fluid, so it carries
pressure really well. So what we're doing in our designs and this
is what has been done in a lot of designs for a long time now in
the subsurface is we are picking very specific ports where we're
opening up our well to that outside geology and that geologic
reservoir and that rock and applying a lot of pressure right at
that specific point. And it's enough pressure that actually can
initiate these fractures, because, again, rocks are relatively
weak in tension, and that's what kind of allows this to work.


David Roberts


So you're taking natural fractures that are already there and
just widening them, or is it the case that you can literally
cause a fracture in a solid piece of rock?


Tim Latimer


You can cause a fracture in a solid piece of rock. And again,
this is a controlled system happening thousands of feet below.
And we know to great precision what the dimensions of this look
like. But, yeah, it's actually creating these new fractures that
go out of the injection wells and into the production wells that
create a new flow pathway that didn't exist before that allows
for the controlled movement of fluid between that injection well
and production well.


David Roberts


That is just wild to me that you can do that at all, much less at
like 10,000ft down. What is the technology that allows you to see
the structure of the rock 10,000ft down?


Tim Latimer


Well, we're doing all sorts of characterization work here. I
think, again, I sort of opened the conversation here by telling
you it's simple ideas that are difficult to execute. And
actually, the first tool in our toolkit to actually characterize
this rock is we can drill down with what's called core bits and
actually hollow out a sample of rock that's 10,000ft down and
pull it up and then go run a bunch of lab tests on it. So we're
doing that work regularly. And that's sort of how you kind of
create a baseline for this. Beyond that, we have all kinds of
different tools in our toolkit.


And a lot of this is stuff that, again, didn't exist ten plus
years ago or wasn't cost effective. That allows us to map out
what's actually happening in the subsurface. So to your point,
one of the challenges why it was so hard to drive innovation in
geothermal, even though, like I said, the first tests for this
were 50 years ago, was because you do the project, it wouldn't
work. And then you'd be sitting around with a bunch of messy data
and say, well, we know it didn't work, but we don't know why
because it's 10,000ft below you and it's difficult to see.


So we have tools that our predecessors didn't have access to. And
one of the things that we've invested heavily in and have a lot
of innovations around now is fiber optic sensing. So actually,
one of the things that we use in all of our projects that, again,
when we did this, in a lot of cases, it was the first time this
had been applied to geothermal. When we drill our wells, we
actually lay fiber optic cables along the entire length of the
wells. And we have a special data acquisition system where we
send laser pulses down that fiber optics.


And because there's impurities in all fiber optics, those laser
pulses get reflected back to the surface, and we can look at the
reflections there and basically map out what those reflections
look like in the fiber optics.


David Roberts


Wild.


Tim Latimer


Using that data, as we change things, we can get a very clear
picture of what's happening in the subsurface. So, like, if you
think back to your fifth grade science class, when stuff gets
hot, it expands, right? When stuff gets cool, it contracts. So if
we're trying to figure out, for example, how much fluid flow is
going down each of these ports that we've opened up into the
reservoir, we can actually look at the real time temperature
change, because along that fiber optics, if it cools off a little
bit, all those impurities get a little bit closer together.


And we can read that with our fiber optics and measure in real
time the temperature along the entire well. And from that
temperature we can figure out everything from how much flow is
going where, how much of that is getting over to the other wells
that we've drilled as our production and collection wells. We can
also map the fluid pathways that are going in between these
wells, even if it's hundreds of feet out into the rock. And this
is stuff that has given us a data set that allows us to actually
understand what's happening in geothermal reservoirs that goes
far beyond any sort of data we've ever had access to before.


David Roberts


And so that's what we're using to measure and verify.


It's super gratifying to learn that lasers are involved.


Tim Latimer


Of course.


David Roberts


That's always good news.


Tim Latimer


You can't do any great technology without lasers. So we've got
our lasers.


David Roberts


So the big breakthrough here is old enhanced geothermal. All
these previous attempts, basically you got one vertical well.
You're jamming water down it to create fractures. But you just
create fractures basically in a sort of circumference around the
bottom of the well, right? And the big breakthrough here is your
well goes down and then across laterally and so you have water
coming out of those lateral pipes at intervals, right? Like a
yard sprinkler is the diagram on your website. So you're creating
these fractures over a large swath of rock, basically. So you
just get more fractures out of your well is the long and short of
it?


Tim Latimer


Exactly. And so you think about what I said before. It's all
about drilling is expensive. How much flow, how much surface
area, how much volume can you get for each well that you drill.
And so in our industry nomenclature, the term we use is zones. So
every time there's fluid that's leaving that well and going from
one well to the next, we call that a flow zone. And just to give
a bit of history, I went to my first geothermal conference in
2015 and I'd started my career as a drilling engineer in the oil
and gas industry.


I became passionate about climate change. I saw that there was a
way to apply my skills as a drilling engineer to a carbon free
energy resource that really seemed like it needed some help. And
I talked to one of the leading researchers in the space and I was
captivated with this idea of multiple zones. And what drilling
horizontally allows you to do is put multiple zones in a well. So
in our pilot project, what we've done is drilled 8000ft straight
down and then we've turned perfectly horizontal, 90 degrees, and
we drilled another 4000ft over. And so rather than just having
one zone at the bottom of the well where we can choose to inject
fluid, that gives us just so much more length to spread that
fluid out.


