Palo Alto Startup Brings Geothermal Power to New Places

California just took a major step toward filling a critical gap in its clean energy future, and it's coming from deep underground.

XGS Energy, a 30-person Palo Alto startup, is developing a next-generation geothermal system that generates electricity in places traditional geothermal plants can't touch. While old-school geothermal taps natural hot springs near the surface, XGS brings its own liquid and keeps it in a closed loop, pumping it down to hot rocks and back up to power turbines.

"That opens up the ability to bring geothermal energy development to many more places," said Lucy Darago, XGS's chief commercial officer. California has plenty of hot underground rocks without surface water, making them perfect candidates for this new approach.

Last week, the startup earned a powerful endorsement. California Community Power, representing CleanPowerSF and eight other public energy providers, signed a deal giving them first dibs on 115 megawatts of power from XGS's geothermal projects. That's enough electricity to power tens of thousands of homes.

The timing couldn't be better. California's electricity demand is expected to jump nearly 50% by 2040, driven by data centers and electric vehicles. Meanwhile, the state aims to run its entire grid on carbon-free energy by 2045.

Solar power now generates 22.5% of California's electricity, up from less than 1% just 12 years ago. But solar stops working when the sun goes down, leaving natural gas plants to pick up the slack at 40% of the state's power generation.

The Ripple Effect

Next-generation geothermal solves a puzzle that has stumped clean energy advocates for years. Like solar, it produces zero greenhouse gases. But unlike solar, it generates power around the clock, rain or shine, day or night, just like nuclear or gas plants.

Marc Jacobson, a Stanford engineering professor focused on energy policy, points out geothermal carries none of nuclear's risks. No meltdowns, no radioactive waste, no security concerns about dangerous materials.

For San Francisco residents, this means reliable clean power could soon flow from California's hot rocks instead of gas-burning plants. The breakthrough transforms geology that seemed useless into a renewable energy goldmine, proving innovation can turn limitations into opportunities.