The Zhitong Finance App learned that the stock price of Fervo Energy (FRVO.US) surged more than 14% before the US stock market on Thursday, after the company, which focuses on geothermal energy, achieved its first power generation at the Cape Station geothermal development project in Utah. The company said this is the first time a global utility-grade enhanced geothermal development project has reached this milestone. Recently, technology giants such as Google, Amazon, and Meta have increased their clean energy layout. The core logic is that this stable electricity supply based on zero carbon emissions and energy other than oil and gas resources, which is based on zero carbon emissions and recent high price fluctuations, is becoming a solid foundation for AI computing power capital efficiency.
According to information, this is also the first time that the GeoBlock module of Fervo's Cape Station project is connected to the grid. This is not the company's first time generating electricity; its Nevada Project Red geothermal power project already supplied power to the grid system as early as 2023.
The company said that the first phase of Cape Station has an installed capacity of 100 megawatts and consists of three GeoBlock modules. The first module has already achieved the first power generation and is expected to achieve commercial operation as agreed in the contract by October 1 at the latest.
Fervo Energy said that as the complete well system is put into operation, the company will continue to increase the output of the first GeoBlock module while debugging the remaining two modules. The latter two are expected to achieve commercial operation as agreed in the contract by January 2027 at the latest; the next phase of the 400 MW project is under construction and is expected to be put into commercial operation in 2028.
Earlier this month, Fervo announced a major deal to supply Google with nearly 400 megawatts of power from Cape Station for its proposed Utah data center.
“This will change the landscape of the geothermal industry,” said Tim Latimer, CEO of Fervo (FRVO). This achievement established the company's enhanced geothermal system technology as an “iconic new generation technology for our time.” “We believe this shows the commercial and technical maturity of EGS, which is sufficient to meet the market's urgent need for reliable, clean electricity.”
According to information, Fervo's main business is to develop, construct, and operate geothermal power generation projects using Enhanced Geothermal Systems (EGS) as a technical foundation, and to sell electricity through power purchase agreements. Traditional geothermal development requires matching underground heat, fluid, and rock layer permeability; EGS establishes fluid channels through controlled reservoir transformation to allow the injected fluid to absorb heat through high-temperature rock layers and then return to the ground to generate electricity. Fervo combines horizontal drilling, completion engineering, and underground optical fiber sensing to continuously monitor temperature, flow and reservoir performance to improve the development efficiency of underground heat exchange resources. Its industrialization logic is to transform the drilling and underground engineering capabilities accumulated by the oil and gas industry into clean power generation assets that can be built repeatedly.
AI's power battle extends underground: Fervo generates electricity for the first time, a key step in commercializing geothermal heat
Fervo Energy's stock price is strengthening this time. The core catalyst is that enhanced geothermal technology is moving from drilling, construction, and order reserves to the implementation stage of actual grid-connected power generation. The company announced that the first GeoBlock module at the Cape Station project in Utah has achieved its first power generation, leading the stock price to rise 7.6% before the market on Thursday.
The company's first phase has a total scale of about 100 megawatts and consists of three modules of about 33 megawatts; the module that pioneered power generation is expected to reach the contract commercial operation node by October 1 at the latest. The remaining modules are scheduled to be put into operation in January 2027, and the 400 megawatt expansion project is expected to be put into commercial operation in 2028. The first power generation means that the complete engineering chain between underground reservoirs, production wells, ground power generation equipment and the power grid has begun actual operation, and has also established the foundation for the subsequent payment of electricity sales revenue.
The progress of this project echoes the need for tech giants to lock in long-term electricity supply. On September 1, Fervo and Google signed a 396 megawatt electricity purchase agreement (PPA). The relevant project is expected to be launched in 2028 to support Google's proposed Utah data center; Google also obtained the option to further expand the procurement scale by about 600 megawatts until June 2030. For AI infrastructure investment, power supply construction progress, deliverable capacity, and long-term power supply arrangements directly affect when the server cluster can be put into use. The strategic value of Google's procurement of geothermal power is to establish an all-weather energy supply foundation in advance for future computing power expansion.
Commercial value beyond zero carbon: Stabilizing the supply of clean electricity resources is becoming the foundation for tech giants' computing power and capital efficiency
The world's largest AI technology giants, such as Google, are speeding up the deployment of geothermal heat. In addition to the social responsibility of zero carbon emissions, the first thing they value is matching the continuous power supply capacity with the AI load. Large-scale training requires computational clusters to operate collaboratively, and online inference services must continuously meet user requests, response delays, and concurrency requirements; GPUs, CPUs, storage, networks, and cooling systems together form a huge electricity load. From the perspective of engineering economics, after expensive servers are purchased in advance, if power access is delayed or power supply capacity is insufficient, equipment utilization and revenue delivery will be affected.
According to the US Department of Energy, the capacity factor for geothermal power generation is usually about 90%, which is suitable for supporting the continuous load of data centers; this shows the degree of utilization of power generation assets throughout the year. Therefore, the important value of geothermal heat for the AI industry is to provide a stable power source in a combination of wind, solar energy and energy storage to help computing power assets obtain a longer effective operating time.
The second level of value is reducing the direct sensitivity of energy costs to the fuel market and improving the predictability of long-term operating budgets. Geothermal uses underground thermal energy to generate electricity, and there is no need to continuously purchase natural gas or coal as fuel; in combination with long-term power purchase agreements, the predictability of electricity prices and power supply arrangements can be improved within the scope agreed upon in the contract. Google has clearly viewed the Fervo geothermal project as a supplement to wind and solar energy to reduce the dependence of hourly electricity consumption on fossil energy.
Deriving from investment logic, the scale for technology companies to evaluate power supplies will get closer and closer to the total cost of ownership of the entire data center: considering not only the price per kilowatt hour, but also the stable power supply, equipment utilization rate, capacity expansion schedule, and long-term budget. The commercial value of power supplies that can help high-value computing power assets continue to operate will go beyond simple emission reduction properties.
The actual deployment of tech giants also shows the direction of collaborative expansion of various clean energy sources. Google announced in July this year that the first two phases of the Steel River project will add 1.6 gigawatts of DC side photovoltaic installations and 1.9 gigawatt-hour battery energy storage to the regional grid; Meta has cooperated with XGS Energy to support the development of a 150 MW geothermal project in New Mexico, which further introduced Beck Hughes' engineering services in March this year.
These layouts reflect a common main line: renewable resources of the landscape focus on expanding the supply of clean electricity, energy storage regulates delivery times, and stable power sources such as geothermal heat support the strong load of continuous expansion. For Fervo, the modular GeoBlock construction and the local power supply path being explored are expected to improve the efficiency of project replication and power delivery, so that the power supply construction can better match the phased expansion of the data center.
Long-term orders, project financing, and actual power generation records are also mutually reinforcing Fervo's commercialization capabilities. The company obtained 421 million US dollars of non-recourse project financing for Cape Station Phase 1 in March of this year. Participating institutions include banks such as Barclays, HSBC, and Mitsubishi UFJ, which indicates that the project has received support from infrastructure financing channels. Based on this, Fervo Energy's initial power generation provides a new starting point for verification of subsequent operation performance: continuous accumulation of power generation, availability, and operation and maintenance data helps financing institutions evaluate future project cash flow, and also helps customers sign more electricity purchase arrangements. The resulting growth path is that long-term demand supports project construction, operational data improves financability, and standardized construction promotes scale expansion and cost improvement; this is what Wall Street analysts believe is the core investment logic of Fervo's development from a new technology developer to a large-scale power supplier.