Google Invests in Fervo Energy's $462M Round for Geothermal Power

Fervo Energy Secures $462 Million for Geothermal Expansion

Fervo Energy, a pioneering enhanced geothermal startup, has successfully raised $462 million in new funding. This capital injection is earmarked for the completion of its inaugural large-scale power plant and the initiation of development on multiple additional facilities.

Cape Station and Future Development

The newly acquired funds will primarily support ongoing work at the 500-megawatt Cape Station power plant, located in Utah. Simultaneously, Fervo will commence development activities on several other geothermal projects, as confirmed by Sarah Jewett, Senior Vice President of Strategy at Fervo.

Investment Round Details

This funding round was spearheaded by B Capital, with significant participation from a diverse group of investors. These include AllianceBernstein, Atacama Ventures, Breakthrough Energy Ventures, CalSTRS, Capricorn Investment Group, Carbon Equity, Centaurus Capital, Climate First, Congruent Ventures, CPP Investments, Devon Energy, Echelon, Galvanize, Google, Impact Science Ventures, Kris Singh, JB Straubel, Liberty Mutual Investments, Marunouchi Innovation Partners, Mercuria, Mitsubishi Heavy Industries, Mitsui & Co., and Sabanci Climate Ventures.

Power Purchase Agreement with Google

Fervo has already established a key partnership with Google, securing a power purchase agreement to supply electricity for its data center operations.

Cape Station Timeline

The company anticipates bringing the first phase of Cape Station online in 2026. Jewett also stated that the plant will be “mechanically complete” within the current year, emphasizing its tangible progress.

Recent Funding History

This latest investment follows a $206 million financing package secured six months prior, encompassing loans and project-level preferred equity for Cape Station. Last year, Fervo collectively raised approximately $500 million through equity and debt financing.

The Rise of Enhanced Geothermal

Growing Demand and Favorable Conditions

Enhanced geothermal technology has been under development for years, but its prospects have recently improved significantly due to a confluence of favorable factors. A primary driver is the escalating demand from data centers.

Data Center Energy Needs

Major technology companies, including Google and Meta, are actively exploring geothermal energy as a viable solution to meet their substantial energy requirements. An analysis by the Rhodium Group indicates that enhanced geothermal could potentially fulfill nearly two-thirds of new data center demand by 2030, at competitive pricing.

Political Support and Industry Expertise

Geothermal energy also enjoys support from within the government. Chris Wright, the current Energy Secretary, previously led Liberty Energy, a company that participated in a $138 million funding round for Fervo in 2022. Fervo leverages fracking and directional drilling techniques, drawing upon expertise from the oil and gas sector.

Many employees at Fervo have transitioned from careers in oil and gas, applying their knowledge of drilling and subsurface development to this new energy challenge.

Fervo's Leading Position

Fervo is widely recognized as a leading startup in the enhanced geothermal space, distinguished by its ability to drill deeper to access hotter rocks and generate greater power output.

Drilling Efficiency Improvements

The company has demonstrably reduced the time required to drill new wells. Initial wells took approximately a month to complete, but Fervo recently achieved a completion in just 16 days. “We are in the mid-teens these days, on average, for our well drilling times,” Jewett noted, while also acknowledging ongoing opportunities for improvement.

Economic Impact of Drilling Speed

The focus on drilling speed is driven by both economic considerations and a commitment to excellence. “Roughly half the cost of wells is in the drilling time,” Jewett explained. Faster drilling translates to quicker power plant completion and accelerated revenue generation. It also signifies operational proficiency and effective problem-solving.

Geographic Focus and Future Expansion

Western U.S. as Initial Target

Currently, Fervo is concentrating its efforts on the western United States, where geothermal resources are closer to the surface. At the Cape Station site in Utah, for instance, drilling reaches 8,500 feet to access rock temperatures of 450°F.

Strategic Expansion Plans

Expansion to other regions, including international markets, will occur after the company establishes consistent drilling speeds in the West. “There are a lot of really high-potential places across the world,” Jewett stated.

Building Technical Expertise

Within the U.S., diverse rock formations provide Fervo with opportunities to accumulate valuable technical experience before venturing into international projects. Jewett anticipates that regulatory differences will be the primary challenge during international expansion.

Potential for Public Offering

Amidst soaring energy demand and Fervo’s advancements at Cape Station, speculation has arisen regarding a potential initial public offering (IPO) in the coming year. Jewett refrained from commenting on these rumors but confirmed that the company is experiencing “off-the-charts demand.”