WEBVTT - Tim Latimer on Solving the Financing Problem for Geothermal 0:00:02.600 --> 0:00:14.000 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.560 --> 0:00:22.480 Hello and welcome to another episode of the Odd Lots podcast. 0:00:22.560 --> 0:00:24.960 I'm Jill Wisenthal and I'm Tracy Alloway. 0:00:25.320 --> 0:00:27.600 Tracy, we were recently down in Washington, d C. 0:00:28.080 --> 0:00:30.400 I know, I really like DC. It has sort of 0:00:30.480 --> 0:00:33.720 like old school vibe. Yeah, I have power lunches. 0:00:33.920 --> 0:00:36.159 I like it. It seems like a good city for 0:00:36.240 --> 0:00:39.960 power lunches. It's also did you know, not to sidetrack 0:00:40.000 --> 0:00:44.640 too much. Basically all the big fast casual innovation is 0:00:44.680 --> 0:00:47.480 from DC as far as I can tell, so Sweet Green, 0:00:47.720 --> 0:00:50.720 I think we've founded Kava. We talked to one of 0:00:50.720 --> 0:00:54.120 the Both of those companies are from DC. And I'm 0:00:54.200 --> 0:00:56.600 not gonna lie. When I think of this sort of 0:00:56.680 --> 0:01:00.200 modal worker in DC, I think of someone who who 0:01:00.200 --> 0:01:02.600 eats a lot of like fast casual lunches. 0:01:02.280 --> 0:01:05.240 At their desk. Yes, okay, which is no judgment. 0:01:04.920 --> 0:01:06.959 Because that's how I eat my lunch. So I just 0:01:06.959 --> 0:01:10.200 want to make that clear. That's not a judgment done anyone, right, But. 0:01:10.400 --> 0:01:13.840 We are not actually here to talk about casual dining 0:01:13.959 --> 0:01:18.200 and takeout lunches. We were in DC for a very 0:01:18.240 --> 0:01:21.600 particular event, something very special. We were over at the 0:01:21.640 --> 0:01:25.160 Department of Energies Deploy twenty four conference. 0:01:25.480 --> 0:01:28.360 That's right, So regular listeners will have heard we've done 0:01:28.440 --> 0:01:31.040 multiple episodes in the past with the Jigger Shaw, who 0:01:31.080 --> 0:01:34.240 is the head of the Loan Programs Office at the DOE, 0:01:34.680 --> 0:01:37.000 who was the LPO part of the DOE that put 0:01:37.040 --> 0:01:40.080 on this conference. And of course the big theme that 0:01:40.240 --> 0:01:42.559 you know when you think about the Loan Program's Office 0:01:42.640 --> 0:01:44.720 is this impulse to figure out a way to solve 0:01:44.800 --> 0:01:48.600 the financing problem for early stage energy in which there's 0:01:48.640 --> 0:01:52.640 some sort of proven technology out there, but the funding ecosystem, 0:01:52.720 --> 0:01:56.800 for various reasons on familiarity, risk, et cetera, doesn't exist, 0:01:57.280 --> 0:01:59.480 and so a lot of the conversations are like, how 0:01:59.480 --> 0:02:02.600 do you solve that chicken and egg problem in energy finance? 0:02:02.760 --> 0:02:06.400 Absolutely, and we do, indeed have the perfect guest. We 0:02:06.480 --> 0:02:10.360 spoke with Tim Latimer, the CEO of Fervo Energy, which 0:02:10.400 --> 0:02:14.399 is that big geothermal startup that is doing some interesting 0:02:14.440 --> 0:02:17.160 things with fracking technology. So take a listen. 0:02:17.680 --> 0:02:21.000 Hello, and welcome to a live episode of the Odd 0:02:21.000 --> 0:02:24.760 Loss Podcast. I'm Jill Wisenthal and I'm Tracy Alloway, and 0:02:24.800 --> 0:02:28.200 we are joined here by Tim Latimer, co founder CEO 0:02:28.320 --> 0:02:31.399 of Fervo Energy, advanced geothermal? 0:02:31.560 --> 0:02:32.239 What is that? 0:02:32.880 --> 0:02:36.920 And when we think about America's energy mix or America's 0:02:37.040 --> 0:02:40.760 energy portfolio, how big can advance geothermal be? 0:02:41.480 --> 0:02:41.960 Very big? 0:02:42.560 --> 0:02:44.800 That's the short answer. So, first off, great to be 0:02:44.840 --> 0:02:47.280 with y'all. I'm a regular Odd Lots listener, so it's 0:02:47.320 --> 0:02:50.320 a treat to be with y'all. Geothermal. What is geothermal 0:02:50.360 --> 0:02:51.640 and what is advanced geothermal? 0:02:51.680 --> 0:02:52.440 It's a great question. 