And so when I was at this conference, I was talking to this
researcher, a very respected person, a career person, and he told
me that enhanced geothermal systems would never work. And I said,
well, of course not. You can't get the right design metrics you
need if you only have one flow zone, but I think there's an
opportunity to do multiple zones. And he said, oh, we've looked
at that too, and it doesn't work. And I was like, well, what did
you model? And he said, well, we've done some extreme cases,
we've even modeled up to three zones in one well.


And I looked at him confused, because if any of your listeners
are familiar with how modern oil and gas drilling works, that's
quite a bit different number. And I said, well, I was thinking a
lot more than three. And so whenever you think about those
specific targeted design flow ports that we open up and flow
fluid through in these reservoirs, these zones, in our very first
project that we just completed, we have 102 different flow zones.


David Roberts


So does that mean the water goes down and travels through all of
those on the way to the other well?


Tim Latimer


Exactly right. Exactly right. And what's nice about this is
because we have that fiber optic technology that I was talking
about, we can actually verify where that fluid flow is going and
show that we're getting good distribution across the entire
reservoir. So the reason we've had different results and a step
change in performance, and why we've made this commercially
viable when past efforts have not been successful, is rather than
thinking about can we go from one zone to three, we jumped
straight to the answer, which is 100 plus zones. And that gives
you a radically different result.


David Roberts


Yeah, well, this brings up one of my questions, which is, is
there a physical or practical limit to the length of your lateral
drilling? Like, you've got 4000ft now, and that gives you 102
zones. Could you do 8000ft and 200 zones? 16,000ft and whatever?
Is there a limit to the size of one of these things?


Tim Latimer


There is, at some point, a limit. It doesn't become
cost-effective to drill further, but we haven't come close to
hitting what that looks like yet. So just to give you an example,
we've just finished our first pilot project, and the intent of
that was really to prove that this all worked. So we wanted to
design something, even if it wasn't full scale. But every single
bit, every single unknown question, every unknown technology
assumption was proven out by this. But it doesn't mean we can't
make it bigger, right? So to make that concrete, this system, we
drilled right around 4000ft in the horizontal distance.


And we also spaced these wells about 400ft apart. And so you
think about the amount of power you can get out of the system
then is kind of bounded by that geometry. 4000ft long, 400ft
across. That's what you're flowing the fluid through. Just to
give an example of this and the flow test results that we've
gotten from this and this is what we're excited to announce that
this worked is we've gotten nearly the equivalent of 4 megawatts
of electricity out of this two well system, which is a really
great number. It starts talking about the success that this can
be at the utility scale because you can do many of these wells in
a single field.


David Roberts


You have one well going down, one well going up, and all these
fracture zones in between that the water passes through. I'm
assuming when you are building commercial power plants, is it
just going to be a one well down, one well up type of situation
or is there a limit to how many of those could you have? Multiple
down wells, multiple zones, multiple up wells, all in the same
area?


Tim Latimer


Absolutely. And that's what makes this so scalable and that's
what brings out the potential here. This was an N equals one
attempt. This was a first ever. We spent an enormous amount on
data acquisition. We made a lot of design choices to make sure we
were maximizing the learning from this and maximizing our chances
of success. The really exciting thing we've learned about this,
to get back to your original question about what are the limits,
our very next project that we're going to, we're going to do
larger diameter wells, we're going to space them farther apart
because we collected the data that shows that we can do that.


And then rather than 4000ft, we're going to drill 6000ft in the
horizontal direction. And so our next project, rather than
getting roughly 4 megawatts of electricity from each well system,
it's going to be about double that. And so that's sort of the
next move.


David Roberts


So just larger wells just get you more flow, right?


Tim Latimer


Exactly. And then the other thing that's great about this, and I
know your listeners also have been informed greatly about the
importance of modularity and repeatability.


David Roberts


That's our next thing.


Tim Latimer


So here's the key for this that's very important. If I want to
design now an 80 megawatt power system using this design, it
doesn't mean I have to throw the book out, start over from
scratch and design a completely different system. What I need to
do then is take this two well system that I already know works
and just do it ten times in a row. And so that's what's very
exciting about this breakthrough that we're announcing today.
This isn't something that like, oh, now we're going to go 100
times bigger. So we got to go back to the drawing board and
redesign everything.


For us, going 100 times bigger means doing exactly what we've
already done, but just 100 more units of it. And so this is the
whole key of the repeatability of making this work. And the next
site that we're moving to is going to be a 400 megawatt project,
which means drilling wells just like we just did, but just a lot
more of them. And in a very tight space, we can stack these
vertically on top of each other, we can put the wells close
together. And so another thing that people often care about when
they look at energy resources is the surface footprint.


David Roberts


What do I see if I go to Nevada? How big or small is your surface
footprint?


Tim Latimer


Well, what's left at the surface when you're done drilling these
wells is a well head that's a few feet tall and a couple of feet
wide. And that's it and it's actually quite an underwhelming
thing. I've taken many visitors out to our site and they expect
to see something dramatic. And —


David Roberts


Just the hole.


what you end up seeing is a piece of metal that could fit in your
living room. And so that's what's left. Now, of course, we have
to connect it to power plants, and the power plants look more
like they're warehouse-sized buildings.


