Breakthrough Energy Ventures, a fund founded by Bill Gates, just made a $30 million investment into geothermal energy start-up Dandelion Energy.
Kathy Hannun founded the company while working at what Google (NASDAQ: GOOGL) refers to as its "moonshot factory," Google X. She spun out Dandelion Energy as part of her mission to use the heat the earth produces on its own to provide efficient heating and cooling to homeowners.
What is geothermal energy?
The temperature beneath the Earth’s surface is consistent regardless of the temperature in the atmosphere. Geothermal systems capitalize on that fact and use heat pumps to extract heat energy from the Earth to transfer it into homes and buildings.
Since the temperature beneath the Earth’s surface is consistent throughout the year, geothermal energy can actually be used for cooling as well based on the same principles put in reverse.
Depending on who you ask and your property’s situation, geothermal can cut energy by up to around 65% compared to traditional HVAC. One of the issues that has kept the technology from scaling is the up-front costs, which is where Dandelion comes in.
What is Dandelion up to?
According to TechCrunch, Dandelion is driving down the cost of installing geothermal systems from over $50,000 to between $18,000 and $20,000. As of February, Dandelion’s system has been installed in roughly 500 homes.
Part of the company’s expansion plan has been to partner with energy companies like Con Edison (NYSE: ED) to provide subsidies to homeowners. For example, homeowners in Westchester, New York, were offered $5,000 off their installations as part of a partnership.
Dandelion’s goal is to ramp up to 10,000 installations per year, and investment from firms like Breakthrough Energy Ventures is the kind of push the company needs in order to get there. Lennar (NYSE: LEN), one of the biggest homebuilders in the country, is also an investor.
Dandelion CEO Michael Sachse said, "Lennar, which depending on how you measure it is either the second-largest or the largest homebuilder -- they are not just an investor but we are working with them on developing communities." Not only is Dandelion raising capital from strategic investors, it's also developing relationships to help it scale.
Retrofitting in the Northeast
While partnerships with firms like Lennar will be important for Dandelion’s growth long term, specifically in new builds, much of Dandelion’s initial focus has been on retrofitting in the Northeast.
Sachse explained why Dandelion is targeting Northeast retrofitting: