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Alphabet's moonshot factory just launched a geothermal energy start-up called Dandelion

  • Dandelion Energy is "graduating" from Alphabet's moonshot factory, X.
  • Based in New York City, the start-up has raised $2 million in seed funding from Collaborative Fund, Zhen Fund, Borealis Ventures and others.
  • Dandelion's geothermal energy systems can heat and cool air or water in homes.

The moonshot factory formerly known as Google [X] revealed one of its secret projects today — Dandelion, a maker of geothermal systems for home use. The company "graduated" from X to operate as a standalone venture as of today.

Dandelion co-founder and CEO Kathy Hannun told CNBC that her start-up has raised $2 million in seed funding in a round led by Collaborative Fund, and joined by ZhenFund and Borealis Ventures. Alphabet, credited with starting the company, also holds equity in Dandelion.

Hannun explained how the company's systems work:

"Geothermal systems like ours let you pump heat out of your house, into the ground. This takes advantage of the fact that the ground is always around fifty to fifty-five degrees. So you don't have to pump heat against its natural gradient, like you do if you're running a conventional air conditioner on a hot day, blowing hot air out of the house into a very hot atmosphere, outside."

The main innovation she and her co-founder James Quazi developed concerns the installation of geothermal systems, she said. "The hardest part of installing a geothermal system used to be getting these things called the 'loops' into the ground. Until today people used tools like they would use to dig a well, general excavation tools to do this. We developed a much more efficient means of installation, which makes the whole thing relatively inexpensive."

For now, Dandelion is selling its systems through installers to home owners in New York state. Why New York? There's a lot of variation in weather, for starters. Geothermal systems can be used for efficient heating or cooling, which makes them appealing versus separate heating and air conditioning systems.

Additionally, New York is a densely populated state where an estimated 2 million homes still rely on oil or propane for temperature controls. Those are each more costly and polluting when compared to geothermal.

Installation of a Dandelion system would cost a homeowner between $20,000 to $25,000 upfront, or between $160 to $180 a month over 20 years, the company said.

"For an average fuel oil homeowner in New York, switching to geothermal would save 110 tons of CO2 and $35,000 over 20 years," Hannun said. "For the average propane home, the homeowner would save over 130 tons of CO2 and $63,000 over 20 years," she said.

The start-up intends to use its funding to ramp up its production and sales of its systems in New York, and then to expand into new states, especially in the Northeast and Midwest.

The company is the second to launch from X at Alphabet as an independent company. Earlier, X-born project Flux.io, which makes data sharing software for the buildings industry became a standalone, venture-backed startup. Other X affiliated projects have become part of Alphabet's own business, including G-cam which now comprises the camera technology within Pixel phones, and Verily, now part of Alphabet's life sciences initiatives.

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