Tim Latimer


But what's beautiful about the directional drilling that we're
using in these projects, another thing that you couldn't do with
traditional geothermals, you have to imagine the wells have to be
spaced a certain distance apart. And if you're drilling vertical
wells, that means if you want your wells to be 500ft apart at the
bottom of the hole, they have to be 500ft apart at the surface.
If you go visit a traditional geothermal site, oftentimes every
new well is a different well pad and it can be spread out over a
wide area. Now we're using directional drilling, we have tight
control over where we drill these wells.


So we can put many, many wells on the same well pad and just
drill them out in different directions using directional
drilling. And so geothermal already among all the energy
resources, typically scores top or near the top in terms of
energy output per unit of land used. And this is actually going
to be significantly better than traditional geothermal because we
can put many of these wells that once we're done, have a very
small surface footprint altogether on the same pad.


David Roberts


But do you need like, you're starting from that central well pad,
that's your injection wells, and you're going out 4000, 6000ft in
different directions. Do you have to own all that land that
you're going under? Because you'd have to at least own a lot of
land, even if you're not sort of like marking it?


Tim Latimer


Yeah, you do not have to own the land. The Geothermal Steam Act
of 1970 was passed and signed into law that created a new mineral
class for geothermal lease rights. And so what our company owns
is not the land itself, but we own the exclusive right to access
and develop the geothermal resources for this land. So what we
have is a really small surface footprint. And then the wells, as
they go, know, we negotiate with landowners. Which because a lot
of these resources are in the Western US, a lot of times the
landowner ends up being the US federal government.


David Roberts


Yeah, right.


Tim Latimer


We negotiate and sign contracts to specifically develop the
geothermal resources that are found thousands of feet below the
surface.


David Roberts


But if I'm on the land that that lateral well is going beneath,
I'm presumably unaffected. Like you can have buildings and farms
and whatever, 4000ft down presumably is not going to bother
anybody.


Tim Latimer


Absolutely. Some of the more interesting geothermal power plants
you can visit are in urban areas. You could do like a little
geothermal tour of Munich, for example, where they have all of
these geothermal power plants that also power district heating
systems that are plopped down right in the middle of the city of
Munich. And there's examples of that all around the world. The
stuff that's happening thousands of feet below our feet has no
discernible impact on the surface at all.


David Roberts


The big promise has been geothermal anywhere or geothermal
everywhere. You're going down 10,000ft to what, 300, 400 degrees,
you said?


Tim Latimer


Yeah, it's about 10,000ft. And the temperature we target is
roughly 400 degrees Fahrenheit.


David Roberts


So, is it the case that if I throw a rock at a map of the United
States anywhere I hit, if I go down 10,000ft, am I going to find
400 degree rock? In other words, could I build one of these
theoretically anywhere?


Tim Latimer


No, not anywhere. But for me, the key question is always not can
we do it anywhere, but can we do it in enough places that it
makes a difference? Right. And to use an oil and gas analogy, you
can't drill anywhere in the world and find oil. But that doesn't
mean that oil is not an important global commodity to the energy
system and geothermal is not any different. The key is can you
drill in places where it's economic to drill and you can access
the electric grid so you can sell your power to customers. And
there is an enormous amount of that in the United States.


David Roberts


So that's the limit. The limit is connection to the electrical
system. Like physically you could do it anywhere, you just can't
port the power out.


Tim Latimer


Yeah, well, there's wide variations in what we call geothermal
gradient. So, like where we're drilling our projects, you get to
400 degrees F at 8000ft or so. There's places that are a lot
cooler where you'd have to drill to 20,000ft to get to that
temperature. And so the question of how much you can develop is
really a cost question more than anything else. How deep can you
drill and for the right bang for your buck and get the
temperature you need? And so I'd say the exciting thing about the
Department of Energy launching their enhanced Geothermal
Earthshots Initiative recently and one of the first things that
they did was review the gradient maps of temperature at depth
throughout the United States and come up with a finer resolution
output of how much shallow potential there is.


And they used in this report and I think a really important
number was 4000 meters. And the reason 4000 meters is important
is that's a depth that the oil and gas industry drills today,
geothermal industry drills today, and we know we can do with
existing equipment. And the important thing out of this is, as
they looked over this resource, traditionally there'd been a few
tens of gigawatts of resource found that way, but with higher
resolution mapping. The new report out from NREL on the energy
Earthshots that just came out this year, which incorporated a lot
of these more advanced technologies into the assumptions,
identified an additional 230 gigawatts of potential just in the
United States that can be accessed with technology today.


And so we're talking about several hundred gigawatts of potential
that's in the right temperature range, that's at that 4000 meters
or shallower depth, that's ready to go, cost effective today.
That can be done. So can you do it anywhere? Not yet. Let us come
down the cost curve a little bit more.


David Roberts


If it follows the path of oil and gas. As you scale up, things
get cheaper —


Tim Latimer


Yes.


David Roberts


the technology gets better, the available resource grows.


Tim Latimer


Yeah. So the bet we're taking, you look at this NREL estimate, if
we only ever produce a few hundred gigawatts of power in the
United States, only get to the point where we're 20% to 30% of US
electricity, and that's it, it's probably still worth doing. But
I still think that as we get to economies of scale and come down
the cost learning curve, we're going to be able to go to even
deeper resources and make that work. So there's really no limit
to the technical potential of what can be done here.


