Latest / Clean Power Hour / Deep Geothermal and the Energy Transition with Sebastian Heitmann, Extantia | EP213

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Deep Geothermal and the Energy Transition with Sebastian Heitmann, Extantia | EP213 · Clean Power Hour

• 0:50
  Sebastian Heitmann: those two goals together, you end up understanding that you build infrastructure is actually going to be very complicated, because it takes a long time consumes a lot of carbon that today, you want to be ideally as close as possible to retrofitting to existing infrastructure reutilizing or leveraging existing infrastructure. So that's how we how we look at it as well. What technology can we bolt on onto today's infrastructure?
• 1:16
  intro: Are you speeding the energy transition? Here at the Clean Power Hour, our hosts, Tim Montague and John Weaver bring you the best in solar batteries and clean technologies every week? I want to go deeper into decarbonisation. We do two, we're here to help you understand and command the commercial, residential and utility, solar, wind and storage industries. So let's get to it.
• 1:36
  intro: Together we can speed the energy transition.
• 1:44
  Tim Montague: Today on the Clean Power Hour, can technology save humanity from climate change?
• 1:47
  Tim Montague: I'm Tim Montague, your host Welcome to the Clean Power Hour check out all of our content at cleanpowerhour.com. Please give us a rating and a review on Apple and Spotify. Check out our YouTube channel and reach out to me on LinkedIn. I love connecting with my listeners.
• 2:04
  Tim Montague: Today on the Clean Power Hour.
• 2:04
  Tim Montague: My guest is Sebastian Heitmann.
• 2:08
  Tim Montague: He is the co founder of a venture capitalist firm called a venture capital firm called Extantia. Welcome to the show, Sebastian.
• 2:17
  Sebastian Heitmann: Hi, Tim.
• 2:17
  Sebastian Heitmann: Great to see you. Great. Thanks for having me. On the show.
• 2:20
  Tim Montague: Today I learned about your work from Nate Haagen show if you're listening to this and you don't know about Nate Huggins, please check out Nate Hoggins ha je e n s. He's a professor at the University of Minnesota. And he's a great show called the great simplification.
• 2:34
  Tim Montague: That is how Nate couches, what the transition that humanity is going through in the next 100 or 500 years. We don't know how quickly the transition is going to happen. But right now, humanity is riding this rocket ship of fossil fuels, which are incredibly energy dense. But they also have a side effect, which is that they're polluting the atmosphere, which is warming the Earth, which is causing runaway climate change. And that's just one of the side effects so to speak of modern society, there are others, you know, artificial biology, AGI there are many things many potential hazards and pitfalls that humanity is creating for itself, which is most likely the reason we don't see advanced civilizations knocking on our door is really the assessment of many astronomers and astrophysicists. But anyway, Sebastian, you're a technologist, you're an investor, tell us a little bit about yourself and how you came to found extension. And what is your mission in this life?
• 3:43
  Sebastian Heitmann: A lot of questions. Yeah, what's the goal? Yeah, it was native, some person who actually I was thinking really resonates with me as well. And it is important that we have these forward thinkers like him, who remind us from time to time that we might need to alter our path. So we might disagree on the answers, how that alternate approach should look like. But I think as soon as human beings understand that we should embrace all of the ideas and and listen to all sides of the story and then see what kind of answers we come up to up with. So I think that's actually what makes us most unique as a species as well, that we're able to this ingenuity is actually limitless, we always come up with new ideas. But maybe to my own story, I never wanted to start a financial product in my life.
• 4:34
  Sebastian Heitmann: Maybe it's a good starting point at a body economist background, and worked in different fields, but happened sort of a clean tech enthusiast I would say from the early days on also invest in clean tech 1.0 era paid my tuition fee there too.
• 5:01
  Tim Montague: What would you call clean tech? One point what give us some examples of clean tech 1.0
• 5:06
  Sebastian Heitmann: The rise of solar mostly to be honest, yeah, the PV when we started to see Industrial Organizational PV some wind to but it was majority PV back then, when PV in the 2000 567 became became an industry which initially thought we have to produce in high wage countries like Europe or the US and eventually China took all the market or most of it simply because people were not willing to pay for better PV cells double the price, so they just bought to China. So which is which I'm not against it. By the way. I think it's totally the right way should be going. And China has very good at engineering to cost India roll out. And we've just recognized that better than us doing this.
• 5:52
  Sebastian Heitmann: So I'm not against it at all.
• 5:56
  Sebastian Heitmann: I'm not a protectionist to say we should be on shoring this back to our industries here, I think it's nonsense. I think this is the way it goes, it's good. But anyway, the companies back then really didn't have much of a great business model.
• 6:13
  Sebastian Heitmann: Other than duplicating, there was the innovation just sort of some point just wasn't so breakthrough anymore. So it just came down to engineering to cost and then a lot of them ended up not making it now.
