Fervo Energy said Monday it is eyeing up to a $6.5 billion valuation in a U.S. initial public offering for shares in the geothermal company, as investors signal more confidence the technology can be scaled up to help meet rising electricity demand.
The Securities and Exchange Commission filing from Fervo — which is building the first U.S. commercial enhanced geothermal power plant — comes as the Department of Energy tries to bolster geothermal and Congress weighs new legislation to advance projects.
Achieving a $6.5 billion market valuation through a Nasdaq listing would suggest geothermal is turning a corner, at least in terms of its potential for raising capital. Today, geothermal resources account for less than 1 percent of the nation’s power supply. Yet the technology’s enthusiasts say the growth trajectory of the round-the-clock source of carbon-free electricity could look similar to wind and solar, particularly as data centers require more power.
Advanced extraction techniques have “the potential to make geothermal generation as ubiquitous as solar generation in the U.S. today,” wrote Fervo CEO Tim Latimer in Monday’s filing. The Houston-based company, which has deals with Google and Shell, said it is looking to raise more than $1.3 billion in cash through the IPO by offering 55.6 million shares priced between $21 and $24.
Fervo uses a different technology than conventional geothermal companies. Its enhanced geothermal systems (EGS) technology uses horizontal drilling and hydraulic fracturing techniques similar to what drove the shale revolution. The idea is to extract large amounts of heat from areas of rock that previously were inaccessible.
Fervo is developing a 500-megawatt geothermal power plant in Cape Station in Beaver County, Utah. If it develops its full 4.3-gigawatt capacity, Fervo would more than double existing U.S. generation of geothermal energy.
“Relying on proven oil and gas technology allows for this scale,” Latimer said. “We do not need to build domestic supply chains from scratch; we can leverage existing oilfield services providers.”
Monday’s filing details plans to deliver power at Cape Station by the end of this year. The company is targeting approximately 100 megawatts at the site by early 2027 but has a permit to develop 1.5 gigawatts there. A gigawatt is roughly enough power for a city of 750,000 homes.
Overall, the company says it has more than 595,000 leased acres for potential expansion in Western states, and it’s signed power purchase agreements with Southern California Edison, Shell and other buyers.
An overhyped technology?
Fervo’s dominance was apparent in a note last year from research firm BloombergNEF, which said the company constituted roughly half of the $1.1 billion in venture capital and private equity funding raised by geothermal startups since 2016.
“Without Fervo, geothermal’s fundraising totals are paltry,” BNEF said.
The company and the industry at large needs to overcome several obstacles if it wants to gain more traction in the market, according to observers. Stephanie Diaz, an analyst at BNEF, said because Fervo is developing a first-of-a-kind power plant, it will take time to determine whether heat in the ground extracted for power degrades over time, among other things.
Fervo has been open about its data, but it won’t be fully known how its plant affects drilling equipment 15 years from now until it’s operational, Diaz said. How equipment behaves over time — and whether power can be generated consistently — could affect whether projects are cost-competitive.
Fervo said in the filing it has lowered per-foot drilling costs by 70 percent over the past four years and has capital costs cheaper than nuclear reactors at $7,000 per kilowatt. Over time, it is looking to be competitive with gas at $3,000 per kilowatt.
Yet it’s unclear whether other geothermal startups can raise much money, a factor that could constrain industry growth as a whole. There are dozens of other companies attempting advanced drilling techniques, such as closed loop systems that heat fluid in pipes running through hot rock.
“They’re going to need more customer demand at some point if they want to actually scale this industry,” Diaz said, adding that BNEF doesn’t have long-term forecasts for the industry because it is so small.
Geothermal power also is constrained by geography, in that the most suitable sites to extract heat deep from the Earth are west of the Mississippi River. Despite support from the Department of Energy, Diaz noted that geothermal is not seeing the same level of funding from the administration that nuclear is getting.
In its fiscal 2027 budget request, the Trump administration called for steady DOE funding stream for advancing geothermal, but it also proposed rescinding funding for the technology allocated in the 2021 bipartisan infrastructure law.
‘A much longer runway’
Energy Secretary Chris Wright — whose company Liberty Energy invested in Fervo — has been pushing for geothermal, overseeing a reorganization that created an office with the technology in its name. The Hydrocarbons and Geothermal Energy office announced $14 million in April, for example, for a project to test enhanced geothermal systems in the eastern United States.
There’s several bills supporting the technology moving through Congress, and the U.S. House late last month approved legislation that would exempt some geothermal projects on state and private land from permitting requirements. Historically, geothermal well approvals on federal land can take double the time as oil and gas wells.
In some states the percentage of electricity from geothermal is significantly higher than the national average. In Nevada, where much of Fervo’s pipeline is, the technology provided roughly 10 percent of power in 2023, according to the U.S. Energy Information Administration.
Nandan Nelivigi, a project development partner at the law firm White & Case, said some technologies that get a lot of attention like small advanced reactors “have a much longer runway” to being commercialized. In the next decade, “this is going to become less of a technology risk than one of simply finding the capital and executing these projects,” he said of geothermal.
Fervo’s IPO could help in making it easier for other companies to get attention from institutional investors, he said.
