
Bedrock Energy, a geothermal heating and cooling startup that employs novel drilling technologies that enable affordable solutions, recently closed a $12 million Series A funding round. The round was led by Titanium Ventures and supported by Energy Impact Partners and Sustainable Future Ventures.
Among the company’s innovative technologies are advanced thermal simulation capabilities and an intelligent construction platform for geothermal borefield construction. As a result, Bedrock Energy can support geothermal installation on a faster schedule with higher accuracy and performance while delivering strong cost efficiencies. CEO and co-founder Joselyn Lai says Bedrock Energy’s innovations can benefit a broad spectrum of construction stakeholders, from production home builders to multifamily, commercial, and industrial real estate developers.
With the new capital, Bedrock is targeting geographic expansion in the Mountain West region and further advancements of its technology-forward solutions in the geothermal construction process.
Lai tells BUILDER that Bedrock Energy is targeting a quadrupling in deployment capacity in the next 18 months and significantly increasing the number of projects it is working on. Lai spoke with BUILDER about the origin of Bedrock Energy, Bedrock’s unique innovations, the growth potential for the geothermal industry, and how geothermal can unlock cost savings.
What are the origins of Bedrock Energy? What factors contributed to the company’s finding and what opportunities were seen in the market?
Geothermal heating and cooling has been around for 60 or 70 years. Geothermal heat pumps have been used for many, many decades. When my co-founder [and current chief technology officer at Bedrock], Silviu Livescu was a chief scientist at Baker Hughes, he was thinking through ways that his technology innovations—hundreds of patents and technical papers and so much expertise at the cutting edge of of the oil field—could transfer into clean energy and the energy transition. He noticed that geothermal heating and cooling had been done kind of the same way for many decades, but so many of his inventions—including being able to read the ground and automate drilling and deeply understanding the subsurface—could do so much for the geothermal heating and cooling category that has so much potential to grow.
So he had that aha moment about the transferability of his technology. He met our other co-founder Joel Wishkovsky from Overture Venture and me. I have been in startups for over ten years doing a lot of startup building, especially in sustainability. And so when we met and [Livescu] had had this aha moment, the key thing that we were realizing together as a group was that geothermal heating and cooling has this massive adoption potential because of what it does in this current moment of not [having] enough energy. The grid is just not being built out fast enough for all the communities that are growing, for all of the communities that are increasingly electrified, for all of the electric needs that need to go into cars being electrified, data centers growing, homes being electrified. And geothermal provides free thermal energy from the ground right on site in a way that reduces electricity needs. It's just so beneficial for communities and for developers, for saving money, and for enabling energy abundance. So that aha moment really got us thinking ‘let’s start this thing.’
What were the stages of building out what became Bedrock Energy following that aha moment?
That aha moment was three years ago. Since then, we have spent a lot of our first phase—our seed stage—building prototypes of our technology to prove all the key concepts about our vision. So, a lot of those key concepts are: Can you drill and construct geothermal systems much faster and cheaper if you can read the ground, which we uniquely do with our sensor package that sits on a drilling machine just to see the ground while we're drilling. Check, we can go deeper, faster, cheaper. In addition to that, we utilized those technologies in commercial projects to demonstrate the value proposition to real estate owners. We've done that in both multifamily residential and commercial. And that has been a key point in terms of, is there market demand? Is there market impact? Can this be a big business that really brings value to the real estate industry?
So together with the technical prototypes and the commercial demonstrations, we really came out of our seed stage saying ‘yeah, we've proved the basics, we're really ready to go grow geothermal deployment capacity to anything from commercial real estate and industrial real estate, all the way to multifamily residential and large district communities.
Can you talk about Bedrock’s subsurface thermal simulation capabilities and construction platform for geothermal borefield construction?
Our technologies fundamentally focus on making geothermal affordable, and then more accessible from a space and schedule standpoint. The number one thing that's really important for enabling all that is that you've got to be able to drill faster and deeper and more confidently regardless of the soil and rock conditions. The challenge with the current approach is that if the subsurface is really difficult, people don't really have the confidence that they can go to deeper depths. If you can't go to deeper depths, you need more holes. That's just more expensive. And if you don't have the confidence of handling different kinds of lithology, then the dollar value of these systems can range from $10 per square foot to $30 per square foot in terms of the overall capital expenditure of this energy investment.
That range is really difficult, and so our technology is about reading the ground, being able to drill really intelligently so that no matter the subsurface difficulty, we're getting you to 1,000 feet, which means much fewer boreholes, much less space, much less destruction, and just overall going faster and getting really cost effective so that everybody can reliably get under $10 per square foot in that capital expenditure of the system which is really how it pays for itself and makes this a really profitable choice for for developers and owners.
What barriers or hurdles does the geothermal industry face and how can preconceived notions some stakeholders may have be combatted?