• 6:29
  Tim Montague: So you're referring to this cost adoption curve, right? That is technology like photovoltaics. I mean, it took it took 50 plus years for PV to go mainstream. It was invented in the 50s, the modern pv cell was invented in the 50s.
• 6:45
  Tim Montague: And then in the early 2000s, is when it kind of started to go mainstream. It wasn't until 2010. really honestly, in the US that it went mainstream. We were 10 years behind Europe and China for a variety of reasons, which is very ironic, because we invented the technology at Bell Labs in New Jersey. But we weren't the first to grab onto it. We have huge native fossil resources and cheap energy as a result. And so we're not, we're not as inspired to grab on to wind and solar, and batteries.
• 7:17
  Tim Montague: And now geothermal, which we're going to talk about, we're going to talk about something called deep geothermal in this conversation, which is an amazing opportunity, right?
• 7:26
  Tim Montague: Because it is an infinite, basically an infinite source, kind of like we see the sun, it's the inverse of the sun, but it's beneath our feet, and it's beneath everybody's feet everywhere on Earth, if you can get there. But Sebastian, what is it that that forced you into clean tech 2.0, so to speak, you could have just, you could have just stayed in clean tech 1.0 And, and gotten wealthy or continued to get wealthy, because there's still an opportunity that I mean, we have 30 years of runway of solarizing. And, you know, installing wind and solar on the grid, right? The grid is today, let's just say 10%, wind and solar. And tomorrow, it's 80 or 90%. You know, in 30 years, it'll be 80 or 90%, wind and solar. But there's other stuff coming. Why did you go into 2.0?
• 8:18
  Sebastian Heitmann: I mean, I think just the evolution to be honest, and I think 1.0 didn't go so well for most investors.
• 8:23
  Sebastian Heitmann: So I think there was a time around 2012 1314, roughly when we all kind of woke up a little hangover from from the Fiesta.
• 8:35
  Sebastian Heitmann: And so these business models are not as good as we hoped they would be. Also quite a few us.
• 8:39
  Sebastian Heitmann: Investors drank the Kool Aid and weren't too happy with it. But so there was there was actually a paper from MIT back then it was called White clean tech 1.0 failed. Most of us read that back then, when we saw a couple things coming together, there was a, there was a parody of the Paris agreement with the big inflection point where we for the first time agreed to the world that decarbonisation is a priority and that carbon needs to have a price in order for that to happen. The Paris Agreement and the world committing to a back then I think 1.5 degrees, but for two degrees, gold, later adjusted.
• 9:15
  Sebastian Heitmann: But there was some common commonality amongst the world that this is now something we need to tackle. Other things came along as well, the US started working on a taxonomy for like, more broader ESG criteria, but it was also in complex climate. So though, that a few factors came together, we saw what Breakthrough Energy did, they were formed around that time, initially as the coalition and then later on the Breakthrough Energy Ventures has been out today. So we saw a couple initiatives, what we thought was missing back then, and really missing because we're also angel investors and some company that was access to capital for founders in this space, it's been quite difficult. There was no specific knowledge out there about how to invest in this type of asset class. And also, the larger institutional investors would actually not touch it. Not much, at least now. So like breakthrough was initially very much dominated by high net worth individuals, I would sometimes call it like a billionaire club, right? So our goal was to say, Okay, this is not going to cut it, we need we need actually institutional capital, like capital from pension funds and insurance companies where the majority of the world's capitalists agglomerated, we need these seven people to come on board and back it as an asset class. And therefore, we get this only works if the solutions that people are working on are not just economically ecologically viable, but also economically viable, they need to be the cheapest solution and the solar showed that this is possible, you know, so that had a huge cost curve. Coming down to Being today, at a certain time of the day, by far the cheapest solution. Yeah. So this cost curve that solar shown is a pure cost engineering to cost curve that I think a lot of industries can show. If if we put resources behind it and manpower behind it so, and wind also, by the way, had a similar trajectory trajectory. So, the these these, when you look at the, these energy forecasts from the mid 2000s, or what they were predicting where solar will go cost wise, we look at it today, it's completely wrong. Yeah, it completely underestimated the exponents reality of that, of that cost curve would come down.
• 11:34
  Sebastian Heitmann: So, anyway, that all that just fascinating, okay, we need more innovation in the space, how do we bring innovation to market, we need to find the people who have the ideas. And there are good ideas out there plenty of good ideas, but we need to fund them and make sure that they also execute well. There's also there's a lot of good ideas out there. But we need to find people who can really bring this to market and not just scientific knowledge, but also just company building knowledge and how to build a how to build a Bible industry. So all of that led to us founding this firm, with the idea to build a sophisticated financial product for the institutional investor for an investor who's really looking for stable returns. So our, our thinking in this is people say like, Yeah, but do we have to impact impact is important, of course, impact important that also impact will never come? If we don't scale?
