Sage Geosystems aims to solve data center energy crisis by storing pressurized water deep underground

Cindy Taff was standing on a flat expanse of Starr County, Texas, in early 2022 when she felt it. “It literally vibrated through the ground,” she told TechCrunch. “That was an ‘aha’ moment for me.”

Her startup, Sage Geosystems, was testing equipment to extract heat from deep in the earth. The team had pumped water into a well and was now releasing it. The result was a gush of water, not oil, but hot, clean water that could replace natural gas as a sustainable energy source around the world.

People have long harnessed heat deep in the earth, and Sage Geosystems has, too. But the company also proposes using wells stretching thousands of feet as batteries, storing water under pressure to later generate electricity. The company has been testing the concept in Starr County for more than a year. Sage Geosystems announced Tuesday that it is currently building its first commercial-scale facility just outside San Antonio.

The new project will occupy most of a 10-acre site next to a coal-fired power plant owned by San Miguel Electric Cooperative Inc. (known as SMECI). Sage plans to drill wells there to store electricity from a small solar array and use it to continuously power a small data center, Taff said, calling it a “model home for a large data center.”

The pressurized geothermal system, as the company calls it, will have the capacity to produce 3 megawatts of electricity, enough to power more than 600 homes at a cost of about 10 cents per kilowatt-hour.

Taff said Sage will begin drilling in mid-September and the plant will be up and running in December.

Taff and her colleagues came to Sage after long careers in the oil and gas sector. Taff, the company’s CEO, had worked at Shell for decades, eventually becoming vice president of onshore drilling. Others had similarly long tenures at Shell, Exxon and elsewhere.

“We wanted to get into renewables,” Taff said, but the transition wasn’t clear. Renewables are dominated by wind and solar, and there’s not much overlap with their skill set, which involves understanding what’s deep in the earth and drilling down to access it. “But when we thought about anything related to geology — like energy storage or geothermal — it was a perfect fit.”

Like many geothermal startups, Sage Geosystems started with a plan to lower electricity costs. Injecting water into the ground is one of the biggest costs geothermal developers face. Yes, you can wait for the water to flow down a pipe and into the fractured rock around it, but you have to wait a while. Instead, they inject water under pressure, and that takes energy.

Once the company began drilling a test well, Taff and her colleagues realized they could recover some of that energy by running pressurized water through a turbine.

“You basically inflate the crack and store the water under pressure,” Taff said. “Then when you need it, you basically open a valve at the surface and the crack wants to close and throw the water back out.”

That’s where some of the similarities between geothermal and oil and gas start to fade. To frack an oil or gas well, companies inject water and mesh (known as proppant) to crack the rock and keep it open so the fossil fuel can flow back into the well. Much of the water used to drill is lost, and saltwater often comes with the oil and gas. So fracking not only requires a lot of water, it also creates a lot of wastewater.

Sage, on the other hand, is trying to minimize water losses. Most of them happen at the surface, when water evaporates from the storage pond. A little more is left when water is pumped from the pond to the well. Over time, Taff said, the rock surrounding the well becomes saturated, creating a barrier that slows the losses. When the test well was first opened, it was losing about 2% to leaks and evaporation for each injection and recovery cycle. A little over a month later, it was losing only about 1% per cycle.

Once Sage proves its technology with the first well, Taff said the company could add up to 10 more wells to increase the facility’s capacity to 50 MW. SMECI, the utility cooperative that owns the property, plans to close its coal-fired power plant at the site in 2026, replacing it with solar panels. To provide the consistent power that the coal-fired plant offers, the utility is considering combining those panels with some form of energy storage. Overall, the company expects to recover at least 70% of the electricity used to inject water.

“They want that front-row seat to what we’re doing,” Taff said. “Even though it’s energy storage, not geothermal, it allows us to prove about 80 percent of our technology.”

In addition to SMECI, Sage is working with major tech companies to develop geothermal and energy storage projects for their data centers. While grid batteries have attracted a lot of attention, they are a bit too expensive to run a solar-powered data center overnight.

“We’re not trying to compete with lithium-ion batteries for two to three hours because they’re going to beat us on cost. But when it comes to stockpiling lithium-ion batteries, we can beat them on cost,” Taff said.