The current conceptions—I won't say misconceptions because there's a history of the way the industry has been—are that it will always take so much money and it will be a 10 to 20 year payback period. Or, [geothermal] will always take a lot of space because drillers are really only comfortable going to 300 to 500 feet depths, so you need a lot of boreholes and you have a lot of surface disruption. Or [geothermal] is just going to increase my schedule for building by months, which is millions of dollars in capital carrying costs.
Those are the things that we're really here to say, actually, if you are able to leverage more innovative technologies, this can be a really strong payback period. This is a financial return for you, you can be profitable based on this. It's really not gonna impact your schedule that much, we can get in and out in a couple of months. Or this is definitely not gonna take that much space in the limited area you have.
Are you finding once you deliver that message stakeholders become more receptive to the idea of geothermal?
We've definitely done projects where Bedrock's ability to say ‘we can shrink that space and shrink that schedule by 50%’ has gotten people to say ‘Okay, I wasn't convinced about doing geothermal, but now I will.’ The other thing that has been true is that there's a lot of folks who have already been geothermal curious or maybe have done one or two projects. So we're not always working with folks who are converting to get their more from total scratch. There’s already a lot of need [for geothermal] that made people geo-curious. There are already folks who are saying I'm building this completely new development and the utility is not giving me the power that I need for three years, because it's just gonna take so much time to build out our infrastructure. Geothermal could help with that. People are already thinking about it. That means that we're getting folks over the line to decide to do geothermal, but they already had the pain points there long before.
What does the $12 million funding round mean for the growth of the company?
What this unlocks is that we're really excited to do more geothermal work. We're expanding our deployment capacity with this raise. We are actually building more rigs, hiring more crews, and saying ‘Mountain West region, we’re ready to drill.’ The other thing that the capital enables is that we still have more really exciting tools to advance robotics and autonomy in the geothermal construction process. And so that's also what we'll be using this capital to do. Hire more engineers and get even further on our technology vision.
Speaking to investors, what is their interest toward geothermal?
There's two types of investors that I think are excited by the potential we offer. The first type of investor is a venture investor. We are a technology company, and so our venture investors are saying, can Bedrock’s technology make this geothermal industry go from 1% of HVAC to 25% of HVAC, which would be a multibillion dollar industry? The thing that's so key about our technology is that we are bringing down geothermal in terms of installation cost in the same way that solar came down in installation costs by 80-90% over the last 20 years. So when you bring down the cost of an energy type, it is just the law of markets that the lowest cost energy will win, because it will help all of these real estate developers say, if I have to pay $4,000 dollars per kilowatt for solar but I can pay $2,000 per kilowatt reduction for geothermal, I'm gonna go to the most cost-effective thing, and that will really help my developments become more resilient and accelerate occupancy faster. That really makes venture investors very excited.
In terms of the second type of investor, it's energy deployment project finance folks. And they are thinking if they put in capital, maybe the builder doesn't want to spend money on a $3 million district geothermal system that serves as a network for the whole community. But they want the benefit. And so, project finance folks would say, what if I just bring in project capital and own this geothermal system? Well, then, the home builder doesn't have to put in the upfront capital, but there is this energy system that makes the whole community more resilient and expedites occupancy. The project finance team investor is able to make a return on having installed that geothermal system, just like they would with solar or owning wastewater infrastructure.
Following the planned geographic expansion into Mountain West states, what are growth targets you are looking at in the short-term for Bedrock Energy?
We're going to be probably quadrupling our deployment capacity in the next year and a half. Over this time we are already starting to increase the number of projects we're able to do. This is the perfect time for us to be talking with real estate developers, including builders, and asking what do you have down the pipe in a year where that you'll be wanting to start breaking ground, what are the design decisions that we can support with in order to make sure geothermal is possible and pencils well for a great financial outcome? Then we'll be able to be drilling all of these systems in the next 12 months.
Then the years after that will be where we scale across more states. Right now, the growth that we're focusing on is really still focused on the Mountain West region, Texas, and putting a little bit of capacity in the Northeast. But beyond that, there's so many more regions that can benefit from geothermal in the next two to three years.
Is there any other piece to the technologies unique to Bedrock or to the wider geothermal story that are important to note?
From the technology standpoint, I mentioned a lot about being able to see the ground. That is actually really useful both for designing the system, designing a really strong robust system in a really fast way so that the design process for real estate developers can be really fast and they can be confident that that the system will be bankable and really strong and high quality. And it helps us drill a lot faster. The technology stack is reading the ground and adding robotics and automation helps all across the design, to the drilling, to the construction process. I just wanted to kind of put a finer point on that.
In the current big shifting landscapes in our country, we have a new federal administration, it's one that's really focused on American energy dominance and American energy abundance. Geothermal is one of the categories that is really strongly positioned in this space. There are some headwinds for some categories that might have very foreign supply chains. But geothermal is really well loved across all political stripes and especially when we talk about American energy dominance and abundance, what is more suitable for that than energy that comes from right under your property for free and is the most prevalent type of energy on the planet. That's what we're here to unlock for developers.