Oct. 11, 2021

Ep 58: John Redfern 'Cracking the Geothermal Code'

John Redfern is an investor, advisor and serial entrepreneur in the data analytics, oil service and energy tech verticals. John spent his career in executive roles at multiple international oil and oil service companiess including as a Director at Hess in London, President of Accumap in Calgary and President of IHS Energy in Denver.

Prior to Eavor, John spent 13 years in China co-founding a series of start-ups, the most recent of which is LocalGravity, the leading retail data analytics platform in China. As a director, executive and advisor over the years, John has specialized in commercial strategy, negotiations, alliancing, M&A, and private equity.

John holds a degree in Engineering Physics from Queen’s University in Kingston, Law degrees from McGill University in Montreal, and an MBA degree from INSEAD in France.


Click here for Edited Highlights

Michael Liebreich: Before we start, if you're enjoying these conversations, please make sure that you like or subscribe to Cleaning Up, it really helps other people to find us. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation. Hello, I'm Michael Liebreich, and this is Cleaning Up. We've got a special episode today with John Redfern, CEO of Eavor Technologies. It's a special episode because I'm an advisor to John and his team at Eavor. Sometimes I'm accused of talking up the companies in which I'm involved or in which I've got investments on social media and in my presentations. In fact, it's entirely the other way around. I tried to get involved with and I tried to invest in companies, which I think are going to be very, very successful. I think that John and Eavor Technologies is likely to be one of those. So let's find out why. Let's bring John Redfern into the conversation. So John, welcome to Cleaning Up.


John Redfern: Thanks, Michael, pleasure to be here.


ML: Now, John, you won't have heard my preamble just now which I recorded saying that the reason I'm an advisor to Eavor is that I think you're going to be very successful. But we're going to need to put that aside, I'm afraid.


JR: No, I'd rather dwell on that. It sounds very encouraging. But we can move on and come back to that later.


ML: Well, let's see if you can persuade our audience on YouTube and podcast that that is indeed the case. What I'd like to do is start by taking a step back. And let's talk about geothermal. Because I started New Energy Finance in 2004. And geothermal was going to be, you know, one of the saviour technologies, it was going to be a big deal. And there are some figures that are out there. For geothermal, perhaps providing as much as 2000 gigawatts of electricity. That's effectively 2000, large coal fired power stations that could be geothermal. The reality today is 16 gigawatts. So it's less than 1% of what they thought that could actually be produced is currently being produced. And you've got a bit more if you go to geothermal heat, you got about just over I think there's about 100 or so gigawatts of geothermal heat. But that's low grade heat, that's just space heating, it's not really doing much to meet the great clean energy net zero transition. Why is that? And what are you going to do about it?


JR: Actually, if I can interject, you know, the heating element of it is one of the things that's hard to decarbonize as well too, efficiently and so direct heat is important in places like yours in Northern Europe, the direct heat market isn't as big as the electricity market. But in general electricity is the scalable, you know, heart of any energy system, certainly going forward, where everything's being electrified, and geothermal, and has always been,


ML: I do apologise to anybody who thought that I don't like geothermal heat pumps, or geothermal heat. I absolutely do. But I think you know electricity is, in a sense, the difficult bit for geothermal.


JR: Yeah. And that's where there is a gap that they need geothermal to fill. So geothermal, as you pointed out, has long been a contender. It's been around for 100 years. But despite many predictions of it's ‘coming soon’, so to speak, it never really made it, there's been a brief period of building in the 70s and 80s. And then it plateaued off again. And there's a number of reasons for that, but what we think we're going to be able to achieve is to finally make geothermal scalable, which was the main problem with it before, it works in a few special spots, like Iceland around the Pacific, around Ring of Fire, and the obvious, you know, hot, very hot geothermal spots where you can think of having volcanoes, geysers or whatever, those are already, you know, in production or are being exploited. But when it comes to really scaling up that it's a geothermal anywhere sort of solution that you can put where the demand is, and not just next to a volcano, that's been a harder time coming.


ML: Okay. Now, when you talk about scaling up you don't mean just doing the same thing, but bigger, you mean doing it in more places,


JR: Doing it in more places with fewer constraints and with more reliability. So there's a bunch of things that has made geothermal tricky in the past. One, it only works in a few very hot spots around the Earth. When you find that hot spot, it's not good enough that it's just hot. It has to be a highly permeable aquifer that can produce lots of volume of water as well. And it's got to be, you know, it's you've got a lot of exploration risk as well too. So you end up with a lot of dry holes, sometimes an aquifer that doesn't last where you want and or the heat itself isn't there, it's, you know, the good, the good analogy would be in the oil and gas industry, where there's a certain number of conventional reserves that peaked and started going down back in the 70s. But they came back into the resource play, shale, where they went brute force and drilled.


ML: Because when I set up New Energy, Finance 2004-2005-2006-2007, there was a lot of excitement about hot dry rocks, and, and, and stimulating fracking and pumping in water in one hole and getting steam out the other. And that was, I mean, we had a geothermal analyst full time we had a team that was entering data, you know, we were flying people around to Indonesia to look at things and, and just basically none of that, or very, very little of that, I don't know, I don't know of any successful projects that arose from that time period.