• 12:23
  Sebastian Heitmann: Every solution that we would we invest in has to solve what we call the trilemma dilemma consisting of economic viability, economic viability and resilience. Resilience means we don't want to invest into any topics that have supply chain restrictions, be it resource or geopolitical or any other restrictions, there needs to be certain resilience back to like you mentioned early on the US has a very resilient energy strategy. I would say, unlike Europe, we're depending a lot of imports.
• 12:59
  Tim Montague: Well, just luck of the draw.
• 13:02
  Sebastian Heitmann: Yeah, fair enough.
• 13:03
  Tim Montague: We just happen to to establish this continent sized country that is rich in resources, including oil, gas, coal, I mean, we have massive, massive fossil resources, I was looking at the size of the fossil industries, compared to the renewable energy industry, and renewables are about 30% the size of the fossil industry in the United States. And today, and and one of the, you know, I'd like to, if we could really shine a light on some of your portfolio companies and how you see the path forward to extracting 50 billion tons of carbon pollution from the economy, okay, to netzero, the economy, we're talking about 50 billion tonnes or 50 Giga tons.
• 14:49
  Tim Montague: And that's a good and that's a good goal. We always, we always want to remember that there's a trillion tons already in the atmosphere. That got us to 420 ppm, ppm is going up, my listeners up, not down, we are still headed the wrong direction. And we also have to while we're netzero in the economy, we also have to suck carbon out of the atmosphere to get back to 300. To what is considered a safe level of pollution in the atmosphere. But how do you see extensions serving that goal of netzero in the economy?
• 15:30
  Sebastian Heitmann: Well, it's it's our it's our North Star housing. But one statement like head of that, I mean, netzero economy is something desirable, for sure. But in the end of the day, it's about a, it's about living in with a healthy planet.
• 15:45
  Sebastian Heitmann: And a healthy planet is for sure, from a carbon perspective, not zero, but also like the way it's an overshoot problem, which has many different facets and climate is one of them. So we generally believe in a just a sustainable and regenerative economy, where we are able to reuse recycle, realized infrastructure and resources.
• 16:07
  Sebastian Heitmann: So, but that it's on the path to that zero economies. Well, there's the same path, but it's maybe a little bit broader the way we view it, we view it. And of course, when we look at now from investment perspective, what are the what are the topics that are interesting? It's quite simply, today we understand a couple we call the TransTech problems, quite clear science is also quite clear where the majority of the emissions come from. And then we of course, look at what areas have the best opportunity to decarbonize through technology. It's always the technological edge still to do it that we have, but we're not somebody who would invest in to build out of solar or wind farms, so we've always looked for a better pv cell or a highly efficient wind turbine or something in that area, or completely different areas. At the end of the day, it all literally all boils down to energy. And energy does not mean electricity, people always confuse that energy is all type of ways how to make atoms dance, I would say, yeah, everything has moved atoms is energy. And therefore electricity is a part.
• 17:11
  Sebastian Heitmann: But electricity, actually, the minor part is the easy part as well to decarbonize the grid can be can be carbonized. Heat is a elephant in the room, that's the biggest challenge. And a lot of the major emissions come from heat process, such like steel manufacturing, and also cement manufacturing, or concrete. So that's a big problem. And there's also transport fuels.
• 17:34
  Sebastian Heitmann: Everything we use to run our planes and ships and cars, and so on. So that's also a big, big portion of the energy consumption so they can come but I'm saying is it can come in different shapes and forms energy. And we will look at all of these shapes and forms now.
• 17:51
  Sebastian Heitmann: Okay, just electricity,
• 17:53
  Tim Montague: right? Sure. So, so you're attacking the major sources of carbon pollution, so to speak, the grid, industrial heat, there's also HVAC, there's transportation, there's major manufacturing sectors, like steel cement, and, and, you know,
• 18:17
  Sebastian Heitmann: real primary energy as well, how do we create energy, there's not that many sources that we really these days create energy, right, we can use the sun to be we can use the wind, which is essentially also sun, driven by sun. Sure.
• 18:32
  Sebastian Heitmann: Also, other sectors, such as biomass is also just another way of storing sunlight. Also, fossils are just another way of storing sunlight in the day. I mean, this is biomass that was created by sunlight and sand convention to the ground and became a hydrocarbon. But essentially, it's all powered by sunlight, and just takes different ways. And also, not just days, but also you mentioned the word early on also different energy densities, because that's actually a key factor as well, that density energy matters a lot. So those,
• 19:04
  Tim Montague: but I see a problem here. And that is how do you how do you how do you filter out ideas, because there's millions or billions of of technology ideas, humans are very creative, and absolute, but a lot of those inventors have no idea of economics. And so one of the things I really appreciate about gentlemen, like Peter for kowski, check out episode 159.
• 19:30
  Tim Montague: Okay, Peter for kowski, fit KOWSKY. He's the author of climate restoration, Peter created a filter, right? It said, Look, I, I'm gonna do a first principles analysis of the solutions, but the answer has to be affordable, practical, scalable, and real. Like it has to be here now, because we have to do this now. Do you have a similar kind of a filter or, or system so to speak to? To measure because you're going to be constantly, you've got to be constantly weighing A versus B, or A versus B versus C? How do we where do we put our money?
