Geotherm is too high, but Energy’s incredibly small drill rig might fix it

On a farm near Manchester, New Hampshire, I was recently treated to a spurt of dirty water, not something that most startups would show reporters. But with DIG energy, mud is not a bug in its compact drilling rig, but a feature.

The startup, which has been operating stealth for the past five years, has developed water jet drilling rigs to provide geothermal heating and cooling that is cheap enough to replace fossil fuel boilers and furnaces. The rig is at the heart of its business, and it promises to reduce drilling costs by up to 80%.

On Tuesday, DIG Energy emerged with $5 million in seed funds. TechCrunch learned exclusively. The round was led by Azolaventures and Avila VC, with participation from Baukunst, Conifer Infrastructure Partners, KOA Lab, Mercator Partners, Drew Scott and Suffolk Technologies.

Heating and cooling represent about a third of all energy use in the US, and in data centers the figure can reach 40%. Geothermal can reduce HVAC energy usage while also saving grid operators up to $4 billion a year. According to the Oak Ridge National Laboratory, the United States will need to excavate 6 million feet of geothermal boreholes every day until 2050 to stabilize the creaking electric grid.

However, geothermal is not cheap at least at first.

“In the US, Geothermal was 1% of building installations for decades,” Dig co-founder and CEO Dulcie Madden told TechCrunch. That’s despite the low operating costs of the technology. “That’s because it’s really the cost of a prepayment. It’s very expensive.”

Geothermal has two major flavors. Enhance geothermal drills of thousands or tens of thousands of feet. Companies that drill like Fervo and Quaise are tapping on extremely hot temperatures (usually around hundreds of degrees) to generate electricity. Other shallow geothermal is the one that DIG focuses and is usually limited to hundreds of feet. At these depths, the ground maintains a consistent temperature all year round. It is perfect for residential and commercial buildings and cooling.

In shallow geothermal, the pipes carry water underground, where they transfer heat to and from the earth. In the summer, excessive heat is thrown away and cold water returns to the surface, cooling the building. In winter, it absorbs heat and warms it.

As underground piping is invoked, installation of a ground loop represents about 30% of the total cost of a ground source heat pump, which is one of the main reasons why the technology remains more expensive than traditional heating and air conditioning systems. These costs addressed were on the DIG list.

“When we started, can we make low-cost drills?” Madden said.

Madden and her co-founder husband Thomas Lipoma began exploring the space five years ago after winding up a former startup, Rest Device. They soon came across an old study explaining how to use water jets to puncture holes in the Earth instead of traditional cutting bits.

However, there was a lot of research into this technology, but it was not yet ready for prime time. “A lot of the drilling technology is flowing from oil and gas,” Madden said. Translation: It is big, expensive and tends to be overwhelmed by things like geothermal at depth.

DIG has spent years refined the design of the rigs and drilling test holes near its New Hampshire office. They were excavated through various rock types, including soil, gravel, clay, sand, sandstone, limestone, granite, slate, and shale. The team showed us some very thick rock test blocks with neat holes blown away in the middle.

Today’s geothermal drill rigs can do the same thing, but are large by comparison. The most commonly used version is located behind a heavy truck. For sites that are easily accessible, they work well. However, they cannot narrow down from side lots to people’s backyards, and in crowded commercial building locations they occupy valuable free space.

Dig’s prototype is now available for commercial use, but what I saw was significantly smaller than the widely used geothermal drill rig. The holes are straighter than those made with traditional rigs. Together, these two details mean that the boreholes of the DIG can be brought closer together. This is a boon for any developer.

Once your first commercial pilot (what this seed round will help you achieve) is ready, the DIG’s rig will be slightly larger, but you don’t need the large double axle truck that currently dominates the industry.

The company plans to sell the device to a driller, offering another option for existing projects and opening new projects to new projects. Other companies are also exploring technology.

“There shouldn’t be any need to ask people to buy a $2 million rig. That should be a low cost for them to get into the business,” Madden said. “Geotherm should be in 100% of buildings. It’s in 1% of buildings. How will 99% be closed?” she added. “It’s practically an untapped market.”