JR: Well, I mean, there were a certain number, but the overall cost of doing it and the reliability of doing it, and the places you could do it was a lot less, because you're looking for a very rare combination of heat permeability and flowing aquifer that you could use to extract heat from the earth and bring it up to surface and create electricity. Maybe we should back up and say there's a couple of different ways that geothermal electricity is made. One is a traditional, just find a really hot spot where you can put a pipe in the ground and steam comes up, those are rare, but they're obviously highly efficient. The second type is when you go and there isn't a flowing aquifer there. And so you have to create your own aquifer, you have to fracture the rock, you have to create your own permeability through fracking, or hydro sharing, or whatever you want to call it, but it's stimulating the rock and has only known associated challenges with it. Part of it is it's not the most popular thing to do environmentally. But as well, it's not that predictable, and not that sustainable. And then the third way, is basically our way that we've come up with, which is to use horizontal drilling techniques to go down and in each location, basically drill out a big radiator kilometres below the surface that you use to harvest heat through purely through conduction, just like a radiator, bring it to the surface and run it through Rankine cycle or heat to power sort of unit that flashes or boils off a liquid into a steam that turns a turbine and then completes the cycle. So three different things. So the first two are very limited geography, geography, and, and they're also limited in their predictability. Whereas ours, it's a little bit, it's a little bit more work, but we know exactly what we're going to get at the end of the day. And that makes it easy to finance. And that's why your guys then will get excited over at New Energy Finance, because they've got something they can finance the same way they can finance wind and solar. 


ML: Right And so that, you know that what we've got is in a sense another the next generation because the first generation was where there was where you could get the these unique combinations of heat and steam, Pacific Rim, Nevada, Iceland, Japan, and then you've got Italy, then there was this, sort of the generation that everybody's excited about when I started New Energy Finance, which was all about creating these artificial reservoirs, fracking, putting water in, then it comes out and you use that, but you're not doing any of that you're actually drilling. And it is a closed loop, right. So all it is, is horizontal drilling. You describe it as creating a radiator, right, so what temperature does this radiator run at?


JR: It depends on where you do it, preferably the hotter, the better. And we're working to make it hotter. I think the important thing to stress here is you've got a lot of similar technologies used in the oil industry and in geothermal, a lot of the drilling techniques and everything else. But I think it's important to point out that the difference between oil and gas and traditional geothermal is much less than the difference between traditional geothermal and what we're doing. in both traditional geothermal and oil and gas. Just got to remember it's all about finding a rare, you know, permeable aquifer that you can produce a fluid from and bring it to the surface. And that is very efficient, but it brings up all sorts of environmental issues. Ours is not like that, because we're not injecting any water into the subsurface. We're not extracting any water from the subsurface, we’re just going around in a closed loop and we're just harvesting the heat itself through conduction and that makes all the all the difference. For all the geothermal sources, you know, the hotter the source you can get, the better. And the nice thing about our resource, unlike oil and gas, the deeper you go, the hotter it gets no matter the resource. So it's really not a question of any more about finding the heat, the heat is everywhere you go around. And it's not about finding an aquifer, it's just about finding a way to efficiently drill down as deep as possible with as much surface area as possible. And use that to harvest the energy at as high a temperature as possible, because the energy can bring out the conversion from heat to electricity much more efficiently, the higher the temperature.


ML: Okay, so typical temperature at the bottom the temperature that you're going to get to?


JR: Yeah, we have sort of two generations of products. The first generation of product we demoed in Alberta, and we're currently looking to build in Germany is limited by oil and gas technology, oil and gas rarely operates about 200-220 degrees C, and all the tools we're reusing from the oil industry to drill things sort of have those design criteria around them. So the original ones we'll do will be, you know, 150-200 degrees, those sort of rock temperatures. But what we're targeting with some of the newer technology we're developing on the drilling side is to get up to 300, 400, maybe even 500 degrees C, and that's you end up with an order of magnitude more efficient system that way.


ML: And how far do you have to go down? So the Alberta or the projects in Germany, so generation one, how far down are you going and generation two or beyond how far down you're going to go?


JR: Now generation one, we're talking more about three or four kilometres going down, and then drilling something horizontally for a similar distance or even longer. But you know, and when we're talking about next generation stuff, we're talking about starting out with some seven kilometres or more deep. But of course, it all depends on what the temperature gradient is. You got heat everywhere in the world, but it's on average every kilometre you go down and you get an extra 30 degrees C. But then there's lots of places where we'll obviously start where there's higher temperature gradients, so you don't have to go as deep to get to the same temperature, whether that's 200 degrees, 300 degrees, or 400 degrees.


ML: So this is a lot of drilling. And let's come back to that. But let's just deal with one thing before we do, which is, even if you get up to the temperatures of sort of 200-250-300. That's below the temperature for a normal steam turbine. So you know, somebody who comes out of, you know coal and gas generators, they would say, well, that's kind of an inferior resource. How are you going to generate electricity from that efficiently? What sort of cycle do you do? How do you generate electricity with that?