0:02:52.560 --> 0:02:56.320 So geothermal isn't new, and even power generation from geothermal 0:02:56.480 --> 0:02:59.280 isn't new. The first power plant for geothermal came online 0:02:59.760 --> 0:03:02.040 at over one hundred years ago in Italy, so it's 0:03:02.080 --> 0:03:05.799 been something that's been around for a long time. But historically, 0:03:06.320 --> 0:03:08.280 even though it has really everything you want in an 0:03:08.360 --> 0:03:11.880 energy resource, it's carbon free, low environmental footprint, it works 0:03:11.919 --> 0:03:14.760 twenty four to seven, it's been very limited to very 0:03:14.800 --> 0:03:19.120 specific geologies. So up until very recently, the story of 0:03:19.160 --> 0:03:22.360 geothermal is you either have the geology of Iceland where 0:03:22.480 --> 0:03:24.360 steam is literally coming out of the ground, or certain 0:03:24.400 --> 0:03:27.359 hot spots like northern California or New Zealand, or you 0:03:27.400 --> 0:03:29.040 don't have geothermal, And those were kind of the only 0:03:29.080 --> 0:03:31.600 two options. So those places blessed with it had a 0:03:31.600 --> 0:03:36.120 great energy resource, but it certainly wasn't widespread. Advanced geothermal 0:03:36.240 --> 0:03:39.520 or enhanced geothermal systems is really the whole concept that 0:03:39.560 --> 0:03:42.040 you could use new technology to go to deeper resources 0:03:42.440 --> 0:03:44.680 or in permeable rock where the hot water the steam 0:03:44.680 --> 0:03:47.400 wouldn't flow on its own, and still make geothermal work. 0:03:47.560 --> 0:03:51.080 And so in enhanced geothermal systems oftentimes you're going deeper. 0:03:51.720 --> 0:03:54.720 In many cases you're doing something to create permeability in 0:03:54.760 --> 0:03:57.440 the reservoir so it can work in more places. And 0:03:57.560 --> 0:03:59.600 the key there is you get all the positive attributes 0:03:59.640 --> 0:04:02.040 of geotl thermal, but you're not limited as doing it 0:04:02.080 --> 0:04:05.080 in places like Island's geology, So the opportunity is huge. 0:04:05.320 --> 0:04:08.120 In the US today geothermal only accounts for about three 0:04:08.160 --> 0:04:10.680 gigawatts of power, so lead less than one percent of 0:04:10.720 --> 0:04:13.880 the US electric grid, but the resource potential is massive. 0:04:13.960 --> 0:04:15.800 You know, we just worked on a paper that was 0:04:15.800 --> 0:04:18.719 published as a collaboration with Princeton that actually showed pathways 0:04:18.760 --> 0:04:21.279 to get up to seven hundred and fifty gigawatts of 0:04:21.320 --> 0:04:24.279 geothermal power by mid century. So if we unlock it 0:04:24.279 --> 0:04:26.520 with the right technology, this could be an enormous resource. 0:04:27.120 --> 0:04:31.760 So you're a fracking guy. What's the technological overlap between 0:04:31.880 --> 0:04:34.720 fracking for oil and gas in like the Permian Basin 0:04:34.839 --> 0:04:38.719 or somewhere like that, versus doing fracking for geothermal in 0:04:38.960 --> 0:04:41.680 Utah or something like that. And I have to admit here, 0:04:41.760 --> 0:04:45.360 my only knowledge of drilling comes from like Bruce Willis 0:04:45.400 --> 0:04:48.600 and Armageddon, which I assume was an accurate depiction of 0:04:48.640 --> 0:04:49.279 the industry. 0:04:49.320 --> 0:04:51.680 But you tell me that's right, yeah, Armageddon. 0:04:51.720 --> 0:04:53.680 Actually I thought it was a documentary the first time 0:04:53.720 --> 0:04:56.039 I saw it, Oky, And you're right. I actually started 0:04:56.040 --> 0:04:58.560 my career as a drilling engineer in the oil and 0:04:58.560 --> 0:05:01.719 gas industry. And there's a lot of technology overlap between 0:05:01.720 --> 0:05:04.719 oil and gas and geothermal, and that's why the shale 0:05:04.760 --> 0:05:07.599 revolution and all the technological development that's happened as a 0:05:07.600 --> 0:05:10.120 result of that has had spillover effects that have moved 0:05:10.120 --> 0:05:12.440 the needle on geothermal technology. But there's also a lot 0:05:12.480 --> 0:05:15.800 that's different. And actually the origins of FERVO. I got 0:05:15.800 --> 0:05:17.640 the ideas