Matt Killeya: Hello and welcome to Strictly Geothermal, the official podcast of the National Geothermal Centre. We're back and we're on episode five of the podcast, Charlotte. Charlotte: Yeah, welcome back to join us, and today we're delighted to be speaking to Karl Farrow from Ceraphi, who's an entrepreneur, technology investor, and founder of geothermal energy development company Ceraphi. He's got long-standing experience of the energy sector globally. He's also recently authored a book from punk rock to geothermal shock, so do be sure to check that out, which covers some of the diverse career that he's had leading to what he's doing now in terms of geothermal and that's what we're going to talk about more today. Matt Killeya: Yeah. So I'm really excited about this one, Charlotte. So we're fresh off the back of episode four, a brilliant episode. Check it out with Neil McLoughlin at the REA. In that one, we really focused a lot on policy and what the government could do to help the push into geothermal in the UK. I think today we're looking, we'll probably touch on that. I know Karl has views about it, but also just really focusing back on projects on the ground. and how all that works. I think that's, is going to be a good one, Charlotte Charlotte: Yeah, I agree. And I I think it's great to have perspective from people that are actually doing the projects and the the challenges to that that we face, which we'll cover in this episode. So we're delighted to have Karl with us today. I've known Karl for over 20 years whilst I've been working in the sector, and he is a real exemplar of persistence. And it's gonna be really good to hear this perspective from someone who's actually getting projects into the ground and you know has developed a viable geothermal business. You've done loads of things, Karl, many of which are covered in your memoir from Punk Rock to Geothermal Shock. But most recently you've founded Ceraphi, which is a geothermal energy development company. Could you tell us a bit more about the moment that you first thought that geothermal was something you wanted to do and how it caught your imagination? Karl Farrow - CeraPhi Energy: Yeah, thanks, Charlotte and thanks Matt for the introduction. And thanks for the opportunity to be on the show. I've traveled around the world, most of my career. I've had about 24 years or more living overseas. The last long stint I did was living in Mexico and I was doing quite a lot of consultancy work for the Mexican government and companies coming into Mexico for the part of the energy reform that they were doing at the time. And one of the projects I did was some due diligence around restructuring national debt or state debt for the Mexican government so several billion dollar debt. So I was doing due diligence for a number of big banks in New York and in this portfolio was a couple of geothermal projects. Having known about geothermal but not really got into the nuts and bolts of it, it was an opportunity to do a really deep dive into the the projects and what they were about. And it was sort of like stepping back in time to be fair, it's like steam and pipes and very sort of archaic sort of infrastructure. And it just seemed such a simple thing. And I just got fixated with it from there after I was, I then went off and started investigating and started learning more and more and more just a philosophy generalism, know, most people think this can only be done in certain places of the world and blah, blah. And just you know, this is ridiculous. There must be other ways we can do this and it doesn't have to be so complicated. So that's really where it all started. then long story short, I got involved with a few startup companies, moved to Slovakia with quite a large one that was investing in drilling technology, spent a couple of years with them. and came away from that in the middle of COVID with a idea that, we need to simplify this and make this a lot easier. And that was really where Ceraphi was founded. Matt Killeya: And you've clearly gone from strength to strength there in terms of you've really developed some interesting geothermal projects and in particular in the UK. so I really like to talk about one of those in particular, which is the one at Kirby Misperton. So that's based around repurposing an old oil and gas well. tell us about that project. What's special about it and what excites you about it? Karl Farrow - CeraPhi Energy: Yeah, I mean, just a step back from that. the sort of founding mantra of Ceraphi was really around using existing infrastructure. one of the big challenges as everyone knows, in geothermal is drilling the exploration risk and finding a resource and being able to commercially get it to the surface to use it. So having spent many years in oil and gas, these wells are in the ground, they're already drilled, the expended Capex is already there and these already had in many cases 20, 30, 40 years of life operating in a different environment. But the proof of the integrity, the proof of the well and everything in the performance of the heat in the reservoir and the well, etc. is all there. So We have so much data in that space and that was really something we latched onto really early on. A lot of people looked at this as being a liability sort of transfer. I looked at it as being an opportunity because rather than having to spend two or three million pounds, four million, five million pounds on drilling a well, you already had a hole in the ground which had massive amount of information. So that's really where we started and we were. lucky enough to get awarded a partial grant from the Net Zero Technology Center to do a demonstration of our technology in a well. Initially the well we were going to look at was not the well we ended up using. We entered this in the middle of Ukraine war and everyone was looking for more reserves so a few of the companies we were speaking to then decided they wanted to re-evaluate their wells so we lost the opportunity on a number of wells. But one company in particular that we've been speaking to at the time Had a well it was actually a better well that we were looking at but it was it was quite challenging It was quite slim because it a former fracking well But we ended up long story short being able to reconfigure our Demonstrator to fit that fit that well and be able to proceed And in that process we ended up with the demonstrator function and we had the project up and running within six to eight weeks From starting literally boots on the ground. It was a really really fast track you know, a whole delegation of visitors on site very quickly. think Charlotte, you visited as well, think fairly early on as well. Yeah, exactly. Charlotte: Yeah. Yeah, great visit. I can recommend. Karl Farrow - CeraPhi Energy: But yeah, and it just went from leaps and bounds from thereafter. I mean, the company, we actually got