David Roberts


Right. So another thing Volts listeners are familiar with is this
notion of a learning curve and this sort of famous graph. I
interviewed the authors of the paper on the pod. They have this
sort of famous graph about which technologies do and don't get on
learning curves, and sort of like, what are the features of a
technology that make it, that lend it to a learning curve. And
the sort of long and short of it was modularity, repeatability,
that kind of thing. You're doing the same thing over and over
again. And then sort of out on the edge you have these
technologies where every new project is bespoke, where you have
to sort of do custom engineering for each project.


In that paper, geothermal, by which I think they're referring to
traditional geothermal, they have out there on the no learning
curve side of this for that reason, because every new geothermal
project required specialized engineering and its own specialized
well drilling and etc., geothermal has not demonstrated much of a
learning curve. And so your whole thesis here, starting Fervo,
was to fix that, to figure out how to get geothermal on a
learning curve. So talk about that a little bit what that looks
like and what you need to do to make that happen.


Tim Latimer


Yeah, that's exactly right. And this is one of my favorite
papers, too. We share this paper internally for onboarding when
people join Fervo because we want people to know, what is it
you're doing? And the premise of this paper, and I thought it was
so well articulated, is that if you want to create an energy
technology revolution that actually scales to global scale, it
has to be simple and it has to be repeatable. And they used
multiple great examples in the paper. You look at their type one,
standardized simple resources are solar PV modules and LEDs.


And those are sort of self explanatory.


David Roberts


Everyone's the same. Every sort of mount is the same. Every field
almost is the same. You're just doing the same thing over and
over again.


Tim Latimer


Exactly. And if you want to have global impact, you have to
figure out how to make that happen. And so what's interesting
about this is that I think a lot of things are somewhat short
sighted, like how could we make this next unit cheaper? Which of
course is important. But if you're doing a bunch of complexity
and customization to do that, you're never going to scale the
resources. So let me use the oil and gas analogy again. A
conventional oil and gas basin, you drill into it, it has huge
flow rates, lots of hydrocarbons there, and just pumps out
gushers.


And it's a simple well. It's vertical. And that's what they were
drilling 100 years ago. But the challenge with that is that every
geologic trap looks different. Sometimes you find a good resource
and sometimes you don't. Oil and gas used to have dry holes. And
so you drill one area, you get a gusher, you drill the next. It
doesn't work. So you got to stop. You got to retool. You got to
remap, try again. You shut down, your crews go away, you lose all
the learnings. The next well looks radically different than the
one you did before, and it doesn't reduce cost.


And you think about a lot of the people who dismissed the shale
revolution when it first started out. They had this thought,
like, "Well, if this project isn't economic, drilling vertical
wells, how is drilling to the same depth and then drilling
horizontally for a really long way going to be economic?" Right.
You're just adding to it. But what people missed was that it
changed oil and gas exploration and drilling from a customized
complex problem to one that was standardized. And so in oil and
gas, because they can create their own permeability, they can
target basically what's called the source rock.


And so every well looks the same, one to the next. And the whole
reason the shale technology revolution took off wasn't because
those wells are cheaper. It doesn't take a drilling engineer to
understand that if you drill down and sideways, that's more
expensive than just drilling down, but it's because every well
could look the same and you could find these huge resources. And
so you start looking back ten years ago, all of a sudden these
companies would report out like, "We've got 4000 wells in our
inventory and every single one of them looks just like the last
one that they drilled."


And so it shifted oil and gas down to the bottom left. And you
look at what we're doing in geothermal and it's actually the
exact same pattern. Of course, if you find the next geysers or
the classic Iceland resource or something that's going to be
cheaper on a one-off unit basis than drilling these deeper wells
with more bells and whistles. But you're always chasing
something. You have dry hole risk. You drill something, you don't
find it, you got to shut down, you got to retool, you can't make
it modular and repeatable. So if you're able to create a well
design that's robust enough that it works in any geologic
setting, which is what we've done through the combination of
technologies that allow us to have highly productive wells
everywhere we go, we can shift geothermal down to one of those
resources that is standardized.


And that's the whole key. Because once one well looks just like
the last one, you can start bringing it down that learning curve,
which has been the most powerful force in driving global energy
technology revolutions across all of the ones we've experienced
in the last few years. And the key of what we're doing here is we
now have a geothermal well design that does for geothermal what
unconventional oil and gas did for oil and gas, which is make it
standardized and repeatable. And that puts this industry on a
learning curve that is not possible if you're just looking at the
conventional hydrothermal resources.


David Roberts


And you think you've got that now, so you've got something that
you're ready to just start cranking out copies of.


Tim Latimer


Basically exactly. When we started this company in 2017, we faced
an enormous amount of skepticism from the traditional geothermal
community and everybody else. We were told that you can't
actually drill horizontal wells in geothermal reservoirs because
the rock is different. You can't use fiber optics in these wells
because the temperatures are too high. There was a whole list of
things that we needed to prove out because in order to get on a
learning curve, you have to be able to do the first unit right.
And that first unit becomes the basis at which you drive cost
down and you drive performance and you improve from.