JR: There's a number of different ways. But the most common one right now is an organic Rankine cycle, which you can take a you know, something that's as low as 70 or 80 degrees and use it to generate electricity because within the organic Rankine cycle, heat to power engine, you'd have a fluid that boils essentially at a lower temperature than water. Now it's not very efficient at those things to get decent efficiency it will want water coming up at least and then 120 to 150 degrees C. And ideally, you know, a lot a lot higher than that in the next generation product.


ML: Exactly. And I think the point is that organic Rankine cycle engines are not novel technologies.


JR: No they’re standard off the shelf technologies that you can buy from a supplier and so we are we're focusing all our magic on the subsurface on the surface we're dealing with very standardised components, and in the subsurface as well, you know what we're doing to drill these radiators. It's very unique and no one's ever done it before. But you know, the hardware and the technology we're using to do it has always been there in the oil and gas industry, just used for different purposes.


ML: Right, but that was one thing that you mentioned that you're drilling, you're creating a loop right, you're drilling out and then back you're drilling out to and then joining it up, How do you create a loop because oil and gas does not do that, they just go out.


JR: There are a number of different configurations and the very first ones we did were quite simple because you start in two different locations, drill down and then you connect them toe to toe. And what's interesting is, you know, again, the technology to connect those two pipes to drill down several kilometres and across several kilometres and hit another eight inch pipe, that exists in the oil industry. But what they use that the oil industry for was a) to avoid running into another wellbore and we're trying to use it to hit the other wellbore and they used it in the past for blowouts and stuff but they had to drill into another wellbore so again, an example of existing technology and we're just putting together in a different way. So there's very low technical risk. But as well, when it comes to the radiator, part of what we're doing is, we're using a few other tricks from the oil industry like the oil sands, where to get efficiency up, they wouldn't just throw one, well, they're doing one vertical well, and then they'll branch off into 30, or 40, in what they call multilaterals, or legs, we do the same thing in our case to increase the efficiency of it. So what a typical Eavor loop would come down to two wells side by side, then they branch out to them, and then meet toe to toe again. So it's like a big pitchfork joining toe to toe with another big pitchfork. And each of those little loops, you'll have 10 to 12 of those little fingers or loops on each one. And they'll each be four or five, six kilometres long. So when you get the total surface area of one of these subsurface radiators, you could have 50 kilometres of drilling in one loop, all in parallel. And that's, that's the magic that makes it work that sheer size of the surface area, because conduction itself is a very, you know, gentle and reasonably slow process unless you've got massive surface area, which, which we found a way to do,


ML: Right, and so and you're not, you're not fracking, so you're not going to push this fluid through fissures and pores and cracks, this is always staying within an eight inch wellbore.


JR: So they're, they're all yeah, there was no water into the rock out of the rock, no fracking, which is all important when it comes to selling this as a green technology in a place, let's say, like, Germany, or whatever. Maybe it's not as necessary somewhere else. But there is definitely the case that if you're going to be injecting lots of water, in and out of the rock, like a traditional geothermal, you're going to have to be very careful, and there's always going to be a risk of some seismicity. And that's one of the things you know, we're very careful about, before we drill anywhere, we make sure we have the right monitoring equipment to make sure that there is no increase in seismic events. And if one does happen, we can show you know what the source of it was, and it's not going to be us, because we're not  injecting anything in and out of the reservoir. Right? 


ML: I know that's going to be critically important because that sort of second generation of geothermal, which involved fracking, they're calling it EGS, enhanced geothermal systems, it has a history of triggering earthquakes and Basel had one, South Korea had a number and so on. So that has a very high risk of not achieving social acceptance. I mean, I don't know maybe it will be accepted in Texas and Oklahoma, but I'm finding it very hard to see, you know, the rest of the world adopting it.


JR: There's a, there's a number of challenges. Part of it is the environmental concerns. The other is just said it's unpredictable, and hasn't really been proven to work in a consistent manner yet. Everyone else talks about well, it's going to be a little bit different this time, we have a little bit more sophisticated tools. But the fact is, it's got a record of, let's say, all traditional geothermal EGS, or whatever has a high risk of drilling down and finding what's called the hot or dry well, where they go down, there's heat, but no permeability, no fluid to come up. And we run at those all the time, because once they have failed geothermal, well, like that, it's actually a perfect well, for ourselves, there's lots of well control the geology is well known, often the drilling pads already been drilled, there's an existing wellbore, all like offtakers arranged, so it's perfect for us to come in. It's almost like if you're in the oil industry, and every time someone drilled a dry hole, you have this technology that came in and still produced oil. That's sort of the enviable position we're in, in the current situation. 


ML: We have a project in Cornwall in the UK, which I believe is not an Eavor project that is an EGS project, is it not?


JR:  It's a more traditional project, yes, where they are producing a fluid from a reservoir that I believe they stimulated, or fracked. I can't remember exactly. But either way, it's producing a fluid and bringing it up to the surface.


