The VC arms of Chevron and BP are funding Eavor, a startup looking to commercialize a form of geothermal energy that it says can provide large-scale power in many regions worldwide.

Why it matters: It's the latest sign of momentum and investor interest behind technology that could significantly scale up geothermal.

• It's a very old power and heat source that remains very niche compared to the immense theoretical potential of tapping high subsurface temperatures.

The big picture: The participation of Chevron and BP shows how oil giants are diversifying into clean energy — and in this case, a form of geothermal that borrows the industry's drilling and geological know-how.

Driving the news: Calgary-based Eavor this morning announced a $40 million funding round.

• Other backers are investment firms Temasek, BDC Capital, and Vickers Venture Partners, and Eversource.
• "These investments, and the partnerships formed around them, are critical to the commercialization of the technology and to help Eavor scale its already extensive project pipeline," the announcement states.
• The company's development pipeline includes planned or potential potential projects in Europe, Canada and elsewhere.
• The amounts coming from the different funders was not disclosed and Eavor declined to offer a breakdown.

How it works: Geothermal energy can come from multiple ways of accessing high-temperature underground aquifers and rock formations.

Eavor's effort aims to commercialize a "closed loop" system in which deep wells are connected underground with lateral connections.

• In the "closed" system, fluids are circulated through the system and heated by high underground temperatures, forming what they call a "massive subsurface radiator."
• The process is meant to operate without energy-consuming pumps — instead relying on the natural effect of hot fluid rising and cool fluid falling.
• The thermal energy brought to the surface can be used for direct heating or converted to power.
• The method could provide both baseload power and act as a dispatchable battery to complement wind and solar, the company said.

Yes, but: "To grow as a national solution, geothermal must overcome significant technical and non-technical barriers in order to reduce cost and risk," noted a major 2019 Energy Department analysis (h/t Yale Environment 360).

• That DOE report, however, sees tech, cost and regulatory improvements providing the potential for geothermal to grow 26-fold to provide 60 gigawatts of power capacity in the U.S. by 2050.

The intrigue: The emerging forms of geothermal involve tricky and deep subsurface technologies.

• They rely in part on the same kind of drilling advances used in the oil-and-gas sector — including use of lateral-well tech.
• That's not lost on the oilfield services industry, with companies including Baker Hughes and Schlumberger seeinggrowth potential.

Go deeper:Geothermal energy is poised for a big breakout (Vox)