Khosla-backed Mazama Energy just raised $135M to drill deeper into super-hot-rock geothermal

Geothermal startup Mazama Energy raised $135 million in an oversubscribed Series B, the startup said Thursday.

The fresh funding will help the company develop horizontal wells in super-hot rocks capable of generating 15 megawatts of electricity per well.

Mazama plans to start generating electricity sometime next year and said its first site in Oregon is capable of producing 10 gigawatts of electricity. That’s a sharp upward revision from the company’s estimate last year, when investor Vinod Khosla said the site had the potential to produce 5 gigawatts.

Enhanced geothermal startups are shaping up to be the dark horse in the battle to power AI data centers and other large loads on the grid. While tech companies and data center developers have been throwing their weight behind natural gas, geothermal startups have been quickly advancing their technology.

Unlike previous geothermal projects, enhanced geothermal startups are targeting deeper and hotter rock. Mazama, for example, has drilled past 10,000 feet in 15 days on its way to about 15,000 feet deep. At those depths, the company can access 750˚ F (400˚ C) heat, which at high pressures turns water into a “supercritical” fluid that’s neither fully liquid nor fully gas — a state that lets it absorb far more energy than ordinary steam. Mazama said that will allow each well to produce up to 10 times more power than traditional geothermal technologies.

Given the depths Mazama is targeting, the potential payoff is significant. Tapping just 1% of super-hot rock worldwide could generate more than 63 terawatts of electricity, according to the University of Twente and the Clean Air Task Force.

While work at its Oregon site is still in the early stages, the startup has already secured land for a second development. Mazama aims to complete development of the first site by 2030, at which point it says it should generate 200 megawatts of electricity.

The new round was led by Centaurus Capital and Doerr Capital, with participation from ConocoPhillips and Shell Ventures. Existing investors including Khosla Ventures and Gates Frontier returned, and new investors SiteGround Capital, H. Barton Asset Management, and the Jeffrey and Marieke Rothschild Foundation also joined the round.

Mazama was incubated at Khosla Ventures.