Fervo Energy, a U.S.-based startup focused on next-generation geothermal power, recently announced a $206 million fundraising round to progress its Cape Station project in southwest Utah. This financing includes venture capital and energy investors. It adds to Fervo’s earlier $556 million in equity and $220 million in debt. Now, their total capital is almost $1 billion.
Fracking for Heat: How Fervo’s EGS Breakthrough Works
Fervo employs Enhanced Geothermal Systems (EGS), which borrow technology from oil and gas drilling. It uses deep, horizontal wells and hydraulic stimulation to create heat zones in dry rock—sometimes called “fracking for heat”.
In Nevada, Fervo’s pilot “Project Red” previously generated 3.5 MW with steady flow rates of 60 L/s, validating the EGS model. Cape Station will stack multiple horizontal wells to boost output to 400 MW by 2028.
The Utah project aims to deliver 100 MW of power by 2026 and scale to 500 MW by 2028—enough to supply nearly 500,000 homes. Fervo has sales agreements, including one for 320 MW with Southern California Edison. They plan to build the largest enhanced geothermal system plant in the world.
To fund this growth, Fervo raised $100 million from Breakthrough Energy Catalyst, $60 million in loan upsizing from Mercuria, and $45.6 million in bridge debt from XRL-ALC. Chief Financial Officer David Ulrey remarked on this significant fund raise, noting:
“These investments demonstrate what we’ve known all along: Fervo’s combination of technical excellence, commercial readiness, and market opportunity makes us a natural partner for serious energy capital.”
Hot Commodity: Why Geothermal Is Gaining Global Ground
Geothermal energy is becoming popular globally because it offers steady power all day. In 2023, its capacity utilization was 75%. In comparison, wind energy was at 30%, and solar was at 15%.
The broader geothermal market (including heat pumps) topped $7.5 billion in 2023 and could reach $9.2 billion by 2030, growing at about 3.1% annually. By mid-century, geothermal could play a major role in the clean energy mix.
The International Energy Agency (IEA) forecasts 800 GW of added geothermal capacity by 2050, supplying 15% of new electricity. In the U.S. alone, Enhanced Geothermal Systems may fill 90 GW of firm, zero-carbon power needs by 2050—enough for 65 million homes.
EGS sits at the cutting edge of geothermal technology. A Market Research Future study shows more rapid expansion, projecting growth from $6.9 billion in 2024 to $14.1 billion by 2034, at a 7.4% growth rate.
Notably, governments, oil and gas firms, and utilities are increasingly investing in geothermal energy. If next-generation technologies achieve major cost reductions, cumulative global investment could reach $1 trillion by 2035 and $2.5 trillion by 2050.
Annual investment may peak at $140 billion, surpassing today’s global spending on onshore wind. As a dispatchable and clean power source, geothermal is attracting interest beyond traditional energy players.
Tech companies, in particular, are eyeing geothermal to meet the rising electricity demands of data centers. These tech giants are also considering this clean energy source for their emission reductions and net-zero targets.
Geothermal Energy’s Role in Reducing Greenhouse Gases
Geothermal power plays a significant role in reducing greenhouse gas (GHG) emissions compared to fossil fuels. Lifecycle studies, like those from the IPCC, show that geothermal electricity emits only 38–45 grams of CO₂ equivalent per kWh.
In comparison, coal emits 820 g CO₂/kWh, and natural gas emits 490 g CO₂/kWh. This means geothermal emits about 90% less CO₂ (or even up to 99%) than traditional power plants and ranks among the cleanest electricity sources.
Enhanced Geothermal Systems can reduce emissions over time. They may reach as low as 10 g CO₂/kWh. This is achieved by reinjecting geothermal fluids and reducing natural gas leakage.
With favorable global deployment, geothermal power could cut 500 million metric tons of CO₂ from electricity and 1.25 billion metric tons from heating and cooling by 2050. That’s like removing 26 million cars from the roads every year.
Geothermal energy is reliable 24/7. This means less dependence on carbon-heavy sources, like natural gas. That value rises as renewables like solar and wind grow because geothermal energy can smooth out fluctuations.
Moreover, geothermal energy has low emissions and reliable performance. It supports clean energy systems, reduces fossil fuel use, and helps countries meet climate goals. This makes it a strong ally in the battle against global warming.
High Stakes, High Rewards: The Economics Behind the Heat
Geothermal energy needs no fuel and offers stable costs, but initial development is expensive. Drilling accounts for over half its capital cost.
A typical geothermal well pair costs around $10 million for 4.5 MW, but EGS wells may exceed $4 million per MW. Studies show a 20% failure rate on wells—that means one in five dry holes.
However, costs are dropping. The U.S. aims for a capital cost of $3,700 per kW by 2035. This is a big drop from about $28,000 per kW in 2021. As a result, the LCOE could reach $45 per MWh. This would make it competitive with solar and wind-plus-storage.
Congress and the Department of Energy support this shift, funding projects like Utah’s FORGE site, which de-risks new well and drilling methods and shares insights with startups like Fervo.
Geothermal also brings strong economic returns. Fervo estimates its Utah site will support 6,000 construction jobs and generate $437 million in local wages.
What’s Next for Fervo—and for the Future of Clean Baseload
While geothermal shows promise, Fervo and the broader industry face challenges. Each well costs tens of millions, and drilling carries technical risk and potential delays. EGS also faces regulatory hurdles and community concerns—especially in Southeast Asia, where rules and local engagement vary widely.
Globally, however, momentum is building. Governments aim for $1.7–2.9 trillion in nuclear and geothermal investment by 2050, with geothermal carving out a growing share. Private investors and tech firms are joining, and public research supports cost reductions and scalability.
Fervo’s upcoming Cape Station plant—with financing, off-take deals, and strong technology performance—could serve as a model for future geothermal development. If drilling costs fall and projects deliver on forecasts, geothermal may become a cornerstone of the clean-energy grid.