the well to do the demonstrator at the time, had a number of issues financially. So we made an offer to acquire the business. So we ended up not just a demonstrator, we ended up with eight wells, so it's 12 wells, load of pipelines, et cetera as well, more or less immediately after that, which really has been a blessing in disguise. It's given us a playground, which a lot of companies in developing spaces don't have. And Charlotte: What can we do? Karl Farrow - CeraPhi Energy: we've managed to build off the back of that playground. And now we've got projects like the Kirby Misperton project developing out of that. The Kirby Misperton Project, we have spent probably about 18 months in a sort of evaluation and side looking at building out off the back of the demonstrator using the wells on the site to connect to the village, which is about 500 meters away. That's been quite a long ongoing sort of community engagement process with the local village. We also have a theme park not far from the site, which is at the end of the village, which we're also connecting to and several of that building. Yeah, that's correct. Matt Killeya: Flamingo Land, isn't it? Karl Farrow - CeraPhi Energy: sort of historical sort of well-known, know, five or six largest theme park in the UK. And yeah, we're connecting a number of the buildings up there, including a new hotel have built, et cetera, within that project. So it's a fairly small project, you know, so it's around, I think it's 550 kilowatt of total, 1000 kilowatt of total energy demand in the process. And then, you know, that will scale over time. But what it does do is of open this door to community energy projects, which is something we're really trying to get behind. You know, people still think that everyone in the UK has access to clean energy and gas and everything is honky-dory, but the real world is that outside big cities, and certainly in rural areas, most people are living with oil boilers and log burners and all these sorts of things. So we are trying to tackle that sort of community problem. And hence that's really where Kirby Misperton and its own right is becoming a sort of flagship project for that. we have four other sites specifically in that location and we will eventually connect all four of them up to other neighboring village in Great Habpton and Little Broad and these sorts of areas around there. So eventually we're expecting to have 500, 600, 700 properties connected up to that network. Matt Killeya: Fantastic and you're still doing open days aren't you at the site? unlike Charlotte I've not been lucky enough to go yet but it is open to visitors as it's sort of a monthly thing and so what would I Karl Farrow - CeraPhi Energy: Yeah. Matt Killeya: see if I went there as to one of those days? Karl Farrow - CeraPhi Energy: Yeah, we've tried to sort of keep the demonstration size sort of fairly simplistic. So we do a monthly visit, normally for one or two days a month. And we normally run morning and afternoon sessions. And normally there's anything between sort of six to eight people on a visit. We've had a 1500 people now pass the site, literally from all corners of the world. mean, you we've had energy, energy ministers and people from Chile from Australia, it's been quite overwhelming actually in some of the, you know, the people who have attended and we've had our own government officials and various regulatory bodies and that then. But I think just for general public, we've also had quite a lot of just interested people that are really interested in community energy and what we're trying to do. still a lot more to do and nothing better than to have a real life project connected to a village to be able to show people as well. we hope to continue that. the visits even when the project is actually connected to a real project and still continue with this advocacy for the approach. Charlotte: Yeah, and I think it's great. I mean, certainly I really enjoyed my visit and we brought the thermal in imaging camera and it was good to look where you could see hot and where you could see cold. Karl Farrow - CeraPhi Energy: Yeah. Charlotte: But there's often not much to see with some of these geothermal projects, but you've obviously got the well head there and then you've got the facility where you've got the heat pump and a radiator and people actually can feel hot pipes and cold pipes and think that's Karl Farrow - CeraPhi Energy: Yeah. Charlotte: coming out of the ground. You know, it's I think that's tells a thousand words being able to go there, doesn't it, and do it. Karl Farrow - CeraPhi Energy: And I think I think actually what you not what you don't see is actually more of the telling stories because a lot of people actually with big infrastructure projects do see infrastructure and That's what puts them off of having a you know wind turbines or solar panels or whatever in our backyard With our project, you know Currently on the demonstrator as a big well head from oil and gas and obviously when we convert this now That's not going to be there. It'll be buried pipes in the ground. You won't really see anything We just finished a project in Scumthorpe and the wellhead was done in a car park in the hospital and actually all you can see in the car park is a drain cover that is there which anyone would just look at and be in a normal storm drain but underneath it's a 550 foot well connected to three buildings and running all their heat and energy into the hospital building It's actually what you don't see as the more, I think, more of impressive side of geothermal. It's the minimalistic approach of not having that big infrastructure in your face and being able to hide it in pretty, you know, Charlotte: Yeah. Karl Farrow - CeraPhi Energy: small, compact, dense spaces, actually. Charlotte: Yeah. And just thinking about that, you know, more widely, obviously we've got thousands of legacy oil and gas wells onshore in the UK. and it was great to see that you guys have recently signed an MOU with STAR as well to look at some of their assets for geothermal as they're no longer used for petroleum purposes. So how do you see your learnings from Kirby Misperton? I know you always wanted to kind of make geothermal to be more plug and play. Karl Farrow - CeraPhi Energy: Yeah. Charlotte: so how will those learnings be applied? in at these other sites. Karl Farrow - CeraPhi Energy: Yeah, I think we, I think something that we've really focused on is to get our geothermal mission into a language that investors and the community understand. There's nothing worse than going to a business or going to big business cases to investors and having multiple different scenarios of what that looks like. If we can create a standardized model where we're saying a certain well, creates a certain amount of energy and creates a certain amount of yield and will service a certain amount of homes. And that's