ML: And my understanding is there's a very specific geology where there's a fracture, which they can exploit etc. But it's a very small project. And I guess I'm finding it again, hard to see how you scale where you go from there, even if it works, what do you do next? You look for the exact same sort of lucky fault elsewhere, or what do you do? Whereas I think what you're saying is you you're just gonna, you know, do this anywhere and, and but it does involve a lot more drilling,


JR: A lot more drilling, but it's predictable, the results are sure and you can do it where you want it. In Cornwall, they're basically having to inject in one well, and it has to percolate through the rocks of various fractures, and then come up the next well, hopefully being sufficiently warmed. But there's a lot of uncertainty in that when you've got the cold water coming in. We already talked about the environmental risks of it, but when you can have what's called a cold water breakthrough, when is that cold water going to find that a pass through the rock where it gets through and the temperature drops off? That happens all the time. The other thing is, when you're dealing with hotter, more economic, traditional geothermal resources, the quality of the water is you know, it's got lots of contaminants in it lithium, stuff, lots of salty brine and everything else. So a lot of it's got to be either retreated on the surface and or reinjected into the subsurface, which takes a lot of, you know, pumping power and everything else. 


ML: Some would say that finding the lithium in your GFR water is a benefit, but it's certainly also a complication. Let's get back to the sheer amount of drilling. Because you know, you talked about now that 50 kilometres of drilling, how much electrical power would that produce something that's got 50 kilometres an Eavor loop system with 50 kilometres? How much does that produce? 


JR: Again, it depends on how hot the surrounding rocks are, which depends on the gradient and how deep you go. But starting off in early stages that are not so hot and be maybe two megawatts later, once you get into hotter, deeper rock, it could be, you know, eight megawatts, we can drill, so that will be their 50 kilometre loop. But we can drill 10 of these from a single pad, basically, their location. And so you can get quite a few, 80 megawatts from a single lease area.


ML: Right? And now there are those who say that, that can never be economic, they challenge the amount of megawatts that you get out, they challenge your drilling costs. There are some very vocal folks out there who, you know, they can be found on the internet. And so can the people they work for, and their various sorts of entanglements can be found. But they're very, very determined to say, No, you've got all your calculations wrong, what do you say to them? How do you deal with that? Also, as a startup entrepreneur, when somebody is out there saying you fundamentally got your calculations wrong?


JR: Well, like I say, it at least starts a debate. And there's two steps here, we're actually actually, when we first started doing this, a lot of people came out and argued that the thermodynamics was wrong, that we wouldn't actually get the amount of heat out that we're talking about. And then as we convince one person after another, that the thermodynamics are right, that all our calculations are correct, then they would question yes, but how expensive is it going to be and is that commercial? I just came from Geothermal Rising conference, which was, you know, a couple of years ago and follow people who didn't believe the thermodynamics, I would think that the thermodynamics themselves are now considered settled science because what the Department of Energy did over the last year or so is actually commissioned, every National Lab or pretty well, every National Lab in the states like Sandia, and National and Enrel and stuff like that, to do their own thermodynamic analysis, Eavor loops. And closely, we got to the least interested enough that they all said, took some of that computing power they have that usually designs, you know, nuclear weapons and things like that, and used it to model Eavor loops. And I think the consensus now is with very few exceptions, there's always a few holdouts. But even the government says, no, the thermodynamics are correct. Now, when it comes to the economics, well, anything that's an early stage of development, whether back when it was wind, or solar, or excess, now, you start out with an expensive cost per unit, which is where we're at at the moment. But the nice thing is we can still cherry pick, and we certainly presented in the conference to the appropriate people. The projects we're working on first, which are economic at the start and financeable at the start, but they're not where we're going to end up. So we look for a lot of our early projects are in places like Germany, where sure we got expensive power, but we're able to deliver the type of power they want, where they want it, and they're willing to pay 251 euros per megawatt hour for that was a 20 year guarantee from the German government. That's financeable even at an early stage of development when things are at a high unit cost but of course just like the shale revolution in, in the oil and gas industry, with volume, you can drive down a learning curve the same way shale drilling did, the same way wind did, the same way solar did. And using some of the innovations we're talking about, we're looking at driving the cost down to about six cents or below per kilowatt hour, which is more expensive per kilowatt hour than wind and solar. But we bring a lot of other attributes that actually enable the use of wind and solar, we’re cheaper than solar plus batteries for example.


ML: Let's get on to the other attributes and load following all sorts of good stuff. But I want to put a push on that, on that cost. You know, if I was an independent journalist, you know, I'd be pushing you now to say, right, so John, what is your levelized cost today? And you'd say, Well, it depends on whatever. Just tell me, what is your levelized cost today? The first project that you got across the line, electrical project, what will the cost be?


JR: 15 US cents  a kilowatt hour?


ML: And so, and then you expect it to come down and you use, you said the figure was six cents, correct?


JR: Six cents. And right now, you know, talking to people in the States, there's lots of demand at about seven cents at the moment. Now for geothermal power. If you can produce it, we think we can produce it at scale and volume. And so that's pretty, pretty tempting for ourselves.


ML: Okay, but now, it's not as cheap as wind and solar. So then there'll be people saying, Well, why would you ever do this, because wind and solar are going to be you know, and I've actually been out there in public saying, they're going to get to one cent, or $10 per megawatt, you know, obviously, in the most fantastic resource locations with low cost of capital. But we're not far off from that in the world record locations already. So you're six times out of the money, let's call it four or five times, you know, realistically. Now, why? Why would somebody want an Eavor loop? When they can, when they've got so much wind and solar? Can't you just do it with more wind and solar?