for this when I was drilling in the 0:05:17.640 --> 0:05:20.320 Eagle for shale in South Texas, and the Eagle Ferd 0:05:20.839 --> 0:05:22.560 had been a resource that people had known about for 0:05:22.600 --> 0:05:25.359 over one hundred years, but it lacked the permeability to 0:05:25.400 --> 0:05:28.800 produce economic quantities of oil, and so it was ignored 0:05:28.880 --> 0:05:31.440 really until the late two thousands. And really it was 0:05:31.480 --> 0:05:34.200 the process of horizontal drilling where you could drill deep 0:05:34.320 --> 0:05:37.440 and then horizontally across the shale layer and the hydraulic 0:05:37.440 --> 0:05:40.479 fracturing process to create permeability that allowed those wells to 0:05:40.520 --> 0:05:43.280 be economic and kind of launched the shale boom. And 0:05:44.000 --> 0:05:45.279 I was looking at what I was doing in my 0:05:45.320 --> 0:05:47.800 career as a drilling engineer there and I learned what 0:05:47.839 --> 0:05:50.200 geothermal was at the time, and I got really excited 0:05:50.240 --> 0:05:53.360 because I realized that the technological gap of getting high 0:05:53.360 --> 0:05:56.440 floor rates out of low permeability formations really was the 0:05:56.480 --> 0:05:59.040 exact same whenever you looked at geothermal. That's what held 0:05:59.080 --> 0:06:02.080 shale back, was holding geothermal back. And the fact that 0:06:02.080 --> 0:06:04.560 these new technologies had opened up oil and gas meant 0:06:04.680 --> 0:06:07.040 it could be done for geothermal too. But the process 0:06:07.080 --> 0:06:10.120 of taking that technique and applying it to geothermal has 0:06:10.120 --> 0:06:12.760 involved an enormous amount of technical work because there's a 0:06:12.760 --> 0:06:15.839 lot different between oil and gas and geothermal. The first 0:06:15.920 --> 0:06:18.320 thing that's probably pretty obvious is we look for much 0:06:18.400 --> 0:06:20.919 higher temperatures, so you know, the Eagle Ferd when I 0:06:20.960 --> 0:06:23.960 was drolling in South Texas is actually considered very hot 0:06:23.960 --> 0:06:26.479 for an oil and gas based and on shore, but 0:06:26.520 --> 0:06:29.320 it's only like three hundred degrees fahrenheit that's considered cold 0:06:29.360 --> 0:06:32.000 for geothermal, and so we needed to figure out how 0:06:32.000 --> 0:06:34.080 to develop the tools and techniques to go much higher 0:06:34.080 --> 0:06:36.280 temperature than that. We're now doing products up to four 0:06:36.360 --> 0:06:38.680 hundred and forty degrees fahrenheit and our drilling, and that 0:06:38.680 --> 0:06:41.120 has taken an enormous amount of tech development to make 0:06:41.160 --> 0:06:43.720 that happen. And it's also turns out that the places 0:06:43.760 --> 0:06:47.640 that are hot geologically overlap very often with granite, which 0:06:47.680 --> 0:06:48.200 is a much. 0:06:48.080 --> 0:06:49.520 Harder rock type than shale. 0:06:49.760 --> 0:06:52.120 So in order to take these technologies from oil and 0:06:52.160 --> 0:06:54.159 gas and make them work in geothermal, we had to 0:06:54.200 --> 0:06:56.320 develop techniques to deal with the fact that the geology 0:06:56.360 --> 0:06:58.640 is different and it's much harder oftentimes a much more 0:06:58.720 --> 0:07:02.159 challenging engineering environment. And so our company has been around 0:07:02.160 --> 0:07:04.320 for seven years now and a lot of that work 0:07:04.360 --> 0:07:06.720 has been trying to figure out what are now solve 0:07:06.760 --> 0:07:08.720 problems in oil and gas, how do you solve them 0:07:08.720 --> 0:07:11.840 in a completely different contact, oftentimes where the rock is 0:07:11.880 --> 0:07:14.240 harder and the temperatures are hotter, and the operation of 0:07:14.280 --> 0:07:15.320 the reservoir's very different. 0:07:15.680 --> 0:07:18.840 What do you have today in operation such that you 0:07:18.880 --> 0:07:23.040 could say these tech problems are provably solved. Because obviously, 0:07:23.320 --> 0:07:25.120 as you think about the future, there are many things. 