really what we've created out of doing the demonstrators. So we've now got effectively a retrofit depth, we go sort of higher and upper limits that we consider as being a sort of target. So 500 meters Matt Killeya: talking to Karl Farrow - CeraPhi Energy: being the low point and 1500 meters being the sort of deeper point. We can go deeper, but it sort of adds additional problems when you start doing that. We've got this sort of threshold now between 500 and 1500 meters, which we believe is really the niche point for deep heat from geothermal projects. Certainly for community, I'm not going to say that that's not the case for maybe larger scale, city-wide district heating and that, which the likes of Star and other companies are doing. That's perfectly doable as well. And I think with the likes of Star, I these things don't... happened quickly, know, this is a discussion that happened over nearly two years, so it's like everyone, you know, most people only do see the decisions you make, not the, you know, the options you had before the decision. So the opportunities that were there before, so yeah, so these sorts of things take time. And I, know, Star have been a great advocate of what we're doing. We're a sort of great advocate of what they're doing. Charlotte: Mm. Karl Farrow - CeraPhi Energy: There's no sort of crossover in the boundaries in the middle. We are doing different things. And for that reason, we've decided to come on a of journey together where we can help them transition away from oil and gas over their next 10, 15 years, whatever it takes. And they have a story. We have a story along with them that actually helps our assets transition along that process. also. supports regulators requirements, which is to close the wells at the end of their life. So that's really where we've targeted this process. As you rightly say, I mean, we have hundreds of wells onshore in the UK. vast majority of them will be used. Just to clarify, these will be from cooling and heating Matt Killeya: just to find a way to put people to action. Karl Farrow - CeraPhi Energy: projects, lower temperature type projects. Matt Killeya: Thank Karl Farrow - CeraPhi Energy: But over in other parts of world, we are also looking at similar wells, which have got a lot higher. thermal gradient that potentially could be used for power generation as well. Charlotte: That's Karl Farrow - CeraPhi Energy: there are certain environments, as we know with geothermal, the higher gradients of shallower depth is really where the icing on the cake is. But we also know that geology around the world is not sort of probably 5 % of that is representative in reality for power generation from a reuse point of view. The rest of it is certainly all of us reusable for heating and cooling. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: And that's really been our focus is really really to trying to bring to these well sites and to these wells the opportunity to commercialize them rather than you know looking at them and saying What do we need what type of well do we need to actually make a project work? We've saying well what type of project do we need to make the well work? You know it's like so turn the other way around. This is like building the business model backwards really Matt Killeya: curious about the time because you just said that it takes a long time to do these things. But earlier on you were talking about Kirby Mispiton, you mentioned six to eight weeks. So am I right in thinking that it's all the planning that takes a long time and the actual technical conversion is potentially quite fast once you've got the go ahead? Karl Farrow - CeraPhi Energy: So this is something we're sort of currently in now. I probably wouldn't be alone to say that, every project has issues with planning. regardless of what it is. So, you know, geothermal, I think actually is probably more easier, you know, planning perspective than probably a solar farm or a wind farm to be fair. But, one of my biggest gripes of policy and government is the planning side at the moment is. very bureaucratic. It's specifically when you're looking at old sort of well sites that have been there historically, 20, 30, 40, 50 years or more, access roads, pipelines, they're all there. And yet you still have to go through a bureaucratic process of looking at the whole process again for BNG and all the biodiversity stuff and everything else, which has already been done. multiple times because you know the sites are there and they're regulartory controlled by the EA and regulatory bodies it is a process that really does need to be looked at and changed. we haven't got enough consultants and companies to actually do the work. So not only is it, a drawn out process. There's so much of it needed now and so much of it going on with multiple projects being applied for. There's just not enough companies out there to do bio-neutral gain studies and ecology studies and all the things that are needed So all that's now doing is driving the price up and people are paying well over the top for work that really shouldn't cost that much and it's slowing things down. But like I said, one of big advantages with our sites is or any oil and gas... is a site that's generally permitted and well regulated. It is a site that will already be under planning authority radar. So it's not a green field, it's a brown field site. So we're seeing more of a change of usage approach rather than a sort of application for a completely new build, which is generally met with a little less resistance. but it's still an area that needs a lot of work. And I think this is where we are sort of pushing that boundaries to try and to drive multiple projects at the same time to really get to that cut and paste, plug and play solution of saying, look, we've done this there, why can't we do it here? It's the same, know, why do we have to have all this, you know, malarkey around different things? Matt Killeya: Yeah. Okay. And as someone who doesn't enjoy the bureaucratic nature of planning, it's really interesting to me that one of the other projects she chose was a grade one listed 16th century stately home in Suffolk called Kentwell Hall. And that's obviously a really different project to an oil and gas well. So I'm really curious to hear more about that. what were the different considerations there and how was or why was geothermal a good fit for that project? Karl Farrow - CeraPhi Energy: Kentwell is one of multiple that we've done on a study site for stately homes. We're currently doing a number of them. But Kentwell is very different on the fact it's one of our oldest Tudor buildings in the country. it's currently run on a multitude of different things, including gas. But the thing with these types of buildings is you come up against various, not really planning challenges, but more like historic Britain and the listed building issues