And so what we set out with our commercial pilot project that
we've now finished, is to prove all those things that you can
drill horizontally, that you can get enough surface area, that
you can evenly distribute the flow across thousands of feet, even
if it's 8000ft down. And what's fantastic about this is we now
have all of the data to prove that works and have done it in a
commercial project. And so we've now started a new learning curve
for enhanced geothermal with the first project.


David Roberts


Right. Like the starting gun.


Tim Latimer


The starting gun. And we're going to do that over and over and
over again to bring more clean power onto the grid, more reliable
power onto the grid. And with each iteration we're going to bring
the unit cost down.


David Roberts


The beginning of a new learning curve stirs the heart.


Tim Latimer


I think this is the right audience for it. It definitely gets me
excited, but I don't find other people maybe than other volts
listeners that will share the same thrill that we do at Fervo
about the beginning of a new learning curve.


David Roberts


This is awesome. And this is know. Here we are, an hour in. This
is the significance now of what you've done. So you've put all
these pieces together into a well, into a commercial sized well
and they work now.


Tim Latimer


Yes.


David Roberts


So now you are ready to start basically cranking out power
plants, commercial power plants, the very first enhanced
geothermal working, money making power plants.


Tim Latimer


Yes.


David Roberts


So let's talk then briefly about costs. This is everybody's first
question, sort of like how much does the power cost coming out of
this? And this is not a straightforward question, so first let's
just talk about just briefly — I think this is also something
most Volts listeners will be familiar with, but it couldn't hurt
to do a very brief primer on — just what is clean, firm power?
Why is it valuable? How are you doing it? Why do you think it's
going to be so — you're not just like power is not a commodity
where it's always worth the same in all places at all times.


Right. So there are timing issues, there are geographical issues,
and there's this thought of the future power system which is
based around it's going to be primarily based around wind and
solar, which are both variable. You need something to complement
that. So just say a little bit about what that means and why you
think you're going to sort of fit in and profit in that niche.


Tim Latimer


Yeah. The path to a decarbonized grid has been a multistep
journey. And if you reflect back 15 years ago when the first ever
RPS targets were announced and corporate 100% renewable energy
procurement targets were announced, there was a lot of skepticism
that any renewable energy could get built. Wind was still
relatively expensive, solar was very expensive. If you go back to
2000s and so the sort of this first step on the decarbonization
journey was just the massive successes of getting wind and solar
cheap enough that they were economically viable to deploy. And we
saw in the 2010s what the impact of those coming down the
learning curve were.


As now, solar is this unbelievably fast growing resource all
around the world. Now, depending on what model you believe of.
Course, at some point the fact that those are variable energy
resources and obviously solar only works when the sun is shining
limits how much more can be produced. And so sort of the next
pillar of decarbonizing the grid and the next energy technology
revolution that we're all now quite familiar with was the massive
reduction in cost of lithium-ion battery storage. And I think
there was a lot of exuberance in the mid-2010s to late-2010s,
that "Great. Energy solved, solar is cheap, batteries are coming,
we did it."


And I think in hindsight that was clearly a little bit premature.
There were a couple vocal but not necessarily listened to voices
out there in the 2010s waving their hands and saying, "Y'all,
this is great, we're going to get a good way there. But we need
at least one more thing to make this work." Because as it turns
out, and you can look at some of our favorites, are the NREL
LA100 study, which is wonderful. Your listeners are probably very
familiar with Jesse Jenkins and the Princeton Net-Zero America
work.


And what we see again and again is that even with ultra-cheap
solar, even with ultra-cheap lithium-ion battery storage, even
with ultra-cheap wind, if that's just what you're dealing with,
you do see this inflection point where costs to decarbonize go up
exponentially as you get beyond the, pick your model, 60% or 80%
electricity coming from carbon-free resources. So what we know is
we need at least one more thing. And this is where the whole
concept of clean, firm power has come about, which is solar and
wind are probably going to be the majority of the electricity
supply on future decarbonized grids. Batteries are going to help
extend how much of the market share solar and wind can take.


But we're going to need something if we really want to get that
last 20% done. And I think the big change in the last few years
is a few years ago, people viewed this as the purview of
academics to debate about because it seemed like a problem that
was 20 years in the future.


David Roberts


When you get to 80%, right?


Tim Latimer


Yeah. And I think what we've seen here is it's not that clean the
world doesn't work the way that models do. It's not like there's
some magic day where you wake up and renewable energy is now
80.1% and you're like "Oh no, we need something else." It turns
out some of the growing pains of getting to that system emerge
far before the 80% level. So I opened up this discussion talking
about how the market and the tech and the policy have to be all
there together. Well, there were some major changes around 2020
in the policy- and market-world of this.


The first is that because of the success in wind and solar, all
of a sudden people said, "Wow, we can maybe actually do this
decarbonization thing." And the most ambitious RPS target in the
country renewable portfolio standard was California's 33% target
in the 2010s, and Hawaii was the first to beat them to it. And
Hawaii, going back five years ago, passed the first ever 100%
clean energy standard. And then California, not to be outdone,
passed SB100. And now we've seen dozens of states follow suit
where we've upped our ambition. And so now this isn't a question
of like, "Oh, we'll cross that bridge when we come to it."


It's like, "Okay, we're ready for the next step. How do we get
there?"


David Roberts


Firm just means it's there when you need it.


