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

Cindy Taff was standing out in the flat expanse of Starr County, Texas, in early 2022 when she felt it. “It was literally vibrating the ground,” she told TechCrunch. “That was an ‘ah-ha’ moment for me.”

Her startup, Sage Geosystems, was testing equipment used to harvest heat from deep in the earth. The team had injected water into the well and was now letting it back out. The result was a gusher, not of oil, but of hot, clean water that could replace natural gas as a steady source of power throughout the world. 

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

The new project will occupy most of a 10-acre parcel alongside a coal power plant owned by the San Miguel Electric Cooperative Inc. (known as SMECI). There, Sage plans to drill wells 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 big data center.”

The geopressured geothermal system, as the company calls it, will be rated to produce 3 megawatts of electricity, enough for more than 600 homes, at around 10 cents per kilowatt-hour.

Sage will start drilling in the middle of September, Taff said, and it’ll start the plant up in December.

Taff and her colleagues ended up at Sage after long careers in oil and gas. Taff, the company’s CEO, had been at Shell for decades, ultimately as a vice president of onshore drilling. Others had similarly long tenures at Shell, Exxon and elsewhere.

“We wanted to go into renewables,” Taff said, but the transition wasn’t clear cut. Renewables are dominated by wind and solar and don’t overlap much with their skillset, which includes understanding what’s deep in the earth and drilling down to access it. “But when we thought about anything with geology — so energy storage or geothermal — then it was an excellent fit.”

Like many other geothermal startups, Sage Geosystems started with a plan to bring down the cost of electricity. Putting water into the ground is one of the bigger costs that geothermal developers face. Yes, you could wait for water to trickle down the pipe and into the fractured rock around it, but you’d be waiting a while. Instead, they inject the water under pressure, and that takes energy.

When the company started working at its test well, Taff and her colleagues realized that they could recoup some of that energy by running the pressurized water through a turbine.

“Basically you’re ballooning the fracture, and you’re storing the water under pressure,” Taff said. “Then when you need it, you basically open a valve on the surface, and that fracture is wanting to close, and it jettisons the water back.”

There, some of the similarities between geothermal and oil and gas start to fade. To frack an oil or gas well, companies inject water and grid (known as a proppant) to crack the rock and keep it open so the fossil fuel can flow back to the well. Much of the water used in drilling is lost, and oftentimes, briny water emerges alongside the oil and gas. So not only does fracking require lots of water, it also produces plenty of wastewater.

Sage, on the other hand, aims to minimize its water losses. Most happens at the surface when water evaporates from the storage pond. Some more is left when water is pumped from that pond into the well. Taff said that over time, the rock surrounding the well will saturate, forming a barrier that slows losses. When its test well first opened, it lost about 2% to leaks and evaporation for each injection and recovery cycle. A little over a month later, only about 1% was lost per cycle.

Once Sage has proven its technology with the first well, Taff said the company could add up to 10 more wells to bring the site’s capacity up to 50 MW. SMECI, the power cooperative that owns the property, plans to shutter its coal plant at the site in 2026, replacing it with solar panels. To provide the kind of consistent power that a coal plant offers, the utility is looking into pairing those panels with some form of energy storage. Overall, the company expects to recover at least 70% of the electricity used to inject the water.

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

Beyond SMECI, Sage is working with big tech companies to develop geothermal and energy storage projects for their data centers. While grid-scale batteries have garnered a lot of attention, they’re a bit too expensive to run a solar-powered data center overnight. 

“We’re not trying to compete with lithium-ion batteries for a two- to three-hour duration because they’ll beat us on cost. But when you have to start stacking lithium ion batteries, we can beat them on cost,” Taff said.