that all fall into that. most of them are like, you can't even go near the building that alone, try and do anything with it. but the good thing about the geothermal approach is, and this is something we've learned through doing the Kentwell Hall study and others, is that actually Historic Britain and Historic England actually... see geothermal as one of the more favorable approaches for decarbonizing these older buildings because you can create not necessarily heating temperature but you can create continual temperature in the building which then preserves all the materials what normally get, shall I say, damaged through heating and cooling effect through gas or humidity through other types of systems. So by maintaining a building at let's say 12 degrees or 10 degrees you can effectively preserve the artifacts and the structure of that building a lot more than you would do if you just have a central heating system in there kicking on every six hours and putting 23 degrees in it. So it's actually a lot better to keep the building at a passive temperature than it is Matt Killeya: Yeah, it's Karl Farrow - CeraPhi Energy: to keep heating up and down. Specifically in the climate we have, we have a, as we've stayed with the last few months, very hot summers and inevitably damp and wet winters. And that's not good for... for woods or any natural materials that are generally these buildings are built of. We see that a lot in churches, for example, the Kirby Misperton Church is a classic example where we have that old building infrastructure. Churches have lots of artifacts and preserved things in there that generally what they do is somebody will rock up on a Saturday night fire the heating on for the Sunday morning service and then switch it back off and... know go walk away for the week and that's a common theme in in villages and communities. So if we're able to create a passive heat in all the all the week let's say 10 12 degrees the building's already getting that sort of preservation so it's it's more about preservation actually than heating and cooling and at the same time you are then helping these buildings decarbonize and reduce operating costs. A lot of these are funded by lotteries and all sorts of different things and to be able to help their operating costs reduction is a significant benefit for them. Charlotte: Yeah. And I think y especially some of these organisations, as you say, could get the grant funding to overcome some of the capital. But then you know, when you when you leave the project they're they've then got that lower operating cost, which makes a big difference going forwards. Karl Farrow - CeraPhi Energy: Yeah, we also we have a lot of estates we work with at the moment, several are currently sort of moving into different project stages. And these are landowners, farmers, tenants that have, larger states. Some of them are historically in a family for tens or even hundreds of years. And, most of these people rent out properties that are on their estate. So, they might have 50 or 60. small cottages or tenant buildings that they rent out to various people. And because of the new legislation of EPC, they're also having to upgrade Charlotte: Actually. Karl Farrow - CeraPhi Energy: them now to meet certain standards. I think it's C by 2030 and B by 2032. lot of these buildings haven't got hope in hell of getting, ratings to that sort of level because they're listed and you can't just go in there and change windows and do loft Charlotte: Yeah. Karl Farrow - CeraPhi Energy: insulation So fabric maintenance or fabric first approach in a lot of these cases doesn't work. Whereas applying Charlotte: Mm. Karl Farrow - CeraPhi Energy: a geothermal solution where you can put an underfloor heating maybe or something that preserves the infrastructure from the floor up, that's a lot better approach. And again, it's been more approved by Historic England and a lot of the more National Trust and these other areas that are trying to support this. And at the same time you are reducing the chance of these landowners getting serious penalization of fines through not complying with EPC. I have one particular example of a property owner who's got several properties, which are three four bedroom cottages, and they're all got economy seven electric heaters. he's having to nearly give them away because the electrical costs of running. it's nearly as much as the rent that he'd be out of charge for them. It's a diabolical situation for lot of these larger landowners because they rely on lot of these income to actually keep their estates functioning. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: They're asset rich, not money rich. Charlotte: Yeah. And from what I can tell of way you work and obviously having worked with you a few years, I think the USP of your business tackles Matt Killeya: Thank you. Charlotte: one of those major challenges of geothermal is that you can't always guarantee getting that water out of the subsurface and that's your energy carrier and that's bringing your your heat up. And obviously your USP, which I think is really neat, you reduce a massive amount of that uncertainty through the systems that you're using. Matt Killeya: to the site. Charlotte: And I was just wondering if you could expand on that a little bit and you know highlight that kind of lack of reservoir dependency that some of the other schemes have, which then has risk associated with it and cost, and also talk us through the basic steps for assessing one of your projects, because in theory your projects could go anywhere. Karl Farrow - CeraPhi Energy: Yeah, we're literally just moving heat around with a working fluid from the ground. So whatever depth we get to, either existing well or one of our 1500 meter wells, take the new drill well, for an example, a new drill Ceraphi 1500 will produce anything from 45 degrees Celsius up to maybe 50 to 55 degrees on an average. I mean, there are instances in slightly hotter geology where that could be higher, but. So we, you the benchmark of 45 to 55 degrees will give you a surface temperature recoverable of probably anything between the low in 15 and maybe high end up to 25 to 30. And I think one of the things that a of people forget is at the moment we burn hydrocarbons at several thousands of degrees in many cases to get a water temperature use of between 45 for radiators and 65 for your hot water. So, we're wasting so much calorific value in that process. Whereas what we're doing is we're working on the lower empathy end of heat into the system and then just boosting that heat with a cryogenic heat pump, which will take heat from, 40 or 25 degrees in the case of our system up to say 45 for radiators and 65 for heating. So the SCOP of the system operation, which is a Coefficiency of Performances, far greater than you'll ever get from a gas system I think this is also public perception and