0:07:25.120 --> 0:07:27.200 You have to get the financing right, you have to 0:07:27.200 --> 0:07:29.680 get the customers lined up, you have to figure out 0:07:29.680 --> 0:07:32.040 how to scale it. But just in terms of like, okay, 0:07:32.160 --> 0:07:35.320 where we are December twenty twenty four, what can you 0:07:35.400 --> 0:07:37.640 show us if we were on a site, Let's say, Okay, 0:07:37.680 --> 0:07:39.640 we've shown that we can solve the tech set. 0:07:39.680 --> 0:07:40.400 So the gold. 0:07:40.200 --> 0:07:44.840 Standard for new tech deployment is actually an operating project, right, 0:07:44.960 --> 0:07:48.040 So since this is a deploy tech focus conference, I'll 0:07:48.080 --> 0:07:50.560 say TRL nine technology right in this level nine the 0:07:51.120 --> 0:07:53.600 final hurdle along that way, which is actually the project 0:07:53.640 --> 0:07:57.160 working in its intended environment and operating conditions. And that's 0:07:57.160 --> 0:08:00.360 something we achieved with enhanced geothermal Systems. Actually just over 0:08:00.400 --> 0:08:02.480 a year ago when we brought our first project online. 0:08:02.560 --> 0:08:04.920 So going back to twenty twenty one, we created a 0:08:04.920 --> 0:08:06.880 partnership with Google as part of their twenty four to 0:08:06.880 --> 0:08:09.960 seven Carbon Free Energy initiative, and we actually selected a 0:08:10.040 --> 0:08:13.160 site in northern Nevada, where there was an existing producing 0:08:13.280 --> 0:08:16.360 geothermal power plant there, but it had been troubled by 0:08:16.480 --> 0:08:19.360 the same challenges that had held back geothermal for decades, 0:08:19.680 --> 0:08:22.120 principally what we call dry whole risk that actually drilled 0:08:22.120 --> 0:08:22.880 a bunch of wells. 0:08:23.120 --> 0:08:25.400 Some of the wells were successful, a lot of the wells. 0:08:25.160 --> 0:08:27.760 Weren't, and so as a result, the power plant wasn't 0:08:27.760 --> 0:08:30.360 producing as much as it could based off its capacity. 0:08:30.640 --> 0:08:32.920 So we actually partnered with the operator there and we 0:08:33.000 --> 0:08:35.640 drilled a set of new wells, including the first two 0:08:35.800 --> 0:08:39.680 horizontal well pair for geothermal, and we actually created that 0:08:39.720 --> 0:08:42.880 project and brought that power online in late twenty twenty three. 0:08:43.320 --> 0:08:45.480 And so we really needed to prove a few things. 0:08:45.520 --> 0:08:47.480 One that we can actually drill and deliver those wells, 0:08:47.480 --> 0:08:49.839 even though it was through granite and much higher temperature. Two, 0:08:49.880 --> 0:08:52.120 that we could get highly productive flow rates out of 0:08:52.120 --> 0:08:54.199 those wells. And the important one and the one that's 0:08:54.240 --> 0:08:56.800 harder to prove because it takes time, is that the 0:08:56.840 --> 0:08:59.760 temperature profile and the production profile those wells would stay 0:08:59.760 --> 0:09:02.360 content over time. So one of the really exciting things 0:09:02.360 --> 0:09:04.960 for Fervo. In October we actually hit the twelve month 0:09:05.000 --> 0:09:07.319 mark where not only did we achieve all the technical 0:09:07.320 --> 0:09:10.319 objectives of the project, but it was actually producing geothermal 0:09:10.400 --> 0:09:13.559 energy connected to the grid, producing electrons for over a 0:09:13.640 --> 0:09:16.920 year and we saw no evidence of production decline in 0:09:16.960 --> 0:09:18.760 that year. So we can say with a lot of 0:09:18.800 --> 0:09:22.200 confidence now this is a completely proven technology, mainly because 0:09:22.240 --> 0:09:24.160 we've actually done it. We have a product that's producing 0:09:24.240 --> 0:09:25.440 electricity for the grid today. 0:09:25.640 --> 0:09:28.120 So what's your funding mix like at the moment, because 0:09:28.160 --> 0:09:30.559 I imagine part of the reason you want a working 0:09:30.640 --> 0:09:32.480 project that you could show everyone is so that you 0:09:32.520 --> 0:09:36.320 can issue more debt, like sort of more traditional energy companies, 0:09:36.360 --> 0:09:39.520 older energy companies, and maybe move away from equity. 