The enhanced geothermal company Fervo Energy has some major utility power purchase agreements under its belt.
- The top line: Fervo signed two 15-year power purchase agreements with utility giant Southern California Edison, for 320 megawatts in total — together, the company said they amount to the world’s largest geothermal PPA.
- The nuts and bolts: The utility will purchase power from the under-construction Cape Station project in Southwest Utah, which is slated to have 400 MW of capacity. The project will come online in phases: 70 MW by 2026, then the rest by 2028.
- The market grounding: The agreement comes at a moment of pressure for California utilities. In 2021, the state’s Public Utility Commission issued a mid-term reliability (MTR) mandate, requiring them to procure 1,000 MW of clean firm power by 2026.
According to Sarah Jewett, Fervo’s VP of strategy, the MTR “underscores the importance of reliability to California power markets” as the state transitions away from fossil fuels and brings more solar online.
And as Fervo regularly points out, Fervo’s enhanced geothermal power falls squarely within that definition, which excludes weather-dependent renewables like solar or wind. (The MTR mandates that an additional 1,000 MW must be from long-duration energy storage.)
“We see California as a priority market for the foreseeable future,” Jewett told Latitude Media. “And we believe that geothermal is the only resource available today that can meet the state’s reliability, affordability, and sustainability objectives.”
Geothermal is far from a new energy source. But Fervo uses fracking methods native to the oil and gas sector to access underground hot rocks underground without concern for natural permeability, which is an enhanced technique that is newer to the market..
At this point, almost all of Cape Station’s capacity has been purchased. In 2022, Fervo contracted 53 MW of its planned-for power to community choice aggregators in California.
The company started exploratory drilling at the Utah site roughly one year ago, and in February published an analysis showing that it was seeing costs and drilling times come down with each well it drills. In the wake of that analysis — looking toward commercialization — the company began to eye project-level finance.
California Energy Commission chair David Hochschild said in a statement that the agreements represent a “milestone” for the state, as it transitions away from fossil fuels: “Enhanced geothermal systems complement our abundant wind and solar resources by providing critical base load when those sources are limited.”
Asked whether Fervo is in conversation with other utilities as well, Jewett said that the company is seeing “immense demand” and “expects sustained outreach from prospective offtakers,” but offered no specifics.
This comes amid a busy year for Fervo.
Just weeks ago, the company was tagged as Google’s first developer partner for its newly coined “clean transition tariff,” along with the utility NV Energy. Via the tariff, Fervo has agreed to provide 115 MW of geothermal to Google’s Nevada data centers; until today’s agreement, that deal was previously the company’s largest PPA.
The Fervo-Google relationship dates back further, though. In 2021, Google and Fervo signed what the company described as the world’s first corporate agreement to develop enhanced geothermal power; last November, that commercial pilot came online in Nevada.
At the time, Maud Texier, Google’s global director of clean energy and decarbonization development, told Latitude Media that the company hopes geothermal follows “a similar trajectory as solar has over the last few decades in terms of rapid cost declines and performance improvements.”
Editor’s note: This piece was updated on June 25 to add comments from Fervo’s Sarah Jewett.