• 20:13
  Tim Montague: Yeah, absolutely.
• 20:16
  Sebastian Heitmann: And I always think the the role of innovation here is the is the unknown, right? And also the beauty. That will become I mean, we have certain technologies today and whatever we have today, deploy as much as we can put capital resources, people behind it a deployable wherever we can today, nothing's gonna stop us from that. However, we have challenges specifically in what we call firm capacity or baseload energy, where we are we don't have great answers today, for example, where we need to work on and this is fairly important problem. And you can see some moves now from some of the corporate time to realize that you saw that was at Microsoft, Amazon, I think Amazon just bought a data center which is powered by nuclear power, because actually understand that in order to be on the edge of AI and be able to continuously process they need from capacity, they can't run it on wind and solar. So because these are so called intermittent sources, so that that there there are some challenges there that we have not met yet. And of course, there are people proclaiming pathways of building large infrastructure in sunny places and then creating ammonia or any type of other energy carrier hydrogen and ship it around the world. I think this is is is theoretically a way that's you see in most of the energy models when you will take a look at it because they're modeling with today's tools. If you had to model with today's tools, I'm a professor for energy systems. And this is what I could potentially model because I obviously I don't have a crystal ball, I can't foresee the future. But I don't think this is the most desirable world today. This is a very complex and very infrastructure heavy world that we need to build an enormous amount of new infrastructure. Our, our game plan we ask for it is typically we look at, of course, we look at speed and scale, clearly, we want to have stuff that comes fast, when stuff that is significant that moves the needle, that's fast tax at 100 Mega tons of co2 per annum per technology abatement potential in the year 2050. So in the distant future, not tomorrow, the 100 megatons is extra large.
• 22:24
  Sebastian Heitmann: But also, we want to see that the technologies that we invest in, are actually a net reducer by the year 2030, meaning they paid back that come debt for being alive today. Because everybody will love today's consuming today's current budget, though, and Pixar to become a net producer now or even have to become introduced earlier to pay back the existing debt. And then from 2030 onwards, they need to be net reducers. It was 2031 or something. But the point I'm saying in the near future is the point here. Sure. And if you put these things together, those two goals together, you end up understanding that you build infrastructure is actually going to be very complicated, because it takes a long time consumes a lot of a lot of carbon that today, you want to be ideally as close as possible to retrofitting to existing infrastructure reutilizing or leveraging existing infrastructure. So that's how we how we look at it as well, what technology can we bolt on onto today's infrastructure? So those things and we need, of course, some other factors as well, those are more like than capital. Well, I can be seated or like, capitalistic point of views are, obviously we need a certain technology readiness level, in order to be fast enough, we need a certain commercial traction, we need to see that there's customers out there, we actually want to buy that solution and interested in the solution. That's where the economic viability comes in.
• 23:45
  Sebastian Heitmann: There's a couple of factors that we that we put on, but it also serves as a nice exclusion criteria, to be honest, because we see interesting technologies that we totally think are worth spending resources on. But they might just not scale in time. To really save us.
• 24:05
  Tim Montague: I have a question about this, because about about, about markets. Think of a national highway system. The United States actually, in the process of World War Two realized the importance of a national highway system from a strategic and national security perspective. And then they set out they set out to build one but this was something that private companies were not going to spearhead it was something that a government had to spearhead. So what is that balance between that grand vision and taking risk, financial risk and putting resources behind initiatives that may not be profitable today, but are going to be hugely profitable, like our economy exploded? After we built this national highway system, right? It turned out to be an accelerant. It was kind of like a physical internet of things, right? That if we didn't have we would not be able to have the economy that we have today. How do you see?
• 25:13
  Sebastian Heitmann: I'm from Germany, the Autobahn is the thing here. Right. So and I think it did, I'm not sure it's 100% True, but the methods that Hitler built him to have troops moving faster to win the war.
• 25:27
  Tim Montague: Yeah, I think we did model our system on what we experienced in Germany. Germany was ahead of us in this regard.
• 25:34
  Tim Montague: And we saw it as a strategic disadvantage. And so we woke up and, you know, you know, it's a double edge. It's a double edge.
• 25:42
  Tim Montague: Okay. Yeah, we don't have good we don't have good mass transit in the United States. We have great, a great highway system, and a car friendly culture, which is great for burning fossil fuels, unfortunately. So it is double edge.
• 25:57
  Sebastian Heitmann: Yeah, it's a double edge. Yeah. Now, the what you asked me, What's the political regulation question?