Tim Latimer


It's there when you need it.


David Roberts


You can turn it on and off at will, which you cannot do to wind
and sun, obviously. And you can do that, obviously, with natural
gas. Natural gas is basically what's playing that role now. It's
just missing out on the clean part.


Tim Latimer


And there's an important distinction here between the term firm
and the term baseload. Sometimes they're used interchangeably,
but they're really not interchangeable. Firm is an attribute of
the energy resource. It's there when you need it, but it doesn't
necessarily have to always be there. Baseload is a way of
operating the resources. Baseload is it's on all the time. Those
are two different concepts. Most baseload resources are firm
resources, but it's all about how you operate them. So when you
look at the solution set of what keeps the lights on in those
troubling hours where we don't necessarily have enough variable
renewable energy solution, you're looking at a few things.


Coal and natural gas are the traditional resources that have
played that role, but both of them come with carbon emissions. So
if your idea is to decarbonize ,your solution set then becomes
nuclear in all of its various forms, whether it's conventional or
small module reactor, fusion. Or you're talking about hydro,
which has its own geographic limitations and challenges. Or
you're talking about a breakthrough in cost for long duration
energy storage that goes far beyond the four-hour lithium-ion
battery storage that we're talking about today. Or we're talking
about coupling CCS onto natural gas or coal plants.


David Roberts


Yes. If you look at decarbonization models these days and dig in
a little bit, there's tons of that. There's tons of natural gas
with CCS attached playing that clean, firm role, which is like,
I've always even before there were technological options, I've
always thought, that's not going to be it. There's no way that's
going to be it. And now I'm so gratified that other alternatives
are coming along.


Tim Latimer


Yeah. And I think the role we see ourselves playing on the grid
is when you look at that last 20%, which I do think that most
people who think deeply about grid decarbonization say that it's
there. Now the arguments aren't, "Do we solve that problem or
not? Or is it a now problem?" It's "Okay is it actually 20% or is
it 10 if we get cheaper on storage? Or is it actually 40?"
Because all of these models made really rosy assumptions about
transmission build out and we need even more firm power.


David Roberts


Or too many nimbies.


Tim Latimer


Or too many nimbies, you name it.


But there's a recognition that there needs to be a role on the
grid for clean, firm power. And historically, geothermal has not
been included in that conversation. And broadly because people
didn't believe that it was a resource that could be widely
deployable and they also didn't believe that it was a resource
that could get on a learning curve and get cheaper. And I think
that's what we have now begun to push back on, and we've now got
the data to prove it out, that this is a resource that is more
widely deployable than people thought, and the costs are coming
down. And it's a resource that has the characteristics to get on
a learning curve.


So if we invest in it today, it's going to be much cheaper in the
medium to long term future. And so we're excited about our
results. Some of our results have already worked their way into
the most recent NREL annual technology baseline, which is what a
lot of people use to sort of discern what might the grid look
like in the near future under different scenarios.


David Roberts


So maybe the next round of models might look a little different.


Tim Latimer


I can tell you the current aggressive cost cases for the NREL
annual technology baseline for enhanced geothermal systems are
much better and much more cost-effective than anything that's
come before. And that's been really a combination of us
publishing our results and making sure that those get out into
the public domain, but also want to recognize the Department of
Energy's leadership efforts on that. Utah Forge, which is a test
bed in central Utah where they're testing a lot of these
techniques, broke all kinds of drilling records on the various
updates for their projects. So we're coming out of this great
stagnation period of geothermal where there was really no new
data for like ten years.


So the NREL ATB used to model geothermal costs as if drilling
technology had been stagnant for 20 years, which, when you look
at the oil and gas industry that's a silly assumption, but if
there's no geothermal data to update it, that has to be what you
assume. The beautiful thing now is between Utah forge projects,
our projects, and other efforts around the industry, we've got
the data now to say it's time to get way more ambitious on these
cost reduction curves for geothermal.


David Roberts


And this is so, I mean, just from a personal point of view, this
was like the last piece of the decarbonized electricity system,
and all the sort of extant possible solutions were sort of like
slightly hold your nose. I don't want to get into how people feel
about small nukes or whatever, but all of them were vaguely
problematic in some way or another. This is like the first clean
firm solution that is free of footnotes or caveats or skeletons
in the closet. This is like a bona fide renewable clean firm. So
the last thing I want to touch on which gets into this so
traditionally geothermal has been thought of as a baseload
resource.


I.e., thought of as a clean firm resource that would be run all
the time and run at a steady state all the time, which is useful.
Baseload power is extremely useful, especially when it's clean
and there's plenty of runway there. But even more useful would be
flexible clean firm power. I.e., clean firm power that can ramp
up and ramp down or store energy for a while and then release it.
So flexibility is huge and Volts listeners will recall my podcast
with Wilson Ricks last year about evidence that these new
enhanced geothermal wells could be used flexibly.


So maybe just talk a little bit about what it would mean to run a
well like yours flexibly, what you could do, and how close is
that to being a reality?


