Mazama's superhot rock bet draws $135M as Oregon site's potential doubles

Mazama Energy has raised $135 million in an oversubscribed Series B, the geothermal startup said Thursday, money it will use to develop horizontal wells in superhot rock capable of generating 15 megawatts of electricity per well.

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

The company is drilling miles underground to reach rock hot enough to change geothermal's economics. Mazama has drilled past 10,000 feet in 15 days on its way to roughly 15,000 feet, where it expects to access 750°F (400°C) heat. At the pressures found at those depths, water becomes a "supercritical" fluid — neither fully liquid nor gas — that absorbs 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.

Unlike earlier geothermal projects, enhanced geothermal startups are targeting deeper and hotter rock. The company plans to start generating electricity sometime next year, and says its first site in Oregon is capable of producing 10 gigawatts — a sharp upward revision from its estimate last year, when investor Vinod Khosla put the site's potential at 5 gigawatts. Work at the Oregon site is still in the early stages, but Mazama has already secured land for a second development. It aims to complete development of the first site by 2030, at which point it says it should generate 200 megawatts of electricity.

The potential payoff is significant. According to the University of Twente and the Clean Air Task Force, tapping just 1% of superhot rock worldwide could generate more than 63 terawatts of electricity.

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 — and Mazama's revised resource estimate at Newberry is one measure of how fast that ground is shifting.