• 26:03
  Sebastian Heitmann: Of course, I mean, in the energy market, it's a highly political, political thing. I mean, majority of the world, the wars around the world are about resources and resources mean power and access and political powers? Well, clearly, I mean, there's good reasons why we have previously been in conflict with our Petro states. And also the conflict with Russia and I was also a lot about resources. So they always play a role. very decisive role I would even say, so of course, therefore, it's a political good. The X axis to energy means access to economic growth. Now, and that essentially also transformed into political power. So it's always a political game. But in terms of innovation in that space, I mean, there, it's not I mean, depends on where you are in some states is very regulated, and others less, but typically always is a, obviously an open the year for for economically viable innovation.
• 27:04
  Sebastian Heitmann: This is really what we thrive on. We don't believe in innovation for being just there for certain political goals.
• 27:10
  Sebastian Heitmann: They also need to really sort of solve economic goals and make it more accessible, more affordable, more just, I mean, many different properties that it can take. But that's the under that as always, and there's always space for that, as well. So we don't worried about regulation, killing innovation in the space so much.
• 27:27
  Sebastian Heitmann: However, maybe we see the other way around. Sometimes we see that innovation and sometimes different interests. I mean, there was a lobby that wants to continue to use fossil because they're currently thriving on it economically. There's a lot of fossil fuel subsidies, which are politically understandable but environment for for local community, because jobs depend on it. And us a lot. So you will understand why certain politicians in Dakota support bracketing because a lot of jobs depend on this in this area. But it's, of course, it can ecologically might not be desirable. Also, I mean, I actually think us also had to learn this, by the way, I mean, this thought didn't come so natural, right for us. I think we mentioned that we talked before that this came pretty much after after 911 Write us realize that we cannot be dependent on people that potentially attack us. And therefore we need to become energy independent and do whatever it takes for it. I think it's a bit of an attitude that sometimes misses here in Europe at the stupid whatever it takes. We like to then outsource it to the Americans or to other countries and think that they will, they will solve our problems for us, instead of solving because we mean there's nothing that speaks I mean a lot. By far don't get me wrong.
• 28:46
  Sebastian Heitmann: I'm not it's not for fracking, but there's also nothing stopping us from doing fracking Europe other than it's politically not wanted, but we probably have shale shale gas
• 28:58
  Tim Montague: for sure. The Clean Power Hour is brought to you by CPS America. The maker of North America's number one three phase string inverter with over six gigawatts shipped in the US.
• 29:07
  Tim Montague: The CPS America product lineup includes three phase string inverters ranging from 25 to 275 kW, their flagship inverter, the CPS 250 to 75 is designed to work with solar plants ranging from two megawatts to two gigawatts, the 250 to 75. pairs well, with CPS America's exceptional data communication controls and energy storage solutions, go to chintpowersystems.com To find out more. So let's talk about some specific technologies that you're interested in and investing in and think are going to, you know, meet some of your goals of of 100 Mega tonnes per annum? What's your short list of things that you're excited about? That expansion is involved in?
• 29:58
  Sebastian Heitmann: I think anything that's transitioned from hydrocarbons is interesting. So can we hydrocarbon transition technologies are super interesting. We start maybe let's start with the with the actual source of energy. Like if there is not that many. When we look at what today available for sources, we've got all the let's call it the finite resources, which are for sales and also uranium is a finite resource the other day, and we got the renewable resources, which are by nature, they're not finite, which would be of course, wind and solar and geothermal and biomass and hydro. Mostly, those are some maybe some old tech or some some wave or like the title reactors, and that direction is a few technologies in the space, which we saw, that's the general categorization, we would always be most interested in the renewable sector, and then look at the intermittency of these resources, which ones can actually really transition us.
• 31:07
  Sebastian Heitmann: Because in order to transition us, they need to be fairly like, like comparison to what we have today. And fossil fuels are from a pure pure quality perspective.
• 31:15
  Sebastian Heitmann: Actually beautiful resources, you know, they're easy to transport they're highly energy dense, they're safe, they're affordable. They're there's a giant interesting behind it. Now though, they have a lot of good properties, you can you could do so called dispatchable. You can easily switch them on and off when you need them and when you don't need them and they storage themselves quite nicely. Unlike a lot of the renewables which are so called intermittent resources. Which, if there's no I mean, at night, obviously there's no solar energy. Right.
• 31:45
  Sebastian Heitmann: So that's, uh Oh,
• 31:49
  Tim Montague: hold on a second there are only affordable right?
• 31:51
  Tim Montague: Because the the free dump in the sky right lake there. There's virtually. I mean, yes, we have now some clean air regulations and we're we're stepping back from the totally free sky okay.
• 32:08
  Tim Montague: But still it is very it is very affordable to dump carbon into the sky. It's not about it's it's very strange that you can look up and you don't see a garbage dump it still looks like everything is fine, right? We see the blue sky. But now when you go to a major city, you know, in China or India, you you see the price, right? We are paying a health price we humans, you know, 6 million or more humans are dying from air pollution a year. But But specifically, Could you could you give some examples? I mean, let's let's let's get into some of the technologies that you're excited about. I you know, your interview with Nate Huggins woke me up to the possibilities of deep Geo, I don't know in the relative scheme of things, how important deep geothermal is to you. But are there other technologies that that are decarbonizing all of the sectors that you're more excited about than deep? Geo?