JR: People like it, when you can keep the lights on. Yeah, and as I've discovered recently in California, and Texas, and stuff like that, there is nothing cheaper per kilowatt hour than wind and solar, but they're intermittent, they don't work when the sun doesn't shine, and wind doesn't blow, as we always talk about. And, you know, to make wind and solar reliable, you need other sources of energy in the grid, that provide that resiliency that provide that baseload at the moment, it seems like big coal plants and gas, peaker plants and nuclear plants, but all of those are being phased out. So the question is, what do you replace those with, you can't replace them all, just with solar and batteries, you end up blanketing the entire surface of the earth, practically with solar cells. And it's not really cheaper, once you factor in the cost of whether it's pumped hydro, or batteries, or whatever else, it's going to give that resilience. So we actually did a study in conjunction with Jesse Jenkins in Princeton, who I believe, you know, as well, Michael, and, you know, we basically went in and used his model and alongside of him, and said, okay, what is your model predict? And his model is forecasting, actually, it's interesting, same thing you're talking about, in the one scenario, one cent per kilowatt hour solar unlimited, as much as you want wherever you want it. And but they also look at the Atmos model, they put in the demand forecast by the hour by the week using real data, projecting it forward to 2050. What's the demand going to be there? What are the other alternative ways of satisfying those, you know, resiliency requirements, and basically for a place like the western US his analysis said to do the optimised system to have the ideal, you know, mix of one cent per kilowatt hour solar plus some wind plus, you know, gas peaker plants with carbon capture. And so, you know, for a net zero solution is saying was we should have in that particular scenario, it was anywhere between 20 to 40% of the whole grid, should be Eavor loops a lot of it would still be solar, but what we'd squeeze out is all the, all the batteries, a lot of the battery storage, a lot of the pumped hydro, a lot of the other options, and doing that would save, you know, $20 billion a year just know western US. So if you know, there's not a simple answer to it because there's a whole bunch of different attributes we bring to the table. We are not just baseload, you know, we're dispatching.


ML: That was what I was going to ask you in that example that Jesse Jenkins you he and his model worked through, how is your resource being used? because surely, you know, once you've built an avenue, why wouldn't you just run it? 24/7, And just, you know, why do you need the solar, because you know, when the sun shines, you're going to turn down, Eavor loop and not going to use it. So what happens, what's the secret sauce there and when is the Eavor loop used in that way?


JR: The secret sauce is that we're truly dispatchable. And we're not just turning this thing off and turning it on later, we're actually, when in the middle of the day when you got lots of super cheap, almost free solar power, you let that come into the system and turn the Eavor loop down. But during the time when the Eavor loop is turned down, it's saving power for the evening or the night when something else isn't working. So we would dispatch around these other intermittent resources like wind and solar, that have to produce when they produce they can't decide when they produce. And that reduces the overall cost,


ML: And so the key is that the heat keeps flowing into the subsurface. So the expensive bit of all of those kilometres of drilling, the heat keeps flowing in. And then you use it when you want, so you decouple the heat flow into the subsurface and into the and the use of the generator, right?


JR: The key to remember is that this massive radiator is down under the ground. If you follow the molecule of water, as it went through the loop, it would take, you know, 8 to 10 hours just to do that operating on baseload. So when we shut in the water, as you pointed out, it gets hotter. But as well, when we want to produce it, we can produce it faster than we would regularly and you know, pull that down, let's say in the evening when there's a demand.


ML: So you  could surge in the evening.


JR: Yeah, absolutely. Instead, we're replacing a whole bunch of batteries in a scenario like that.


ML: And why are you cheaper than batteries? Because, you know, batteries are going to get really cheap. So how do you beat the combination of solar plus batteries?


JR: And again, when we're doing this, the sort of dispatchability is an inherent part of the design, we're not, we're not the only thing we have to do to allow the dispatchability is slightly oversize the service location. And that, that turns out to be cheaper than batteries, you know, they're not free to make everyone talks about driving costs down, but, and Jesse's got some very aggressive forecasts as to how cheap they will get. But even factoring all those things in you know you still have some batteries, but it makes more sense to have a big slug of Eavor loops, but like a battery that recharges itself, you know. So it's, it's not just the fact that we can move the power around within a day to dispatch around the solar peak, it's that, you know, it's going to be there every day, to the same amount, and you can rely on it. And that allows good stability. The other thing to remember is, and people always overlook this, we always talk about the intermittency of wind and solar. But the footprint of wind and solar is a bit of a hassle and it's going to get worse. Sure down in Nevada and California, there's lots of relatively empty land that you can fill with solar panels. But there comes a point, especially in a more crowded place like Europe, or let's say a place like Singapore, where you just don't have room for more solar panels. And even if you did, do you really want to cover your whole country with them? So you know the other advantage, it's not factored into Jessie's model. But part of the other advantages, you know, as the electrical grid goes from where it is now to 100% green. And as you know, EV, electric vehicles and everything causes the electrical grid to have to grow in size, you can manage to preserve some of the natural landscape by doing something like, like Eavor.


