Hot Funds for Cool Tech: Geothermal Company Fervo Energy Raises $244M

Geothermal startup Fervo Energy Co. secured a substantial $244 million round, led by shale oil and gas giant Devon Energy Corp. The Houston-based geothermal developer’s fundraising topped this week’s Crunchbase biggest funding rounds.

The raised funds exceeded what Fervo Energy disclosed in its recent SEC filing, aiming for $221.5M funding. The capital infusion will bolster Fervo’s drilling endeavors in Utah. The project could start supplying clean electricity to the grid by 2026.

Founded in 2017, Fervo has amassed $431 million in funding, according to Crunchbase records.

Tapping Earth’s Heat: Fervo Energy’s Geothermal Breakthrough

Fervo Energy focuses on leveraging horizontal drilling technology, originally pioneered by the oil and gas sector, to harness geothermal resources for power generation.

In collaboration with Google LLC, the company completed an enhanced geothermal system (EGS) pilot project in Nevada in November 2023. This initiative caters to some Google data centers in the state.

Fervo’s successful demonstration is the first instance of an enhanced geothermal system implemented on a commercial scale.

Geothermal energy, often dubbed the “heat beneath our feet,” currently contributes 3.7 gigawatts of electricity in the U.S. That amount could power over 2.7 million homes, but this constitutes only a fraction of its immense potential.

A considerable portion of geothermal energy remains untapped due to technological limitations, leaving vast energy reservoirs unexploited.

This is where the EGS holds promise in unlocking these resources and introducing clean, and dispatchable electricity to the grid. This geothermal system employs man-made reservoirs to facilitate fluid flow, enabling the extraction of hot water for electricity generation.

Drilling for Tomorrow

The technical potential of EGS in the US alone could meet global electricity demands.

Even harnessing a fraction of this resource through widespread deployment could feasibly power 40+ million American homes and businesses affordably. Moreover, investments in EGS will promote the proliferation of geothermal heating and cooling solutions nationwide. This, in turn, will provide exponential opportunities for sustainable energy utilization.

Currently, Fervo Energy is engaged in a drilling campaign at its 400-MW Cape Station project in southwestern Utah. Early results from this endeavor have surpassed the expectations set by the US Energy Department for enhanced geothermal systems.

The company has received a grant from the DOE for the Utah project to showcase the potential of EGS in delivering reliable and cost-effective electricity.

Before this offering, Fervo Energy had secured a combined $176.63 million across three disclosed funding rounds, according to data from S&P Global Market Intelligence. Investors in the company include oil and gas firms Devon Energy Corp., Liberty Energy Inc., and Helmerich & Payne Inc., as well as Breakthrough Energy LLC, a venture capital firm backed by Bill Gates.

DOE’s Green Push for America’s Clean Energy Future

The U.S. DOE announced a plan to allocate up to $60 million to 3 geothermal pilot projects as part of the enhanced geothermal systems pilot demonstrations funding opportunity. Fervo Energy’s project is one of them, aiming to generate at least 8 MW of power from each of 3 wells.

The initiative is spearheaded by the DOE’s Geothermal Technologies Office, a component of the Office of Energy Efficiency and Renewable Energy.

The other two selected projects include Chevron New Energies’ pilot endeavor. It will use drilling and stimulation techniques to access geothermal energy in Sonoma County, California.

Additionally, Mazama Energy LLC’s demonstration on an enhanced geothermal system near a volcano in Oregon was chosen.

US Secretary of Energy Jennifer Granholm expressed enthusiasm for the projects, noting their potential to expand geothermal power into previously untapped regions. She also noted that:

“…these pilot demonstrations will help us realize the full potential of the heat beneath our feet to reduce carbon emissions, create domestic jobs, and deliver clean, cost-effective, reliable energy to American[s] nationwide.”

The DOE plans to support further demonstrations in the eastern US in the second round of funding. With a goal to slash the cost of enhanced geothermal systems by 90% by 2035, the Biden administration aims for 100% clean electricity by that year.

RELEVANT: Transforming the American Clean Energy Landscape Under Biden’s Era

Geothermal resources currently contribute around 4 GW of electricity in the US. Still, advancing enhanced geothermal systems could potentially yield 90 GW of power by 2050, which power over 65 million households. That projection is according to a January 2023 analysis by the DOE’s National Renewable Energy Laboratory.

Fervo Energy’s groundbreaking geothermal system, fueled by a $244 million funding round, signify a pivotal shift towards sustainable energy solutions. With ambitious projects and support from industry giants, Fervo is poised to lead the charge towards a cleaner, greener future.

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