• 33:10
  Sebastian Heitmann: No, no, absolutely not do deep do is the holy grail? Yeah, it really is the holy grail of energy. That is the most fascinating resource, we have an enormous amount of energy trapped below our feet, right? Enormous. We seem to paint the picture where everything stands in the in the mix of energies, but what what what are good energies in modern art and the the problem with the intermittent renewables, is that actually not an energy transition. During addition, we are consuming more energy that we need to build out. But we're not transitioning, you're not really shutting down a coal fired power plant because you build a solar park next to it.
• 33:42
  Sebastian Heitmann: That's just not electrolyte comparison, that we need to look for the light like comparison, geothermal is a great answer for that, right? A really great one, because it possesses all and more qualities and processes to today. Now, all at the same quality. There's really no downside to using geothermal.
• 33:57
  Sebastian Heitmann: You can really say I can absolutely which off my a coal plant and put a geothermal plant next to it and it will be the same thing. Right? There's no nothing extra.
• 34:07
  Tim Montague: Why has Why is deep geo languished. Obviously, we know how to drill. But when you're drilling through certain types of rock that gets very expensive and time consuming, right? It's
• 34:21
  Sebastian Heitmann: expensive.
• 34:21
  Sebastian Heitmann: Yeah. We know what to drill for what for oil and gas 99% of drilling today's for oil and gas. And we have been very good at mastering that. And previously in Texas, you would drill an oil well, like in the 1940s, or something would take you like three months. And for other people to do it today. You do it in 10 days and for people.
• 34:41
  Sebastian Heitmann: That's how we've mastered just this technology of drilling over the over the last century.
• 34:44
  Sebastian Heitmann: Simply because very profitable thing to do. But the drill deep geothermal lies in hardrock there's a different rock formation. And the one thing you do not find in hardrock is oil or gas. And it was never questioned. We never had to invent any tools that were required to drill into granite or courtside formations, because for sure, there was no other gas to be found. We
• 35:08
  Tim Montague: had tunnels, Norway, Norway, and Switzerland are full of tunnels, right?
• 35:12
  Tim Montague: Isn't that a form of hard rock drilling?
• 35:17
  Sebastian Heitmann: Did it is depends on some tunnels are not too many granite. Some are so we can drill in Granite is tunnel tunneling is possible. It's a different story those well, because tunneling is not under heating under pressure or low details, a lot of heat, a lot of pressure. So it's a different type of skill filling again required. But yeah, tunneling is a application as well, where we drilled it's quite different when tunnels are rarely very deep. And those times we go through actually granted, there are some definitely in the Rockies or helps us something they definitely some. Yeah, these are tough jobs for the machines. And they take significantly longer than grilling through any other type of softer rock formation. So yeah,
• 35:58
  Tim Montague: so what's the what's the braid? Drilling?
• 36:00
  Tim Montague: What's the breakthrough for deep Jia that's going to unlock deep to and define for us if you would, what is? I mean, we have geothermal power today. But what how do you define deep to versus the standard Geo?
• 36:14
  Sebastian Heitmann: Standard geo is quite simple. I mean, it was invented in 1904. By the Italians, they were the first ones drilling basically next volcanoes and found that there's heat and that they can utilize that. And that's how where we see do today as well. It's pretty much available. Wherever we have any type of tectonic anomaly could be able to Canelo could be a fault. I mean, a lot of Americans actually don't know. But the city of San Francisco is largely geothermal power. Large geothermal operation just north of San Francisco. And actually it's the biggest geothermal power plant in the world in the US US utilizes geothermal to a certain degree as well and more than any other country in terms of gigawatt output. But it's still a it's a niche it's very small part of the overall energy production less than a percent in the US today, though it's despite its biggest sales. So but that's because it's only available very few areas now you have to send address fall you have Hawaii, you had an Hawaii there's even some religious reservations against using volcanoes energy so. So there's, there's specific areas, I think Iceland is a classic one that didn't volcanic island and use a lot of geothermal energy. But Indonesia and some other Japan.