I think it's a message we need to get more into government. People think that the cost of a kilowatt of gas, they see it their bill at 6.5p or 6.7p a kilowatt, that's not actually the cost of gas. Gas is only 80 % efficient at best. So if you add another 20 % on that 6.5, you get some more like 8P, then you've got stand in charge, which is based over 24 hour day. And most people are paying around 30 P for a stand in charge, but we don't use our energy 24 hours a day. We use it at best six to eight hours. So if divide that 24 P a day cost by six to eight hours, you'll then up to 10, 12 P a kilowatt for gas. So I think that messaging is slightly distracted and slightly. distorted when we're talking in the public sector and that's something where the public do need to understand the real value of energy and that's the thing we're trying to do with heat because once we have got the cost of geothermal in the system and it's being produced it is an infinite of energy and it's there for decades and there's no feedstock to fill it up, it's not constrained or affected by wars in Iran. anywhere else or shipping costs or whatever. It's a local resource, has to be used locally and the people who live in the area get the benefit of it locally and that's really one of the key factors that is missing out on the messaging in a lot of that process. Matt Killeya: Absolutely. Absolutely. I'm really interested just to pick up as we started to get into the numbers there. you're talking about quite a lot of infrastructure upfront and therefore quite high capital expenditure. On the other hand, as you just touched on there, once it's up and running, you're getting almost free heat or power, or sometimes actually free. but certainly very low cost, very low operational expenditure. I'm just curious though, those high upfront costs, we're talking about big numbers, right? So have you found that to be quite a challenge and how have you managed to deal with that in terms of the financing? Karl Farrow - CeraPhi Energy: So we tend to reverse the building, the business case into the well rather than look at the infrastructure the other way around. So, you one of the ways I look at business in growth is that, when I look at anything new or any innovation or anything else, I always think about the thing is what are people going to do in 20 years time that they're still doing today? Because, you know, people will still be paying for energy. People will still want cheap energy. people will still want warm homes, people will still want cool homes in the summer, et cetera. So, rather than looking at the economic side, I've really looked at where the value sits of what we're trying to produce. So we've sort of reversed our model now into more of a point of trying to get the 40 year business case model for what people will need to then, reverse that into then how do you break that down into an economic cost and how do you get it into a plug and play solution that you can rinse, repeat, et cetera. So that's really where we've got to and hence why we've come back to this sort of 1500 meter being a ceiling point Reason being as once you start going deeper than that specifically for drilling new wells you're moving into a different world of drilling and a different type of drilling technology and a different cost and everything else so 1500 meters we can drill a well suitable for one of our systems with a fairly high-end geotechnic rig which is tracked at costs, you several thousand a day to operate rather than tens of thousands a day to operate. So straight away you shave a huge amount off the drilling cost. And even when we're looking at drilling shallow wells here in the UK, with shallow being a couple of thousand meters, we're still gonna inevitably bring in a big oil and gas rig to do that. And a big oil and gas rig is sort of minimum £10,000 plus a day, 15 to £20,000 plus a day. So that's where we've been a little bit more innovative on the approach is trying to say well let's not try and get the maximum amount of energy out of the ground let's try and build something that provides us a good amount of energy something we can commercialize every time but also something we can do at a low cost which is going to give long-term value to the customer So today, you know, we want to create a 40 year gas price at 6 per kilowatt with geothermal, so when we do our cost base model, we're looking at a 40 year, point at today's cost. that's really what we're trying to drive is a model where we can show an investor the price we charge today is still the same price we're going to charge or could charge in 40 years and still get our money back. Obviously with inflation, you're not gonna do that, but that's really where we try to base our business model. And we've been able to do that. You can't look at geothermal the same way as you look at other types of energy like oil and gas. And because there's drilling involved, because the oil and gas sort of skill sets are involved in geothermal, they never see. people are still looking for that five, six, 10-year payback, where in the real world, you're probably looking at 10 to 12, 15 at best, maybe 15 to 20 at worst, but then you are looking at a resource you can exploit for at least 40 years in a business case, not 25. So this is where the investment world is slightly changing their attitude. We're seeing... a lot of that in the market. Investors now being more open to longer term type pension fund processes rather than VC quick return processes. And I think the more of projects we do, obviously the cheaper we'll get, the better we'll get at it and hopefully get more and more companies in the space because competition also brings in huge value. The other thing we've found that, know, driving these projects is changing our model from being a service provider to be an energy supplier. So rather than actually just building infrastructure for somebody, we're actually building the infrastructure for ourselves or a community project that we own. And we then sell the energy to the end customer over a long term period. So we're able to recuperate the CAPEX costs. over a longer term period and amortize that through a heat service agreement or heat purchase agreement or power purchase agreement if it's electric. Charlotte: So it's a real turnkey solution then, isn't it, if you're offering kind of everything from the conception of the project to selling the heat to people at the end, which I think people often want because they just don't know who to go to at every step along the way. And in cases where they've used different people, that's not often led to good project outcomes. So I can see that people will be very interested in that kind of start to finish service. Karl Farrow - CeraPhi Energy: Yeah, we've learned a lot on the way as well. mean, we never intended to be a drilling company, but we've had to become a drilling company because there's nobody do 1500 welds or 500 welds. Most of the shallow boreholes are down to several hundred meters. So we've had to step into that space to be, should I say a company that serves us what we need to get the kickstart in the industry moving. And hopefully once we do get it moving, other people step into that space so we can step back and be the user of that rather than the supplier of that. But it sometimes takes that in sort of innovative world where you have to sometimes create the market for the project you're trying to deliver or the process you're trying to deliver. