Two years ago, Sarah Jewett was on her honeymoon and biking through the French countryside when she got a text that made her burst into tears. The message from Fervo Energy’s CTO Jack Norbeck contained a single photo: white steam billowing from the top of a geothermal well in northern Nevada.
That steam represented the culmination of over a year of work on Project Red, Fervo’s first commercial facility. More importantly, it proved that the company’s innovative approach to geothermal energy actually worked — setting the stage for what would become one of the most ambitious funding journeys in climate tech.
Since launching in 2017, the Houston-based company has secured nearly $800 million in total capital, with backing from major investors including Devon Energy, Breakthrough Energy Ventures, and Google. The December 2024 funding round alone brought in over $250 million through a combination of equity investment and debt financing. With the company now valued in the billions, CEO Tim Latimer has confirmed that Fervo is exploring going public, with an IPO potentially coming within the next few years.
“I think the moment that we opened our production for the very first time while injecting fluid into the injection well and saw steam coming out of our silencer, it was this moment of I think just ultimate silence on the team,” said Jewett, Fervo’s VP of strategy, on The Green Blueprint podcast. “Everyone was choked up.”
That breakthrough would ultimately help Fervo raise the capital needed to build Cape Station, a 500-megawatt geothermal project in Utah that represents a hundred-fold scale-up from Project Red. But getting there required navigating the treacherous funding landscape that confronts every new infrastructure-building company: how to build and prove technology before traditional project finance becomes available.
Methodical building
Fervo’s strategy began with a clever workaround. Rather than trying to build a standalone geothermal facility from scratch, the company designed Project Red as an “uplift” project that would add capacity to an existing geothermal plant.
“We found an existing geothermal power site, Blue Mountain in north central Nevada,” Jewett explained. The pitch to the facility’s operators was straightforward: Fervo would test their technology on the edge of the existing field, and if it worked, the operators would get the upside with zero risk.
But even that required significant capital. “This is the tricky, tricky part about financing first-of-a-kind demonstrations,” Jewett said. “You typically wish to have lower-cost capital and end up with higher-cost capital.”
Listen to Sarah Jewett’s whole interview on The Green Blueprint:
Fervo ended up raising corporate equity to fund the demonstration — expensive money, but the only kind available for unproven technology. And they brought in Google as an offtaker, who wouldn’t put any money at risk upfront but agreed to pay for any electrons the system produced; that ability to use the Google name as they moved through the process of building and raising venture capital, Jewett said, was “huge.”
The company started with desktop computer modeling for their Series A, then moved to a very small field test — a four-stage hydraulic fracture in an existing well in the same field where they would later build Project Red. That demonstration had to prove three critical things: whether the team could execute, whether the approach of fracking a geothermal reservoir would actually work, and whether they’d be able to pull together the supply chain and permits to proceed.
Only after proving those capabilities in the small-scale test did they move to Project Red, their first single-unit system. According to Jewett, the process is about “incrementally growing what you’re trying to build and then setting the target milestones that will show that you’re successful.”
In May 2023, Project Red became the most productive enhanced geothermal system in history — a milestone that would prove crucial for Fervo’s next, much bigger bet.
Demand for clean firm
While Fervo was still developing Project Red in 2021, California regulators issued a ruling that would reshape the company’s entire strategy. The California Public Utilities Commission’s midterm reliability ruling in June 2021 required utilities to procure a gigawatt of clean firm energy, to come online by 2026.
“All of a sudden geothermal was on the map,” Jewett said. “There’s a gigawatt of demand for this and it actually has a deadline.”
The policy created real demand for exactly what Fervo was building, and opened doors with California utilities that had previously been closed. Rather than continuing to focus on smaller repower projects like Project Red, the company decided to prioritize larger greenfield developments.
“I think that was the point in time when our greenfield pipeline ended up sort of jumping our repower pipeline,” Jewett explained. That’s when Fervo set its sights on Cape Station, which would dwarf anything they’d built before.
But scaling up brought entirely new financial challenges. Unlike wind and solar projects that can secure financing based on commercial agreements, enhanced geothermal is newer and therefore riskier to financiers. “You have to sign the commercial agreement to make the project real,” Jewett explained, “but you can’t actually take it to a bank and finance against it.”
Cape Station’s funding follows what she describes as a traditional but painful progression for FOAK infrastructure: start with expensive capital for the highest-risk phases, then transition to cheaper financing as risks are retired. Ultimately, different project phases require different capital sources, and building credibility through incremental successes can fundamentally transform a company’s access to financing.
“All of the early phases of Cape Station…we have been financing with corporate equity,” Jewett said. “And then as we’ve gone along — and as the financial markets have started to perceive a de-risking actually [happening] — then more capital has become available to us.” The company is now pursuing traditional project finance with project-based equity and debt, a transition that reflects the technology’s evolution from experimental to bankable.
As of today, Fervo has drilled 21 of 24 wells for Cape Station’s first phase, with power facilities under construction and the first 100 MW targeted for delivery in 2026. It will be the largest single geothermal facility built in 20 years.
Fervo’s VP of development and commercial markets Dawn Owens will be speaking at Transition-AI 2025, on June 12 in Boston. She’ll be discussing clean firm technologies for meeting data center demand with RJ Johnson of Form Energy and Mike Kramer of Constellation Energy, as well as Latitude staff reporter Maeve Allsup. Get your tickets today.