• 37:29
  Sebastian Heitmann: So that's
• 37:29
  Tim Montague: where in geothermal we're talking hundreds of feet in deep Geo, we're talking 1000s and 1000s of feet or miles and kilometers and and somebody I saw recently drilled a three mile deep well in New Mexico, as an example of deep
• 37:49
  Sebastian Heitmann: Yeah, that's quite deep. Exactly. We're talking miles you know, we're talking two miles plus at least more like three. Independent were you on the planet? Why are we really next level que nos and Paul's because simply, the heat is way higher up. So we need to, we need to get to at least 150 degrees Celsius. Now I'm not sure Fahrenheit. And you know, to do something with the heat that's not even efficient for electricity production, we need to go like triple that to really be efficient for electricity production, to be liked by comparison of a steam powered turbine. So that's typically not available in both depths unless you next level Aquino, then there's some higher temperatures, I think there's some wells and drilled some wells in Iceland, which literally had like 400 to 500 degrees. And also in Italy, the experimenting with some really hot wells. It is that that's where it's available. However, that's just the very few few places we need to come to more places. And that's a question the drilling is the answer. And drilling is really the the main bottleneck. There's awesome subsurface work to be done later on, and how to create a very efficient heat exchanger below surface or open loop systems, closed loop system, different types of ideas. A lot of that is traditional knowledge that we have already from today's geothermal. The question is, how do you really get deep, it's a different technology we need for drilling, we invested in a company called gap drilling, their aim to solve that there's also other companies across the globe, that are also trying to solve this with different technologies. And it's all about the exponential lt of cost.
• 39:22
  Sebastian Heitmann: Today, every meter gets more expensive. The deeper you go, the more expensive it gets. And we need to come to technologies that are linear and agnostic of the type of rock they drilled, drilled to. So these are just very different technologies than we needed for oil and gas extraction. However, it's important to notice, all the rest is very similar. So the oil and gas industry today possesses 80 to 90% of knowledge. And we probably need to extract the resource officers or the people.
• 39:54
  Sebastian Heitmann: And we just need to now innovate a bit more around how to really drill more efficiently into these hard rock formations in order to enable deep ultra deep geothermal.
• 40:06
  Tim Montague: So tell us about that, though. What is what is the what is the specific breakthrough that allows one to make deep drilling economical or breakthroughs? Like I was recently alerted to a company called quase energy? Are you familiar with quake? Exactly?
• 40:24
  Sebastian Heitmann: Yeah, quase.
• 40:24
  Sebastian Heitmann: Carlos, he's doing he's doing millimeter wave technology. So basically, making the rock through millimeter waves evaporate. Like you can imagine, like a microwave, but Right, the very specific one that evaporates, right? And then there is a gap drilling where we investors in they're actually using plasma, or they have different technology, but one of them is plasma to also thermal, shocking the rock. Yeah. And therefore making it brittle and easy to drill. So different approaches. It's, yeah, there are different approaches, or some other companies doing did some laser stuff in the past. So there are different approaches.
• 41:07
  Sebastian Heitmann: It's just spending time and resources behind these technologies. I think all of them will have their place in the market, even though it's not a winner takes it all market. I think a lot of different technologies should come to market and fission will just enabling new drilling era.
• 41:22
  Tim Montague: So with with, you know, with wind and solar approaching $1 A megawatt hour or a penny a kilowatt hour, you know, sometime in the next 10 years, we'll we'll be there.
• 41:38
  Tim Montague: Where is deep geothermal on that spectrum? You know, in your interview with Nate Huggins, you talk about replacing coal and natural gas plants with deep Geo, you use the existing infrastructure, which is a great idea. I love this idea. And, and doing some deep deep drilling.
• 41:58
  Tim Montague: What what is the what are the economics of this?
• 42:05
  Sebastian Heitmann: Um, first of all, I mean, I think there's question marks and economics or shows or but in general, generally speaking, it's a, it can be very cost competitive and wind and solar might approach $1 per megawatt hour, at a certain time of the day on a certain day. Yeah, but definitely not 24/7 available. And if we calculate the cost of storage, and it's very different cost of storage is very expensive. And also, it's also limited to storage with I mean, terawatt storage capacities, are not the most likely thing I will put my bet, bet money on that they will ever come in an extra large capacity to, to really store like an economy over the winter, with very little wind or solar available. But there could be certainly areas where it's very, very challenging to do that. But I think they really play together. It's not either or wind and solar, wind and solar and geothermal partners. They're not either ors, so you would run some of your heat needs. And also, electricity needs on a constant consistent basis with a bit more expensive, I don't think we'll get down to $1. But we can probably get quite competitive. It depends on on the depth in the end of the day on the All depends on temperature, we really are able to access the so called supercritical geothermal, that's probably the holy grail of geothermal and often described as the fusion of geothermal because it's kind of a bit of a avant garde concept. Yeah, that is, water can take supercritical state when we are 274 degrees Celsius and 2020 bars of pressure. And that state, it actually is able to conduct about 10 times more energy than normal state, fluid or gaseous state. So it's a mix between those two states, that would probably allow for very efficient energy production and probably also around the $2 mark, but nobody's been there.
• 43:58
  Sebastian Heitmann: So I wouldn't put put that just by doing some basic calculations, you would assume it can come very cheap. But let's not go that way. I think any energy source can come in for five $6 and have the does not have does not require storage is extremely competitive, and a great companion to solar,
• 44:25
  Tim Montague: the whole long, we are away from being able to okay, I get it with shallow geothermal, you go to those places in the Earth's crust where the heat is shallow, and access to that and shallow and we should, we should definitely pursue those opportunities. And then in the long run, where the heat is deeper down, where you have to go several, let's just say a mile or two, how far away do you think we are from going to some random, you know, 100 megawatt natural gas or coal plant and replacing it with deep Geo? at that scale?