0:09:39.920 --> 0:09:42.760 Yes, that's exactly right, and we've had an interesting funding 0:09:42.840 --> 0:09:44.959 journey that's probably very similar to many of the companies 0:09:45.000 --> 0:09:48.080 here at Deploy. You know, early on we were backed 0:09:48.120 --> 0:09:50.920 from many grant contributions from the Department of Energy. We 0:09:50.960 --> 0:09:54.600 partnered on many aspects of new geothermal technology development. We 0:09:54.640 --> 0:09:57.080 actually were part of the ACTIVATE program at the Lawrence 0:09:57.080 --> 0:09:59.960 Berkeley National Lab, so we were back in twenty eight. 0:10:00.080 --> 0:10:02.760 Team got kind of our start through some DEE research 0:10:02.840 --> 0:10:05.160 programs and grant funding, and on the private side, it 0:10:05.200 --> 0:10:08.400 was really venture capital funding. So funds like Breakthrough Energy 0:10:08.480 --> 0:10:11.440 Ventures and Congruent Ventures stepped in and got us up 0:10:11.480 --> 0:10:13.760 early on. You know, those funds that specialized and looking 0:10:13.800 --> 0:10:16.360 at companies that were so early in their development that 0:10:16.400 --> 0:10:18.880 it was really just an idea, a PowerPoint slide, but 0:10:18.920 --> 0:10:21.120 would sit in and understand the technology with you. And 0:10:21.120 --> 0:10:23.360 then as we expanded, what we've brought in is a 0:10:23.400 --> 0:10:26.720 lot more institutional investors. We've actually gotten an investment from 0:10:26.720 --> 0:10:29.080 the oil and gas industry. Now, we raised the Series 0:10:29.160 --> 0:10:31.880 D round in February of this year. That was a 0:10:31.920 --> 0:10:33.880 two hundred and forty four million dollars Series D and 0:10:33.880 --> 0:10:35.520 that was actually led by Devin Energy, one of the 0:10:35.600 --> 0:10:38.360 leading independent oil and gas producers out of Oklahoma City, 0:10:38.559 --> 0:10:40.920 with one hundred million dollar investment. So the investment mix 0:10:40.920 --> 0:10:43.959 has changed over time. But for a lot of new technologies, 0:10:43.960 --> 0:10:47.160 there's this crossing the chasm level where you know, a 0:10:47.240 --> 0:10:50.240 venture capitalist or a Doe grant writer will sit with 0:10:50.320 --> 0:10:52.520 you and understand the ins and outs of your technology 0:10:53.040 --> 0:10:55.240 and they'll see is this feasible or not and you 0:10:55.240 --> 0:10:58.320 can actually have a good conversation around that institutional money 0:10:58.320 --> 0:11:00.160 that wants to do project debt, they don't really want 0:11:00.200 --> 0:11:02.719 understand how your technology works. They just want to see 0:11:02.720 --> 0:11:05.000 that you've done it many, many times before. And that 0:11:05.280 --> 0:11:06.959 kind of gets to the chicken and egg problem that's 0:11:06.960 --> 0:11:07.679 with this funding. 0:11:08.080 --> 0:11:08.240 You know. 0:11:08.320 --> 0:11:11.880 So often when we approach those larger infrastructure sources of funding, 0:11:12.320 --> 0:11:14.280 the answer is, we'll bring us twelve months of data 0:11:14.600 --> 0:11:17.120 or bring us an independent engineering report that says zero 0:11:17.160 --> 0:11:20.120 percent chance this will ever ever fail. And that's kind 0:11:20.120 --> 0:11:23.160 of a big hurdle to jump. So we finally crossed 0:11:23.160 --> 0:11:26.720 that chasm earlier this year because we brought that project online. 0:11:26.920 --> 0:11:29.600 We announced in July one hundred million dollar construction loan 0:11:29.600 --> 0:11:32.080 from Excalibur Rural Capital. That was the first time we 0:11:32.120 --> 0:11:34.559 brought in project finance, you know, so we're finally moving 0:11:34.600 --> 0:11:37.880 away from the expensive venture capital sources of funding and 0:11:37.920 --> 0:11:41.520 down into the more sustainable, long term infrastructure style of funding. 0:11:41.559 --> 0:11:45.280 But it took us seven years from inception an operating, 0:11:45.360 --> 0:11:48.920 fully successful project and a lot more work to finally 0:11:48.960 --> 0:11:50.760 cross over that funding mixed barrier. 