UPDATE 1-Google-backed geothermal co suspends test project

* Geologic anomalies force suspension of project

* Investors include Google, Khosla Ventures

* Company evaluating alternative locations

LOS ANGELES, Sept 2 (Reuters) - Geothermal startup AltaRock Energy Inc on Wednesday said it has suspended its demonstration project in California due to geologic anomalies.

The company, whose investors include Google Inc's (GOOG.O) philanthropic arm, Google.org, and top Silicon Valley venture capital firms Khosla Ventures and Kleiner Perkins Caufield & Byers, said that despite the setback, it will keep developing its engineered geothermal systems (EGS) technology and is evaluating alternative well locations.

EGS improves upon the century-old technology of tapping geothermal energy from geysers, hot springs or volcanoes to generate electricity. With EGS, engineers drill their own geothermal outlets and pump in water to create steam to power a turbine. This process allows projects to be built in a wider variety of locations.

AltaRock's demonstration project at the Northern California Power Agency Geysers Power Facility was intended to test the company's technology advancements, which it has said will reduce the cost of clean, geothermal energy.

A year ago, AltaRock raised $26.25 million from Google, Khosla Ventures, Kleiner Perkins, Advanced Technology Ventures and Vulcan Capital. The company's demonstration project also received a U.S. Department of Energy grant of up to $6 million last year. (Reporting by Nichola Groom; editing by Gunna Dickson)