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: And that's really what we've tried to do. And again, it's like we Matt Killeya: and I'll you next Karl Farrow - CeraPhi Energy: don't see these things as roadblocks. They're just things that have to be done to actually accelerate the process to go forward. I mean, we're living in a space where we're trying to solve tomorrow's problems with today's resources. And Charlotte: Yeah. Karl Farrow - CeraPhi Energy: we'll never know what's coming around the corner. So we have to try and innovate Matt Killeya: enjoy. Karl Farrow - CeraPhi Energy: and predict what tomorrow's resources are gonna be and try and get today's world to Matt Killeya: what we're is we're concentrating on the traffic. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: fit it. Charlotte: And the learning you've done from kind of a business perspective is not the only learning you've done. I'm aware of how much public engagement work you've done, particularly around the Kirby Misperton site, and also with the children's book that you have recently produced as well, which is available on Amazon for anybody that wants to grab a copy. And I know that you're arranging with people if they want to have some or or sponsor some. If you could reflect a little bit more about the kind of public engagement and how you find people's attitudes to what you're doing and people you've had to I know there was a bit of a change of mindset required at Kirby Misperton because of the former use of the site. you know, how do you go about reassuring people and the importance of this engagement? Karl Farrow - CeraPhi Energy: Yeah, so it's a very early on approach. mean, unlike, shall I say the oil and gas sector, which are very secretive and say nothing until the planning approved in the last minute, etc, etc. We're very much the reverse. you know, community projects selling heat to a community of 100 people or 150 people won't happen unless you get 60 % of them on board to buy heat, you know. that's first conversation. So you need to be out there, discussing this with them and getting them to feel that they own it. Although we are delivering the project, although we might own the Community Interest Company or the SPV that actually delivers a project initially, what we're trying to do here is get them to feel that it's their system and they own it and it's for their benefit. And they are going to be the custodians and the end users and the end beneficiary of it, not us. And you can do that in a way that... still makes profit for stakeholders and investors and all the other things a lot of people would go in there and say you know we're going to spend 10 million to do this project and for us to do it we need you to do this this and if that's the wrong approach i mean because before that they had an easy life and they were getting on with their life and they didn't have to worry about that so the main question people want to ask is how much does it cost and am I still going to get my house warm? Is it still going to be comfortable? Are you going to disrupt my garden? Are you going to, you know, have to, you know, remove my hydrangeas or, you know, et cetera, et cetera. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: So, there are things people worried about. They're not really interested in anything else. So, if you can comfortably go in their early stage and sort of address them issues with them and make them feel that they're part of that community. process and that's really what we've done in Kirby Misp and we've Charlotte: I think. Karl Farrow - CeraPhi Energy: held multiple community engagement town halls. They start off small, half a dozen people in the room, they grow over time as you start to explain about what you're doing and how you're going to go about it and then they'll fall off because what happens is people they hear enough and then they want action. It's no good because you keep having the town halls every week and telling people you're going to do something. They want to see something. They want to see it happening. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: we've sort of learned when to push and when to pull and when to step off. And it's a process you have to go through. You have to get good at it. And we've got some good people in the team to do that. We have community engagements where we engage the families and children. We're planning one in in October. sort of family weekend event, Sunday, where we have Charlotte: That's closely. Karl Farrow - CeraPhi Energy: a barbecue and we invite everyone and have it more of us not selling Ceraphi it's community day. And if people, they want to talk to us about what we do and they can do, you know. Charlotte: Yeah. Yeah, nice. Matt Killeya: Yeah. And I think one thing that people are often worried about is the sort of noise from the drilling as well, that part of the disruption. Am I right in thinking that they're often quite surprised by how much quieter it is than they expect? Is that fair? Karl Farrow - CeraPhi Energy: Yeah, I mean, so generally when we're doing drilling, you know, in a hospital or in a, private project behind a wire type project. Yeah, people are surprised the footprint we use, the actual noise of the work. I mean, actually running a generator, you hear the generator more than you do the drilling rig. it's like, it is a very sort of weird scenario. You know, people will hear the generator. and go, it's really loud. And you go, well, that's not the rig, that's the generator that's running all your lights and all the other things you Charlotte: All the noises underground. Karl Farrow - CeraPhi Energy: wanted to do the job. So yeah, they are very low. I mean, you only have to rev the rig when you're really pulling out of the hole with the pipe. I mean, other than that, you're just running a motor and the rig's turning and the drill bit's turning and that's it. very little if any vibration. mean, I'd be a liar to say that you don't get vibration. You do get a little bit of vibration. Specifically when you're doing that first sort of shallow part of the drilling in the first 20, 30, 40 meters. Once you get deeper, you don't really hear it or get any. yeah, certainly first, but it's over and done within a matter of a few hours or a day. It's not like