0:12:06.080 --> 0:12:08.400 So obviously we want to talk more about the chicken 0:12:08.440 --> 0:12:10.200 and egg problem because in a way, I mean, that's 0:12:10.240 --> 0:12:12.000 the entire premise of all of this. 0:12:12.320 --> 0:12:14.000 But just before we dive. 0:12:13.840 --> 0:12:16.080 More into that you know, you mentioned shale, and there 0:12:16.160 --> 0:12:18.800 is this story that people tell and I only maybe 0:12:18.840 --> 0:12:21.120 like fifty percent believe it or sixty percent believe it 0:12:21.320 --> 0:12:24.000 that the shale boom was like partly a tech story 0:12:24.200 --> 0:12:26.360 and partly a low interest rate story, or that a 0:12:26.440 --> 0:12:29.400 funding story. And there are various theories about how the 0:12:29.400 --> 0:12:32.440 FED helped cause the shale boom. Again, not totally sure 0:12:32.480 --> 0:12:35.280 if I buy it. That being said, for any sort 0:12:35.320 --> 0:12:37.959 of renewable or clean energy project or anything that has 0:12:38.000 --> 0:12:41.960 a lot of upfront capital costs, the rate conditions in 0:12:42.040 --> 0:12:44.640 the beginning matter quite a bit to the math. And 0:12:44.720 --> 0:12:47.640 I imagine here in twenty twenty four versus when you're 0:12:47.960 --> 0:12:50.959 seven years ago, that picture looks very different. Talk to 0:12:51.080 --> 0:12:53.760 us about the sort of I guess mathematical implications of 0:12:53.800 --> 0:12:56.400 where we are with interest rates in terms of making 0:12:56.520 --> 0:12:58.200 geothermal projects pencil up. 0:12:58.440 --> 0:12:59.720 Yeah, it's a great question. 0:13:00.000 --> 0:13:02.079 The fact that we've gone through such a big movement 0:13:02.080 --> 0:13:04.600 and interest rates over the last five years has been 0:13:04.640 --> 0:13:06.800 we've kind of gone through multiple business cycles in this 0:13:06.920 --> 0:13:09.840 sector in a very compressed period of time. You know, 0:13:09.840 --> 0:13:11.840 as interest rates started to rise a couple of years ago, 0:13:12.200 --> 0:13:15.199 there were two sectors or areas that sort of bubble 0:13:15.240 --> 0:13:16.280 to the surfaces. 0:13:15.840 --> 0:13:17.679 Being challenged by a high interest rate environment. 0:13:17.760 --> 0:13:20.360 That was number one startups that were based on very 0:13:20.400 --> 0:13:23.480 long term growth and number two, capital intensive businesses where 0:13:23.480 --> 0:13:26.040 it's a lot of capital upfront with a long payback period. 0:13:26.480 --> 0:13:28.520 That was a double whammy because we were running a 0:13:28.559 --> 0:13:31.400 capital intensive startup and so the interest rate environment was 0:13:31.640 --> 0:13:33.960 very challenging to try to get new capital to come 0:13:33.960 --> 0:13:36.439 into the space as those interest rates went up. And 0:13:36.640 --> 0:13:38.880 you know, one of the things about renewable energy, and 0:13:38.880 --> 0:13:40.720 this is true about solar and win but also true 0:13:40.720 --> 0:13:44.480 about geothermal, is these are oftentimes high capex but long 0:13:44.480 --> 0:13:47.320 payback period projects. And there are also projects that are 0:13:47.400 --> 0:13:49.840 interesting because you end up with a different profile than 0:13:49.840 --> 0:13:52.600 a lot of other energy infrastructure projects. Because you know, 0:13:52.640 --> 0:13:54.640 all of our projects we build, we have fifteen year 0:13:54.760 --> 0:13:57.200 off take agreements with locked in pricing, so we don't 0:13:57.240 --> 0:13:59.120 have to worry five years from now, what you know, 0:13:59.200 --> 0:14:00.920 it's the price of our product going to go up 0:14:00.960 --> 0:14:03.840 or down. We also don't have any fuel cost and 0:14:03.880 --> 0:14:05.840 so we're not exposed if there's a big run up 0:14:05.840 --> 0:14:08.000 in fuel costs, and so we eliminate a lot of 0:14:08.000 --> 0:14:11.440 that volatility so as a result, renewable energy projects like 0:14:11.480 --> 0:14:15.439 geothermal have