The advanced geothermal industry is heating up, with Fervo Energy announcing Thursday that it had closed a $421 million financing package for its first utility-scale geothermal power plant.
The Houston-based startup said the money will be used for construction of Cape Station, a 500-megawatt power plant in Utah that is expected to begin generating electricity later this year. The project is a bellwether for the advanced geothermal industry, which relies on fracking techniques honed in the oil and gas industry to unlock the Earth’s heat. It’s also a key test of efforts to generate electricity around the clock without producing planet-warming emissions.
Thursday’s announcement showed investors’ growing faith in the technology. Fervo said the financing package is nonrecourse financing, or essentially a loan secured by the geothermal developer’s assets. Early stage technologies typically have difficulty securing nonrecourse financing because they are deemed riskier investments.
“Cape Station disrupts that narrative,” said Fervo Chief Financial Officer David Ulrey in a statement. “With proven oil and gas technology paired with AI-enabled drilling and exploration, robust commercial offtake, operational consistency, and an unrelenting focus on health and safety, we have shown that EGS [enhanced geothermal] is a highly bankable asset class.”