Tim Latimer


Absolutely. So a couple of comments on this: One is geothermal
historically has been run in a baseload fashion because baseload
power historically has had value. There's been very few hours on
a traditional grid of negative priced electricity. So if you've
got a resource with no marginal cost, you're going to run it. And
that's still the case as we're talking right now in July 2023
that that has value and you can see evidence of that. For
example, one of the big things that really boosted the market
demand for geothermal was in response to the rolling blackouts
that occurred in California in August of 2020, the California
public utility commission issued what they'd called their
"midterm reliability ruling" that required a lot of capacity that
is leading to a massive build out in battery storage on the grid.


But there was already this recognition in the state of California
that we have to be thinking about that next step. So they carved
out what they'd call "long lead time resources" and created a
1000 megawatt procurement mandate for clean firm power to help
keep the lights on in California while still achieving their
decarbonization goals.


David Roberts


Is that the first specifically clean firm requirement that you're
aware of in the country?


Tim Latimer


It's the first one that we're aware of and it made a huge
difference in catalyzing the modern iteration of the geothermal
market. And so a lot of the power purchase agreements we've
signed have been in response to this forward looking mandate that
California issued on this topic. And so there's a recognition
that in 2023 and throughout the rest of this decade getting any
kind of power, baseload or not, as long as it's firm, is going to
add value to the grid and help achieve the decarbonization
reliability goals of our customers. But we also wanted to sort of
skate where the puck was going.


The grid is always changing. There's a few negative hours a year
if you're in like Oklahoma or west Texas with wind, or in
California on a spring day with sun. But every single model shows
that there's going to be a lot more of those in the future. And
the attribute that everybody's going to value going forward is
going to be flexibility and dispatchability. So while we're
signing these power purchase agreements and selling round the
clock 24/7 carbon free power to our customers, we've hatched an
idea of working on a more flexible resource for the future as
well.


And so if you think about geothermal, it actually can operate
flexibly with no issues. And in fact, it makes sense if you think
about countries like Kenya or Iceland or the Big Island in Hawaii
that get such a high percentage of their geothermal power that by
definition, it has to ramp up and down because it's a huge part
of the grid. And so geothermal is ramped up and down for forever.
There's no technological limitation in making it happen. But the
thing that we became really interested in is because we're
operating in different reservoirs than traditional geothermal,
and because we're able to kind of create these closed, isolated
systems, we thought, "Well, what about rather than just ramping
down production. What happens if we shut in production while we
continue to run our injection wells and build pressure in the
reservoir?


David Roberts


So like, when you talk about, like, Iceland traditional
geothermal well running flexibly, you just mean it can ramp down
by injecting water at a lower rate?


Tim Latimer


Right. Or by continuing to produce the well field, but then just
bypassing the power plant so that you're not producing extra
electricity with that fluid flow.


David Roberts


Right. So there's a ceiling, a max flow rate that you can do on a
sort of baseload way, or you can go down from there.


Tim Latimer


Right.


David Roberts


And so your innovation is don't pump less water down, just
literally put a cap on the other well where things come out. So
water's still going down, but it's not coming out, which means
pressure is building.


Tim Latimer


Yes. And so this is something where we found in the Princeton
Research Group and Jesse Jenkins and Wilson Rick, who you had on
the podcast, some like minded folks who shared our views on what
was going to be very valuable for decarbonizing the grid of the
future. And we applied and got first an NSF grant and then later
an RPE grant to actually test this in the field. And if you
remember, because we've collaborated with Princeton and Wilson
for a while on this, we thought about joining Wilson on the
podcast when you discussed this last year.


But what I knew at the time was that rather than talking about
our modeling results, if we just waited a few more months, I
could come out and tell you about real results and so we wanted
to hold off on it. And the great thing about this, and I would
encourage folks who are interested in this topic, Wilson did a
wonderful job articulating the value to the grid and how this
would work on the Volts podcast last year. But what's nice now is
we've actually collected the data to prove that this works. So
thanks in part to the RPE funding we got during our test phase of
this project, we tested for traditional industry standard time to
prove that under conventional operating conditions, this was an
effective and viable way of producing geothermal power.


We were very excited about the positive results there, but then
we took and extended an extra time to do cycles of what we call
Fervo flex, which is this idea of doing in reservoir energy
storage.


David Roberts


Right, because if you're capping the well coming out and you're
still pumping water in and pressure is building, you are
effectively storing energy underground.


Tim Latimer


Exactly. And so the idea here is we have a geothermal power plant
that by itself is very valuable because it could produce 24/7
carbon free electricity. But then as we get to grids that have
ever increasing levels of, in our case in the western US, mostly
solar built out, we could operate it in a mode where we actually
continue to inject into the reservoir throughout the daytime
without producing any new electricity, taking power and using
that to run our pumps to build pressure in the reservoir. And
then when the sun starts to set and we're dealing with these
challenging evening ramp conditions where you've got to add tens
of gigawatts of power —


David Roberts


The neck of the duck.


Tim Latimer


The neck of the duck. We can open the wells up. And that pressure
that we've stored throughout the day means that we're still
getting geothermal fluid flow out, but it's coming out at a
faster flow rate and temperature than just our steady state
conditions. And so we can be responsive to the neck of the duck
in a really powerful way. And so, to be clear, this was a shorter
test than sort of the industry standard test that we ran on the
geothermal round-the-clock production methods that we're very
confident in now. But it's great to run a model and then get out
there in the field and deal with the tens of thousands of feet
and all the real-world conditions and have the field production
results match the model perfectly, which they did.


