Fervo Energy’s initial public offering day has arrived. It comes after months of momentum — the company’s value has more than doubled since January — and ushers in a big test for the still-nascent enhanced geothermal market: Can Fervo and its technology survive the scrutiny and disclosure demands of public company status?
Fervo raised $1.89 billion in the lead-up to its Nasdaq listing this morning, making it the largest climate tech IPO so far this year. It’s also the first geothermal company to go public in more than a decade.
The company marketed 70 million shares at $27 each, valuing Fervo at more than $7.7 billion based on the outstanding shares listed in its latest SEC filing this week. And in just half a day, shares rose 33%, putting the company’s valuation at over $10 billion. Strong investor interest led Fervo to boost its valuation twice this year in the lead-up to the IPO; earlier this month, it targeted $6.5 billion.
Geothermal has been a rare zero-emissions energy source with bipartisan support, including from Energy Secretary Chris Wright, the fossil fuel industry, and data center developers seeking clean, firm power sources. Sarah Jewett, Fervo’s senior vice president of strategy, emphasized the company’s enthusiasm for tackling climate change.
“We are proud to be at the forefront of geothermal innovation for the purpose of helping to solve climate change,” Jewett told Latitude Media. “That’s why a lot of us come to work every day. We are also really proud to have put geothermal energy on the map again.”
Jewett said investors are excited about Fervo’s potential growth and its goal of delivering affordable, reliable energy. The IPO is a financing milestone that will allow the company to build out multiple projects simultaneously across its 600,000 acres of leased land — something that historically had been challenging due to capital constraints.
Fervo’s high valuation is a sign of the times. Load growth forecasts continue to rise, mainly due to the AI data center boom, and tech companies are looking for sources of around-the-clock power. Proponents like Google — an investor in Fervo that has also struck a “right of first refusal” agreement with the company — are hoping enhanced geothermal follows a similar trajectory to solar: As the industry scales, costs come down, and performance improves.
It has a long way to go. Geothermal accounts for less than 1% of the U.S. power supply today, in part because of high upfront costs and the technology’s limitations to regions with specific geological conditions: heat, water, and permeable underground rocks. That said, Fervo’s next-generation technology — including horizontal drilling adapted from oil and gas fracking and fiber-optic sensors that more precisely map underground conditions and track performance — has made it possible to generate geothermal power in more locations.
According to an analysis from the Department of Energy, geothermal could provide 8.5% of the country’s electricity generation by 2050.
Over the last five years, Fervo’s project pipeline has expanded exponentially, with a $7.2-billion potential backlog of contracted revenue from power purchase agreements with hyperscalers and utilities, according to its latest SEC filing. Fervo said it’s already executed 658 megawatts of binding PPAs with customers, including Google, Southern California Edison, and Shell. Another 2.6 gigawatts are in advanced development, while more than 38 GW are in early-stage development.
Google’s right of first refusal
One quirk of the company’s strategy: Google will have first priority over some of Fervo’s near-term development pipeline. In March, Fervo disclosed a 3-GW deal with the tech giant that gives Google the right of first refusal over “portions” of the geothermal company’s pipeline, including “expansion capacity within contracted areas and certain near-and-medium term uncontracted capacity.”
The agreement is non-binding and not project-specific, meaning Google isn’t required to purchase that amount of capacity. But Fervo must propose at least a gigawatt of projects to Google within the next two years. Either company can terminate the agreement in March 2028 if there isn’t a definitive offtake agreement, which means it could lapse without any PPA from Google.
“Google has proven to be a really innovative and amazing partner as an off-taker,” Jewett said. “We believe that it is fair for Google — in the event that they are the anchor tenant at a new Fervo project — to have a right of first refusal to future phases of that project. That makes sense, because we’re deploying this standardized manufacturing model and we’re bringing down the cost of projects over time.”
When the agreement came to light via Fervo’s SEC filing, there were questions about whether it would constrain Fervo’s growth and even restrict its ability to work with other hyperscalers. However, Jewett clarified that it isn’t an exclusivity agreement, so Fervo doesn’t have to offer Google every project. In fact, Fervo is already in talks with other hyperscalers, but doesn’t have any binding commercial deals yet.
However, Fervo is also blocked from accepting investments or financing from Google’s competitors, the SEC filing said. If a competitor acquires an interest in Fervo, the company must implement specific “protective measures” for Google’s benefit.
Fervo acknowledged the risks of such an agreement in the filing: “Together, these provisions give Google significant priority over our near-term development pipeline and may limit our flexibility to pursue alternative commercial, strategic, or financing arrangements that would otherwise be available to us.”
Google has been a longtime partner of Fervo, announcing its first deal in 2021 by financing a pilot project in Nevada that came online in 2023. The following year, Google signed a PPA with Fervo and NV Energy, a Nevada utility, to supply 115 MW of power to its data centers. It represented Google’s first deal under its novel “clean transition tariff” incentive structure. Google also joined a $462 million investment round in December 2025.
Capital intensive
Another potential risk Fervo flagged to investors is that enhanced geothermal remains an expensive business. The company expects to spend $1.2 billion in 2026, including $125 million to finish phase one of its Cape Station power plant in Utah. That project is on track to deliver electricity this year, and phase two is already under construction.
In December, Fervo estimated it would cost $7,000 per kilowatt to build a single 50-MW geothermal power plant. That has dropped to $5,500 per kW for Cape Station’s phase two, Jewett said; the long-term goal is to drive costs down to $3,000 per kW in the next five to 10 years.
That would place enhanced geothermal just above the average cost of building a gas plant with combined-cycle turbines, which rose to $2,157 per kilowatt last year, according to BloombergNEF.
“This isn’t about a single, innovative breakthrough,” Jewett said. “It was through many incremental breakthroughs in the subsurface, in our brine transportation system, and in our power facilities. It’s about drilling longer laterals at hotter temperatures that drive more efficient power plants. It’s about innovating in how power facilities are constructed to simplify them from the way they have always been built.”