ML: Right, and let's talk about some of the projects that you've got in your project pipeline. You know, I have the kind of behind the scenes knowledge that you've got a pipeline of projects, I don't know where it stands now. 200, 250. But what do the leading projects look like? You've talked a bit about Germany, where they have a feed in tariff for geothermal, which is sufficiently attractive to make this work. But if you could talk about your two or three different sorts of projects that you've got in the top, you know, in the top 20 or so in your project pipeline, I think that would give the audience a bit of, you know, granularity on what you're trying to achieve. What do you mean by scalable then?


JR: Alright, so I think one of the things I already mentioned is one of our best projects are projects where there's been a failed geothermal well, so they've drilled down, they've done all the work, there's just no permeability. It's hot, but dry, and we've got a dozen of those at least that we're currently working on and so those are great, whatever the background, the business case was, but the sort of markets we're targeting is one Europe, Northern Europe is a great one, Germany in particular, we got about 70 prospects right there. And those run the gamut from scalable electricity projects, like the first one in Bavaria, where you know, in that one licence area, you can invest up to $2 billion, doing multiple phases of this to scale it up over time.


ML: How many gigawatts?


JR: A couple of hundred megawatts, we’ve got other licence areas in Germany, that if you build them out, you'd be in gigawatt scale. And that's all driven by the regime they have there that have these high fixed prices. But you know, the heat market is good there as well, too, you can get between 25 and 35 euros per megawatt hour of heat, which is actually given that your conversion to efficiency from heat to electricity is maybe 15%.That's a very high price. So with selling heat, or electricity in Germany is very profitable, or potentially profitable for ourselves, there seems to be no limit to the number of opportunities. One of the things driving the opportunities there is, as you know, they're phasing out all their coal and nuclear, which leaves this big, reliable chunk of the electricity grid that needs to be replaced, which we're talking about replacing. But a lot of the district heating systems are run from the exhaust or waste heat from those same coal and nuclear plants. So instead of a double whammy, we can address both of those, and you were pursuing similar markets that similar projects to that in places like the Netherlands, but as we go into Eastern Europe, places like Poland, every town of 15,000 people or more has their own district heating system. And those, you know, those are all good targets for the system we build. They want to transition to a greener fuel. And so those are, those are delightful markets for us. And often you combine the two, because the heat demand isn't constant all through the year, it peaks at the beginning and the end of the year. So you can infill the unused heat for district heating and use it to let it generate electricity. So that's one market. The other market is places like Japan that have similar high tariffs to Europe. Island markets are great because again, they have no room for wind and solar. And a lot of them are touristy destinations, and don't want to blanket their island with a bunch of stuff. And a lot of islands just through the way they formed. They're actually quite hot, geologically. So we've got a lot of Island projects, whether it's in small islands in Caribbean or Northern Canada that's not connected to the grid, it's remote, or a place like Singapore that just doesn't have room for a tonne of solar. And so 90% 95% of our grid is all imported hydrocarbons, they'd love a solution like this. The other really scalable market where we're focused on our next generation product is in the US, the entire western US is a huge hotspot, they're in desperate need, given all the solar they already have now have to mix in some more reliable green energy. And we're working with a lot of people, a lot of people there have some great large scalable projects they're gonna be chasing. Again, that will start out they won't be at a high price, like in Germany, but they'll be in situations where the there's a high heat gradient, and they're super scalable, and that makes them longer term very attractive.

ML: Okay, and you mentioned Singapore that has come up a couple of times. And of course Temasek Singapore based Wealth Fund is one of your investors you just raised earlier this year, the first, the first large slice of money, $40 million. And your investors were Temasek in Singapore and then BP and Chevron. So tell the story of that fundraising round. Why did they invest? This was the first, you know, decent sized investment in geothermal by any of the oil majors for quite some time.


JR: Yeah, it's interesting. I mean, we've gone through several phases of fundraising and you know, we started with some super angel investors like Doug Beach and people like that. They put the money, we moved on to the VC side, and Vickers Venture from Singapore invested. And in fact, the biggest single source of funding up to now has been Singapore. And because of Temasek and Vickers and you know, but the key thing was getting some strategic partners like Chevron and BP and some other people we haven't been able to announce yet who are bringing, you know, not just money from the oil industry, but lots of resources and financial ability to help us scale this model because, yeah, once we've raised about $100 million Canadian, and we'll raise more on the technology side, or once we start doing these projects, you know, we're needing hundreds of millions of dollars or billions of dollars to bring those to fruition and the sort of scale that only the oil industry can bring. So we're pretty excited to have people like that in our investor base. And we'll continue to grow that but the main thing we're focused on now is we got all the technology development money we need, what we focus on now is raising project finance, costs, debt and equity from a different sort of project development capital stack to move these things on to the next level, Singapore that you did mention at the start is an interesting use case, and we're not doing anything there yet. We've certainly been in discussions with them. And it's our opinion that Singapore could be a great, great potential use case for the technology, just because they want to be green, they don't have the surface area to do anything else. And we've determined there's enough geothermal potential under the island to do at least a couple of gigawatts of power, and potentially all the power they need if they really wanted to target energy independence.