And we have an enormous amount of optimism about how not just
24/7 carbon-free power from geothermal, but also incorporating a
flexible energy storage mechanism into the output profile here is
just going to further unlock potential for geothermal.


David Roberts


Yeah, and then you have clean, firm and energy storage in the
same package. A true Swiss Army knife for the modern grid.


Tim Latimer


Exactly.


David Roberts


And so we know that's possible. That's not something you're ready
to do in a commercial setting yet. Do you have any timeline on
that or any idea like when that might be a reality?


Tim Latimer


Yeah, the power purchase agreements that we're signing up with
folks right now, again, the grid still needs baseload power right
now, and it's an urgent crisis. In fact, I was just reviewing the
Electricity Reliability Council's report for their five-year
outlook on grid reliability. And I don't want to scare everybody,
but it's hard to look at it and not get scared. They break it up
by grid ISO and they have an okay color and then a yellow color
and a red color. The yellow color is under extreme weather
conditions. This grid is going to struggle to meet demand in
2027.


The red color is under normal average daily operating conditions.
This grid is going to struggle to meet demand in 2027. And it's a
little bit scary how much yellow and red there is on that chart.
So the world still needs reliable power and it needs it fast,
especially if we're going to continue this decarbonization
journey, which we must. And so the products we're building for
the next two to three years, at least, the utility scale products
we're building are going to operate that way because that's what
the grid needs. But we have continued R&D scope that as we're
building out these geothermal power plants, we're going to do
longer and longer test cycles of the Fervo flux methodology.


So that the power plants that we build by the end of the decade
are all going to have that proven out and built in as a feature
of the way we operate geothermal plants of the future.


David Roberts


So the plants you're building, even if they don't run that way,
will be ready to run that way when it's proven out.


Tim Latimer


Yes.


David Roberts


That's an interesting proposition for a buyer, I would think,
sort of like, here's the price and the value you now want and
need. And here's a little hidden bonus. It might someday become
even more valuable.


Tim Latimer


That's right. And I don't mean to draw too big of a distinction
between what we've proven already versus what we're trying to
prove now. The catch on this is, as you know, and probably have
had many guests on the show, people who buy utility scale power
don't like risk and they don't like the words "new stuff". And so
we're very clear to market this is the proven thing and we can
bring it to you in the next two to three years, and it has
enormous value for your decarbonization goals and your
reliability goals. Also. We've got a nice topper to that that's
less proven, but it could be out there.


And so it is interesting, as much as power buyers want that,
though, it's incredible whenever you're actually building a
business, how important it is to bifurcate. Here's the proven
thing versus the stuff we're really excited about, but it's going
to be a new feature that we're able to add as we scale and get to
market.


David Roberts


Especially in a very conservative market, conservative industry.
I have kept you too long, but this is all super cool. So enhanced
geothermal, no longer a gleam in our collective eye, is now a
real thing, ready to commercially produce power. So what's next
for Fervo? Is it just, I mean, do you feel let's check in on your
feelings here, Tim. Do you feel like you've kind of crested a
summit here and you're ready to just like "Hell, yes. Let's just
start building power plants and making some money." Do you feel
like you sort of completed a phase here and the next phase is
going to be a little easier? Or is it just all challenges forever
in this industry?


Tim Latimer


There's a reason why people talk about R&D as distinct from
deployment. We've crossed the chasm now where what we're doing
is, it's not you know, low technology readiness level. It's not
unproven. And the work and I can tell you, I've worked on this
for over a decade now. We founded Fervo six years ago. I worked
on it in a research capacity for years before that. So to see
steam coming out of the ground because of the thing we drew up on
a napkin nearly a decade ago has been just a phenomenal
experience for me personally and the whole team at Fervo.


We took a moment to celebrate. But then you realize that
deployment isn't easier than R&D. Deployment is just a
different set of challenges. So we've had a moment now where it
is "How do we do this all again and again?" And that comes down
to how can we standardize, how can we bring it down, the cost
structure, how can we get the right interconnection position and
transmission policy that supports this?


David Roberts


Yeah, now you're getting to really old school industrial
problems, right? Like, how do we make our process efficient and
all that kind of stuff.


Tim Latimer


So what we've done is we've built a new system that is creating
electricity in a way that has been hypothesized for 50 years but
never done before. But we've just done it once and doing it a
second time and a third time and then 500 more times because
that's what it takes to move the needle on global carbon
emissions. It's not any easier, it's just different.


David Roberts


But you've got contracts now. You are officially a GENCO. A power
producing company no longer a mascot for geothermal research.
You're a producing company now and you've got enough contracts to
keep you busy.


Tim Latimer


That's right. We've got power purchase agreements lined up from
now through 2028. That's going to keep us drilling and drilling
for some time to come. And we've got the production test results
behind us now where we can say with confidence this works. So we
are a developer. We're developing a new kind of energy that has
been hypothesized, but not part of the grid mix to date. And
we're now trying to do it as fast as we responsibly can, because
that's the only way to make a difference on the grid.


David Roberts


So exciting. These are exciting times. Well, thank you so much
for coming on. Congratulations for working on something for ten
years and then having it work out. That's not everybody's story.
So it's really amazing what you've done. And congratulations.


Tim Latimer


Thank you.


David Roberts


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