long-term. And actually to be fair, as we saw with United Downs and even the Eden project, know, actually local people, start to get used to it get excited when there's a little bit of a tremor because they go, a little bit of a vibration. There's something happening, you know, they're drilling at Eden or they're drilling at United Downs. So, yeah, think providing you have engagement, you talk to people and they understand you take them on a journey with you, along with you. And you can only deal with these things by speaking to people and talking to people and winning them over. Matt Killeya: I want to come back to innovation. you're obviously, as we've discussed, sort of entrepreneur and technology investor. And I know that you're involved in helping other companies in the space beyond Ceraphi. I'm just curious, what innovation are you seeing in the space in those other places and what are the likely benefits of that innovation? Karl Farrow - CeraPhi Energy: Yeah, I've got various investments from everything from drilling technology through to energy production, but all around the sort of geothermal or thermal energy space in one sort of another. where I put my bets is in really not trying to look at going deeper and trying to chase the resource in the ground. we've we have the technology that's that's there already, you know, we've drilled millions of wells across the globe, we've got the best drilling capability you could ever get in the oil and gas space anywhere, in the sea and land, wherever. I mean, I've worked with companies where we've drilled 36 inch pipelines up mountains and pulled pipelines through mountains, et cetera, so we can drill holes. I think one of the challenges is we've never really had a demand because we've been burning fossil fuels at high temperature. We've always had energy at high temperature, more or less the resources from energy of high temperature, waste heat, et cetera, et But I think where we are gonna see and where I'm seeing the transition is technology moving in more, being able to convert power, convert energy at lower temperatures. So looking at organic rank and cycle machine improvements, thermal engines. So it can be done at really low temperatures. And I think that's going to be the game changer, And this is why we at Ceraphi focus on that lower temperature threshold and focus on heat, because I firmly believe that in parallel to what we're doing, coming around the corner in five, 10, 15 year time, will be small scale ORCs that you can just plug into a 30, 40 degree pipeline and generate electricity. You're not going to generate megawatts or gigawatts, but you can generate several tens of kilowatts and that could put community lighting or do EV charging or do other things. So I think we're moving to a world of more decentralized community energy structures. And this is another reason why we're focused on the community side I think we'll have more decentralized users everyone's house, every person will become an energy generator in some form or another, I believe. think we're in moving in a world now where people are owning cars that can store and produce electric houses that can store and produce electric. we can create heat from stuff we use. So we are moving in a world where I think before long, we'll all be energy generators, we'll all be providing energy back to the grid or back to the network that we're not using and that will be your store or reuse, et cetera. Charlotte: And you're obviously you know, having considerable success on the ground. You've got quite a lot of projects on your books, you're always busy guys. but as a country we are lagging behind many of our neighbours in the amount of geothermal we have in the ground. I know we touched on some of the planning challenges we face, but more broadly, why do you think that this is and what needs to be done to change this? Karl Farrow - CeraPhi Energy: Yeah, think we've, we're not alone. This is a global issue. geothermal has moved significantly in the last five years, even Matt Killeya: quiet. Karl Farrow - CeraPhi Energy: I've seen it, you know, it's shifted significantly. And, the work that you've done previously, Charlotte, as you know, and projects like that, these are all sort of flagship projects. They're all learning curves. We're never going to create projects, even projects we're doing now. that we're not gonna turn back in five or 10 years time and somebody say, we could have done that better and this could have been changed and this would have been good. And these are all learning curves, we're all learning. And actually sometimes you have to fail to move forward in a different direction or take the lessons of that. So yeah, I mean, I think the thing is we look at geothermal and we look at most energies and we look at the failures as being the end of it. Well, actually I look at it the other way around, I look at that, well, that's another starting point that we need to. build on and I think that's really where government is missing a big trick. think the fact is we have had projects started and stopped and that for over 30, 40 years in Geothermal well that should send a signal to them that this is something that we are missing really in our energy portfolio. Not for the fact is it doesn't work, it's the fact that we haven't tried hard enough to make it work. And I think whilst I look at wind energy, 25 years ago I was involved in the first project offshore, which was off the coast of Great Yarmouth I remember standing in planning rooms with people screaming and shouting and saying this is ridiculous, this never going to work, what a waste of money. We're the largest wind energy installer and generator in the world and we are the envy of the world when it comes to wind energy. I think we could be that with geothermal. We've got a really slick oil and gas business which fits into that space. We could really easily build off the back of that. one of issues is we have very short cycles of government and then short cycles are focused on voters. It's Matt Killeya: Thank Charlotte: Yeah. Karl Farrow - CeraPhi Energy: back to the old scenario of, we ask the average person and we know what happens when you do that. You don't really get... the real answer. We need more people who are driving the thing forward and then people need more backing and more support and I don't necessarily need financial backing. mean backing from government. mean I would love to see or would have loved to have seen Ed Miliband stand up in parliament and say geothermal will represent X amount of percent of our energy mix in the next so many years. That's all it needed. