Next-generation geothermal startup Sage Geosystems announced today that it has raised a more than $97 million Series B round to deploy its first commercial-scale power generation project, expected to come online in the Western U.S. sometime this year.
The raise stems from a commercial partnership Sage signed with conventional geothermal giant Ormat Technologies midway through last year. As part of that deal, Ormat, which is one of the investors in this latest round, is licensing Sage’s “pressure geothermal” technology, and Sage is building a plant at one of Ormat’s existing power stations.
It’s a partnership that catapults Sage toward the front of the pack of advanced geothermal companies racing to meet data center demand, by fast-tracking its commercialization plans. The Ormat project will be online roughly two years ahead of Sage’s prior roadmap, putting the company in commercial deployment at a moment where load growth and speed to power demands have made the market particularly receptive to new geothermal.
Ormat experimented with fracking in the early 2000s in an effort to get more heat out of its Geysers project in Northern California. That project is the largest geothermal power plant in the world, but was experiencing decreasing temperatures in its underground reservoir, hence Ormat’s experiments with fracking. Those early efforts didn’t go very far, but now the giant is getting back into electricity generation, with an assist from Sage.
Sage’s approach leverages off-the-shelf oil and gas technologies to drill deep wells to reach hot, dry rock, creating artificial fissures that they fill with water. Rather than just letting steam rise, like traditional geothermal, Sage keeps the closed-loop system under high pressure until it reaches the surface. For its first commercial project with Ormat, Sage plans to add a new supply to an existing power plant by digging deeper into the rock below the reservoirs that Ormat previously tapped; the two are building an entirely new well to expand the facility and extract previously untapped heat.
But the company has also been deploying its tech for a secondary, long-duration storage business: Sage uses curtailed renewable energy to inject water into fractures that operate as storage tanks until the well is opened, and that water flows through a turbine to produce electricity.
Mutually beneficial
Heading into the Ormat deal, Sage already had technical validation and a marquee offtaker in the form of Meta, which committed to purchasing up to 150 megawatts of power from Sage for its data centers by 2027.
The Meta deal didn’t come with upfront capital, however, and Sage didn’t have any operating history at commercial scale. Inking the deal with Ormat last summer gave Sage a huge boost, and opened up funding opportunities. As Yakov Feygin, a researcher at the Center for Public Enterprise, told Latitude Media at the time, the deal was “a really good thing to take to a loan committee.” In other words, the Ormat partnership could help Sage attract investment for the very power stations that will generate electricity for Meta.
Even before the Ormat deal, Sage was already considered one of the top players in the (relatively small) advanced geothermal sector, alongside companies like Fervo, XGS, Eavor, and Quaise. But in terms of cash raised, the company still has catch-up to do when compared with competitors like Fervo Energy; Fervo has raised approximately $1.6 billion through its Series E, compared with Sage’s total of over $114 million.
But Sage’s position is somewhat unique. While Fervo is essentially an infrastructure developer, building massive, extremely expensive greenfield projects, Sage’s brownfield approach is more capital-light. By partnering with Ormat, Sage is proving its commercial viability with significantly less equity than its peers, thanks to the fact that it can utilize existing grid connections, permits, and surface infrastructure.
As Sage CEO Cindy Taff put it to Latitude last year, that commercial project is critical to Sage’s plans for “getting the technology built, stewarding the technology, then building it at scale so we’re able to show everybody how it works and where it’s applicable and how powerful it can be.”
