Earlier quoted context omitted.
It would be more efficient without the heat exchanger, but you’re almost certainly right - the reservoir water would probably be too oxygenated/mineralized for direct use if being stored in contact with the rock, at least without a lot of additional treatment. Don’t want to kill all those underground pipes with mineral buildup as things precipitate out as it cools.
Counterflow heat exchangers easily approach 100% efficiency. It needs to be large enough, and needs sensors to control the flow, but both of those are trivial at this scale.
The water pumping and maintenance costs are likely going to be their largest ongoing costs, no?