ML: Very good. And I suppose having BP and Chevron and people like that, that invest in a way that's the best answer to that is you think you've done your thermodynamic calculations wrong.


JR: I like to say there's no widows or orphans in the oil industry. BP can take care of themselves when they're looking at an investment.


ML: But they can also check they can also check thermodynamics subsurface thermodynamic calculations, I suspect


JR: Believe me, they've squeezed us dry, they got all the background they need. It’s not just them. It's like I say, when what happened in Geothermal Rising is few years ago, you know, there was general scepticism, I think, as part of that Department of Energy commissioned the vast bulk of the national labs to do their own analysis, and they've all come back and thermodynamically it's all correct.


ML: Well, of course, that great thermodynamicist in London, Michael Liebreich was also convinced.


JR: Yes. Well, once you agreed, I mean, we're in.


ML: I confess, I didn't do as much due diligence as I'm sure that Chevron BP and Temasek and others did and because when they came in, I just figured that it sounded incredibly exciting. You talked about financing and doing project financings for now that those kinds of top projects we’re a pretty extraordinary point in the you know, capital markets. Why wouldn't you just do a SPAC? I mean, the phone must be, you know, ringing off the hook, there's all these people who've raised their SPACS, and they don't have targets and the clock is running down. Don't they want to shower you with money?


JR: Well, we've been a little busy to do all that. But you know, we're definitely keeping our options open. We're focused, you know too much on these just getting these first projects done. And we think that we can SPAC later or go public later. But first, first, we're going to be a lot better positioned to get some traction. This thing I would say that's interesting is one of the advantages of our design is it should be easier to finance than traditional geothermal. You know, oil and gas and traditional geothermal, they've got a high exploration risk, a lot of uncertainty even after the field is up and running. And that means you need oil and gas or a high rate of return to do that. We're actually from a bankers perspective, Eavor loop is like wind and solar, wind and solar, intermittent, you know, so you don't know what you're gonna get in a day. But averaged over a year, you know exactly how many kilowatt hours you're gonna produce. And that makes it very predictable, you have a guaranteed price guaranteed uptake, there's no reservoir risks, there's no, you know, watering out of the reservoir. And so wind and solar, as we've all seen really high debt levels at very low interest rates. Once we get the first few projects up and running, and squeeze that last remaining bit of technological risks out of it, the fundamentals of this thing mean that we should have that same financing ability. And we know from talking to a lot of people on both the debt and equity side that there's huge demand for anything that we show that can be predictable, like wind and solar, green like wind and solar, and a scalable like wind and solar, then raising money is not going to be the problem. So we're trying to crack that nut first and we're making some good progress on it. 


ML: Yeah, no, that's a good answer to focus on getting these projects done. But when you talk about technological risk, and let's be clear, it is really just drilling risk. And it's not but not not drilling and will you find what you're looking for, but just drilling costs? It's just how many? What is your rate of progress going to be as you drill, that's pretty much the only risk that's left in this thing.


JR: Yeah. And we've seen how drilling learning curves work in the shale industry. And they had, you know, price drops that were faster even than wind and solar did was their own technological development. So, you know, people like BP and Chevron, when they're looking at our projects, they believe in those same learning curves. So they're factoring that into their work as well, too. So the other thing to keep in mind is not only do you have some technological advances, but the learning curve we're talking about is just a one that comes from repetitively drilling the same rock in the same place over and over again. And there's no, there's no, no system that's going to be more amenable to machine learning and those sort of learning curves, than the type of drilling we're doing, because we're not drilling, like an oil or traditional geothermal well, or we're chasing it all, and we got to frack it, and then you got to complete it. No, all we're doing is most of our drilling is open hole drilling, no casing, we're going to park, you know, a couple of drilling rigs in one spot, and they're going to drill for years as we scale up each of these projects. And they're going to drill one well after another after another after another, doing almost the same thing. And you have an environment like that. It's incredible the speed increases the rate of penetration and the efficiency of the entire drilling operation.


ML: We've got time for just one final question. The origins of the company are in Alberta, in Canada? And has that been would you say an advantage or a disadvantage, because, you know, there's a lot of excitement. For the last few years, while you've been building this business, the US has been obsessed with, you know, EGS. And you go back to even as recently as 2019, the Department of Energy's big review of geothermal didn't even mention closed loop. And you're sitting there in Alberta. So has that enabled you to sort of develop in stealth mode? Has it been an advantage? Or has it been intensely frustrating and a disadvantage?