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: That's all it would have needed to... spin the needle a little bit further in the favour of geothermal. He wouldn't have had to put a dime into it, but just saying that in itself in an authoritarive manner would have done the trick. And, know, give him his credit, Lord Whitehead did do that. Charlotte: Yeah. Karl Farrow - CeraPhi Energy: The former Minister for Geothermal stood up in West Minister and said that he believed that geothermal could generate around 20 % of the UK's energy by 2050. I personally think it's going to be more like 35 to 40%. I think once we do get to that sort of pivot point where people actually do jump Matt Killeya: field of defense like, from every point in the equation. Karl Farrow - CeraPhi Energy: on it, it will accelerate really fast. do think it will be really, I don't Charlotte: Yeah. Karl Farrow - CeraPhi Energy: think we're have enough resources, people, anything to be able to deliver what's required And there's no, all the stuff that's going in now is still okay. mean, There's nothing wrong in still fitting air source heat pumps, still fitting all the other things because they've only got a 15 year lifespan anyway. So, you what we're looking at is building something that's got a 20, 60, 40 plus year lifespan. A new geothermal well installed with plastic pipe could last 100 years. You know, Charlotte: Yeah. Karl Farrow - CeraPhi Energy: the infrastructure on the surface won't, but the pipe and the wells it would. So that embedded cost potentially of representing maybe 40 Charlotte: Okay. Karl Farrow - CeraPhi Energy: to 60 % of your overall CAPEX. that embedded cost could potentially be invested for over 100 years to get energy out of the Charlotte: Yeah. Karl Farrow - CeraPhi Energy: ground. that's where I think we're going. And I think, you know, there will be a step change specifically when we start introducing small power generation. That will be, I think the needle will turn when people see power can be produced Matt Killeya: Thanks. Karl Farrow - CeraPhi Energy: also. Because if you do heat and cooling and power from one resource in one location, who's not to like that? Matt Killeya: So we're coming to the end of our conversation, Karl. Just to touch on your memoir that Charlotte mentioned earlier, From Punk Rock to Geothermal Shock. We know that we've had punk rock in the UK, but it sounds like we haven't quite had our geothermal Charlotte: That's good. Matt Killeya: shock yet. So how long do you think it will be until we experience our geothermal shock? Karl Farrow - CeraPhi Energy: I think we're underestimating what's actually being done at the moment. I think there's a lot going on. These things, as I mentioned, technology shifts in slow steps. But I do think there will be a big shift in the next three to five years. I'd like to think once we've got... a large community project up and running. We've already done a hospital. I think there's more coming around the corner on that hopefully in the next years. I think, once, companies like Star or a few others get one or two, we need a few more champions that are actually doing projects, commercial and selling energy. You know, it's fantastic what we've done at Eden. It's fantastic, what GeoThermal Engineering have done, down in the United Downs. Are they projects you can stand behind from an investment point of view and say, let's go and do another 10? Probably not, but they've set the groundwork and the basis for that in the UK. And I think what we've got to do is get one or two projects in the ground that are heat as a service, energy as a service, these types of things, selling energy. And that helps to shift the needle massively, things that you can actually touch and feel I think it needs that and it needs more people to be reading the book. I'm gonna be sending the book and hopefully trying to get. load of these placed in Westminster so MPs can take them home or even read them and learn something. We'll see. Matt Killeya: This Charlotte: Just Matt Killeya: is a kid's book, isn't it? Charlotte: gonna hold up my coffee there. Matt Killeya: there we go. Karl Farrow - CeraPhi Energy: You Charlotte: Little bit shiny but there we go, geothermal deep beneath our feet. Karl Farrow - CeraPhi Energy: Yeah, yeah, yeah, no, I you know, so I personally I don't I don't want to just disregard what's already being done because there's been a lot done. I think if you just look at you know, back in May, although it wasn't in this country, we saw the largest IPO of any energy company in his first day with Fervo in the US doing a 2.8 billion first day listing. Charlotte: Mm-hmm. Karl Farrow - CeraPhi Energy: you know, that's should send us little bit of a signal. All right, there is a lot of hype and other things around that generally, you know, these things don't happen because people just want to throw money away. they happen because there's certain bets that people are making on this. And I think that's really what we'd like to see in the UK is that same bet. And like I said, it doesn't need money. personally, I mean, It'd be nice to see more money in the space for various startups that trying to do things. I think it needs more endorsement than anything because the private sector has money and wants to invest money. I feel that there's just a lack of endorsement, a lack of confidence in the endorsement that investors can get behind at the moment. But I think that narrative is going to shift in the next few years. Charlotte: Yeah. Agreed. Matt Killeya: Karl, it's been absolutely fascinating talking to you. Thank you so much for coming in and sharing your thoughts. Karl Farrow - CeraPhi Energy: Thank you, time flies when you're having fun. Charlotte: Yes. Thanks very much, Karl. We do appreciate it and it's great to have your insights from the projects that you're delivering and see how much good work you're doing actually on the ground. I agree we need to get more projects going, definitely. Karl Farrow - CeraPhi Energy: Keep up the good work of this because this is really great this sort of platform where you can get multiple people sharing their experience and knowledge Charlotte: Thank you for joining us Matt Killeya: It's. Charlotte: for episode five of Strictly Geothermal. We were delighted to be joined by Karl Farrow and it was great to have some time with him to go into a bit more detail about his wide range of experiences in both setting up Ceraphi and also his wider experience in the energy energy industry, plus his kind of hopes and dreams for the future. So I hope you enjoyed it as much as we did. There was some great stuff in there, wasn't there, Matt Matt Killeya: Yeah, it was really interesting. I thought, even some of the stuff on, they're doing some fairly innovative work on community engagement. And I found that really interesting. also talking about some of the financing as well. yeah, I think it was really a very positive account of geothermal and where it can get to in the UK. Charlotte: So we really appreciate you joining us and we look forward to hearing our next guest for episode six. Thanks for listening. Matt Killeya: Thanks everyone.