always been viewed as historically much safer investments 0:14:15.480 --> 0:14:17.400 because you're not exposed to a lot of the volatility 0:14:17.400 --> 0:14:20.960 mix that impact other infrastructure investments. That's a good thing 0:14:21.000 --> 0:14:22.960 in general because it means you can bring low cost 0:14:22.960 --> 0:14:25.720 capital in the space because it's perceived as safer investments, 0:14:26.000 --> 0:14:28.080 but it also means you're spread off. The risk free 0:14:28.160 --> 0:14:30.680 rate is a lot tighter than if you were talking 0:14:30.680 --> 0:14:32.920 about a fossil fuel project or a project with more 0:14:33.240 --> 0:14:35.600 risk in it, and so when those rates move, the 0:14:35.680 --> 0:14:38.240 sort of relative impact for something with a low spread 0:14:38.600 --> 0:14:41.560 is a lot bigger. And so the interest rate environment, 0:14:41.880 --> 0:14:45.360 it hits startups and it hits infrastructure projects, particularly renewable 0:14:45.440 --> 0:14:47.680 infrastructure projects, in a big way. And that's one of 0:14:47.760 --> 0:14:50.480 the things that companies are navigating now. There's so many 0:14:50.560 --> 0:14:53.880 tailwinds looking for more and more power. We need more 0:14:53.880 --> 0:14:56.680 reliable power. We need more power period, everything from data 0:14:56.680 --> 0:15:00.400 centers to industrialization, to ensuring and manufacturing to I mean, 0:15:00.520 --> 0:15:02.720 the AI world is with driving so many of our 0:15:02.760 --> 0:15:05.800 conversations right now. So there's all these tailwinds helping the 0:15:05.840 --> 0:15:08.680 sector out, but the headwind that interest rate environment is 0:15:08.720 --> 0:15:12.120 still something that's limiting both deployments of new innovation and 0:15:12.160 --> 0:15:14.080 also broadly the renewable sector overall. 0:15:14.360 --> 0:15:17.520 I mean, presumably this is when someone like the DOE 0:15:17.640 --> 0:15:21.440 could step in and potentially help. What kind of support 0:15:21.640 --> 0:15:23.640 have you seen from the DOE so far? 0:15:24.280 --> 0:15:26.320 Yeah, so we've gotten great support from the DOE. 0:15:26.320 --> 0:15:28.920 As I mentioned, we've gotten multiple grants over the years 0:15:28.920 --> 0:15:32.280 to work on anything from high temperature tools to novel 0:15:32.360 --> 0:15:35.960 data sensing methods. Earlier this year, you know, there was 0:15:36.000 --> 0:15:40.000 a provision in the bipartisan Infrastructure Law where there was 0:15:40.080 --> 0:15:43.760 eighty four million dollars earmarked for geothermal energy development. FERVO 0:15:43.920 --> 0:15:46.520 is actually the recipient of the largest grant of that, 0:15:46.600 --> 0:15:49.280 which was a twenty five million dollar grant, And so 0:15:49.480 --> 0:15:52.080 that kind of early demonstration funding can be very critical 0:15:52.080 --> 0:15:54.640 for a technology that's just taking off. I don't want 0:15:54.640 --> 0:15:56.240 to make any enemies, and there's a lot of different 0:15:56.240 --> 0:15:58.560 technologies out in the audience here. But if you read 0:15:58.560 --> 0:16:01.240 the Department of Energies Commercial lift off report for geothermal, 0:16:01.440 --> 0:16:03.760 they've got a nice chart in there where it almost 0:16:03.800 --> 0:16:05.560 looks like a data error because they put the eighty 0:16:05.560 --> 0:16:08.680 four million dollars that geothermal got up against the ten 0:16:08.720 --> 0:16:11.600 billion dollars for nuclear, and the nine billion dollars for 0:16:11.760 --> 0:16:15.000 carbon capture, and the several billions for longeration energy storage 0:16:15.040 --> 0:16:17.920 and other things. So I think other technologies benefited far 0:16:17.960 --> 0:16:20.560 more than geothermal did. But even that kind of move 0:16:20.640 --> 0:16:22.880 was sort of catalytic to get things off the ground. 