JR: None of the above I think. The interesting thing is what drives innovation. Yeah, so if I, if we had been sitting down in the States rather than Calgary, um, you know, there's all these great traditional geothermal resources or you know, hotspots in the States, you would be motivated just to take whatever is there and try to make it a little bit better. But the same, you know, same thought process and the same fundamental design, it is stimulating the reservoir a bit better. So that tends to be an incremental improvement. Up in Alberta, you know, the entire geothermal energy production in Canada of all time is zero, they've never done anything because it doesn't have the same hotspots. And, you know, we started this company by trying to figure out what we do with, you know, abandoned oil wells that haven't been properly put to bed, or suspended or anything else. And we were thinking of using geothermal. But we started thinking creatively about <inaudible>, because it wouldn't work in Canada and the way it was traditionally done, so it spurred us to go on. Luckily for us, the other driver in Alberta is the job market in oil and gas. And the sort of market in general in oil and gas has been depressed since about 2014, even earlier than places like the States. And that was because of lack of pipeline capacity. And a whole bunch of other things meant we had a lot of eager people. The background of all those people was actually working things like the oil sands, not the greenest of technologies. But you know, what are they doing in the oil sands? They were sitting there calculating how to heat up the subsurface. So the oil sands themselves would flow to the <inaudible>. So thermodynamic models to figure out, not how to heat up subsurface, but how to extract heat from the subsurface. As I mentioned earlier, some of the stuff like multilateral drilling that was all developed and progressed in places like Canada. So we had the impetus to do something creative. We had a whole bunch of people who were there available and keen to find some way to repurpose their skills. And that sort of led us to the initial, you know, kickstart to get to get building. Once we had our idea. I don't think it's really held us back because very early on, we came to the idea that closed loop was going to be the answer. And I think we did that once we figured out, you know, it operated on its own thermosyphon effect and everything else and got rid of the parasitic pump loads and we said, hey, that's a great start. And let's just operate like any startup, you got to pick your pick your battle and say and go for the home run. And that's what we did. We said four years ago, a closed loop is going to be the solution. How do we make it work and we spent the last four years doing every different angle we could to try to make it better and figure out how to push that agenda forward. And yes, there's been some inertia in the geothermal community, but that's, that's typical the way it always is. You talk to some guy on the street and explain it. He says, that sounds fantastic. But if you spent the last 30-40 years working on enhanced geothermal systems, you already know all the reasons why what we are trying to do shouldn't work. It's up to us, the outsider to show how we can make it work. So I think it's been an advantage, but also a disadvantage, I guess.


ML: I love the idea of whether it's easier to be an outsider or not, when trying to be a disruptor. In an industry. It's a great theme, and it resonates with me, because I was not an energy person. When I came in and started New Energy Finance, it wasn't like I had spent ages in, you know, oil, gas, coal, nuclear, and then thought that there must be a way to do it totally different. I came in as a, as a sort of, I don't know, you know, somebody I was, I was, I think it's called a green skin. And I had no idea. All I knew was that there were a bunch of problems and that there were a bunch of things that looked like they could be solutions. And as an outsider, I just couldn't understand why one wouldn't spend more time and resources trying to, you know, put those two things together. And it sounds like you've done something very similar.


JR: My entire career, I've been a bit of an outsider. Sure, I had a lot of oil and gas experiences to start. But the 13 years before I co-founded Eavor with Paul Cairns I was living in Shenzhen, China doing data analytics startups. So definitely a rank outsider, right? The other outisder the angle is we've hired maybe 60 people now at Eavor, every one of them except one is an oil ang gas person. 


ML: I want to ask about that. And just just to close off, because you talked about the people available in Alberta since 2014, who had these subsurface engineering and subsurface thermodynamic skills and so on. Now that Eavor has sort of come out, you've had your big coming out parties. It sounds like Geothermal Rising was the latest of them. And it really looks like it's getting some great momentum. Are you now just getting your inbox filled with resumes of subsurface engineers and oil and gas people saying, I want to I want to jump ship? I want to be part of this because that certainly ain't growing ever again. 


JR: No, definitely. One of the things that I've always told the guys is that we know we're on the right path when we get hate mail. So we got lots of people, a few people doing numbers saying it'll never work. You guys are crazy. And I always used to joke in the early days, our best barrier to entry is people did think we were crazy. But far more and more than any other startup I've had, we get what I can only call fan mail. And a lot of those are people saying, Yeah, I really want to work with you. Here's my background, here's my thoughts. But a lot of it is people just writing up and saying, well, that's amazing, keep up the good work. That's it, they don't even have an ask. So I'm a little bit not used to that. But it certainly makes it exciting. And I know for our entire team, you know, they're motivated, not just from all the traditional, good reasons that doing a startup is exciting. But I know for all of them, they really feel like they're doing something good, making the world a better place, and, and all that. And that sort of is a powerful combination. If you can have the excitement of a startup, and actually feel like you're changing things for the better.


ML: Well, that's a great place to leave it. John, thank you for spending a little bit of time with me here on Cleaning Up. I'm not just a fan, sending you fan mail. You know, I also as a member of the advisory board, in fact, the chair of the advisory board, I also challenge pretty hard, we've had some, we've had some great sessions where I've said, look, you've all you've all, you know, you've all drank the Kool Aid. But as an outsider, here are the questions you need to answer. And so far, I will say that you and your team have always answered them. So let's leave it there. But I wish you luck. You've got a lot of work to do to get some of those projects up and running to get those investment decisions. So I'll let you get on with that. Thank you very much. 


JR: Thank you, Michael. 


ML: So that was John Redfern, CEO of Eavor Technologies, the world's leading provider of closed loop geothermal technology, which I think has a very good chance of being a very big deal. Thank you very much for joining us for this special episode. And we'll get back to our normal programming next week.