• 45:04
  Sebastian Heitmann: It depends a bit, I mean, generally is person whose first commercial project and next 12 months, so actually not that far away. It's gonna be actually going to I'm not 100% sure to be honest, US could be in Europe, not Hudson, Sure, okay. Probably in us, but I would have to ask the company the stage. So they presume the first commercial project and that time and that will not be this will go step by step, you know, the innovation will not you will not immediately replace 100 Mega Watt coal plant, you will, the first goal will actually go for district heating networks, easy to replace very even easier to retrofit than a power plant. All you need is a heat source and basically feed into that system. And that's it's quite straightforward.
• 45:49
  Sebastian Heitmann: Sure. And that'll be the first one first gold and there's plenty, plenty of district heating networks that could be utilized for that. And then later on, you could also retrofit power plants, but again, we're not talking 20 Year 2040 or 50. Here we're talking in the next five years. You could do all this and maybe put scale to it as well as it was interesting number it's mind boggling actually. It would require about 600,000 wells of the size of loaded like seven or nine into something that it's classic geothermal wells wise 600,000 of those wells to pretty much bleed all of our power needs from geothermal. You may not original some other resources on Earth on earth.
• 46:35
  Sebastian Heitmann: 600,000 wells, okay, actually ridiculously small number considering that the oil and gas industry is drilling about 100,000 wells per year for Getting gas. So in
• 46:43
  Tim Montague: 10 years in 10 years, although those wells are those are the oil and gas wells going, How do you How deep are those going? depends
• 46:53
  Sebastian Heitmann: completely where you are you can can be really deep offshore specifically, it can be really deep. Okay. We've seen oil and gas wells that several miles as well. But also very shallow in Canada and only a couple 100 years. We
• 47:06
  Tim Montague: make the drilling fast. If we make the drilling into hard rock faster than we could we could be doing 100,000 wells a deep geo a year. Yeah,
• 47:16
  Sebastian Heitmann: absolutely.
• 47:16
  Sebastian Heitmann: The scalability of the have the real bits, let's say it's not a problem. You could you could build as many drill bits as you would have to do in order to do the job. That's not a limitation factor.
• 47:28
  Tim Montague: Yeah. Well, unfortunately, we're out of time factors more. Yeah.
• 47:32
  Sebastian Heitmann: In fact, there's more about the the ability to actually be payability drill rigs, as I said, that's why it's scalable, because actually drilling rigs we have a lot we utilizing the planet as well for you. Yeah.
• 47:45
  Tim Montague: I mean, I do like this, that you can take the oil and gas industry and turn it make a right turn and start doing deep Geo, with that technology, obviously augmented and modified for hard rock drilling. Oil and gas drilling is not hard rock drilling.
• 48:02
  Tim Montague: Right.
• 48:05
  Sebastian Heitmann: Exactly. And by the way, they also quite aware of it. I mean, we're there was Sarah week in Houston, just the other day, in March now. And there was a lot of talk about that town about about geothermal. And actually, in Houston, we see quite a cluster of geothermal companies nowadays that are innovating in this space. So it's not that we're we still have to wait that giant Yeah. But slowly, everybody sort of waking him up. And the oil and gas industry is clearly on board for exploring opportunities. Yeah, they don't want to miss that. It's their chance.
• 48:39
  Tim Montague: So listeners, please check out all of our content at cleanpowerhour.com.
• 48:42
  Tim Montague: Tell a friend about the show.
• 48:46
  Tim Montague: That is great way to get more people educated about all the possibilities for the energy transition, and reach out to me on LinkedIn. I love hearing from my listeners, Sebastian, how can our listeners find you?
• 49:00
  Sebastian Heitmann: First of all, thanks for the chat really interesting. And by the way, we really appreciate your show.
• 49:04
  Sebastian Heitmann: It's really been doing this for quite a while and been covering a wide range of topics are really great. Thanks for having me today. You can also reach out to me on LinkedIn, absolutely.
• 49:14
  Sebastian Heitmann: I'm out on LinkedIn. Or we can also find more about us and an extensive.com. That's EXTANT a.com, which is where you can also contact us but see see all about a work and our wheels, a medium blog where we sort of publish on what we do, we obviously cover a lot more range than we're able to cover in this talk today. And but we do a sequel one day on other technologies. Yeah,
• 49:40
  Tim Montague: we just scratched the surface, no pun intended here today, but I really appreciate your time, Sebastian, thank you for what you're doing with expansion. And let's grow solar and storage. I'm Tim Montague. Take care. Hey, listeners. This is Tim, I want to give a shout out to all of you. I do this for you twice a week. Thank you for being here.
• 50:04
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• 51:05
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• 51:18
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