0:16:22.960 --> 0:16:25.720 And then, of course the DOE has a big message 0:16:25.920 --> 0:16:27.840 and a big audience that reads these things. So actually, 0:16:27.840 --> 0:16:30.440 this lift Off report that came out earlier this year 0:16:30.640 --> 0:16:32.400 changed a lot of people's minds because one of the 0:16:32.400 --> 0:16:35.160 problems with the chicken and egg problem is there's so 0:16:35.240 --> 0:16:37.520 many investor meetings that we don't even get to have 0:16:38.040 --> 0:16:41.720 because we reach out and they say geothermal. I know, geothermal, 0:16:41.760 --> 0:16:44.360 we're not looking at that, and the media never even happens. 0:16:44.440 --> 0:16:46.600 And you have something like the geothermal lift Off Report 0:16:46.640 --> 0:16:48.840 come out that's got the DOE logo on it. They 0:16:48.840 --> 0:16:51.400 know it's been well vetted, well researched work, and all 0:16:51.440 --> 0:16:53.200 of a sudden, it may be there's some investors who 0:16:53.200 --> 0:16:55.120 may have written off geothermal. Let's say, well, maybe there's 0:16:55.160 --> 0:16:57.360 a new shot here, there's new data that we weren't 0:16:57.400 --> 0:17:00.000 aware of, And so that kind of awareness in technology, 0:17:00.120 --> 0:17:01.640 validation is pretty critical as well. 0:17:02.040 --> 0:17:05.920 So one of the obviously nice things about your technology 0:17:06.160 --> 0:17:08.720 is that it's cleaned, it's carbon free. There are some 0:17:08.760 --> 0:17:11.000 people that don't care about that, particularly March. They don't 0:17:11.040 --> 0:17:13.960 rank that particularly highly. You know, for some people the 0:17:14.000 --> 0:17:18.000 biggest priority is cheap energy. When you think about the future, 0:17:18.600 --> 0:17:21.560 how important is it that either the public sector or 0:17:21.680 --> 0:17:25.440 private sector actors who've made various commitments over the years 0:17:25.440 --> 0:17:28.719 about net zero other sounding things, how important is it 0:17:28.800 --> 0:17:31.800 that those priorities stay firm or if they're sort of 0:17:31.880 --> 0:17:34.639 changing moods where in the private sector this is not 0:17:34.720 --> 0:17:36.840 as important to us as it was a few years ago. 0:17:37.080 --> 0:17:38.600 How does that affect your outlook? 0:17:39.119 --> 0:17:42.080 Yeah, it's a good question, And honestly, my view on 0:17:42.119 --> 0:17:44.720 this is I don't think people actually there's not really 0:17:44.720 --> 0:17:46.679 that much of a divide. I think in what people 0:17:46.680 --> 0:17:49.840 actually want out of their energy resources. I think it 0:17:49.880 --> 0:17:52.959 can get politicized and there's a lot of food fights 0:17:53.000 --> 0:17:55.800 and political fights in this, but people want three things 0:17:55.800 --> 0:17:58.000 out of their energy resources. They want the energy to 0:17:58.040 --> 0:18:00.480 be cleaner, they want the energy to be more and 0:18:00.480 --> 0:18:02.200 then want the energy to be more reliable. 0:18:02.720 --> 0:18:05.040 And does everyone really want it to be cleaner. 0:18:05.200 --> 0:18:08.520 I'm just serious because like I get totally cheaper and 0:18:08.800 --> 0:18:13.120 reliable seem unambiguous when it comes to cleaner. I could imagine, 0:18:13.160 --> 0:18:14.200 like I could see if. 0:18:14.119 --> 0:18:15.120 I were anyone. 0:18:16.080 --> 0:18:17.760 I don't know, it is less important. 0:18:17.960 --> 0:18:20.280 I do think everybody wants it to be cleaner, and 0:18:20.440 --> 0:18:22.080 that's true if you talk to people on both sides 0:18:22.080 --> 0:18:23.840 of the aisle. I don't think it matters where it is. 0:18:24.040 --> 0:18:25.880 I think where a lot of the debates come up 0:18:26.119 --> 0:18:29.240 is where is the trade off between clean and affordable 0:18:29.320 --> 0:18:31.320 and reliable. But I think you'd be hard pressed to 0:18:31.359 --> 0:18:34.440 find anyone other than maybe some very French people who 0:18:34.440 --> 0:18:36.159 are just trying to institution. 0:18:35.760 --> 0:18:37.480 Show you stand alone on that one. 0:18:38.040 --> 0:18:41.280 I don't have an opinion here, no opinion. You're the 0:18:41.280 --> 0:18:43.680 one out there that doesn't want cleaner energy. I'm a journalist, 0:18:43.760 --> 0:18:45.960