Fervo's Google deal lifts its geothermal order book to $11.9 billion

Fervo Energy's order book is growing faster than its power plants. The Houston geothermal developer said Monday it now has 1,054 megawatts of capacity under binding power purchase agreements, representing about $11.9 billion in contracted revenue, up from 658 megawatts and about $7.2 billion at the end of the second quarter, according to its third-quarter results. The jump came almost entirely from one customer, Google, and it lands as AI data center builders hunt for power that runs around the clock.

The Google contract is the centerpiece. Fervo calls it the largest enhanced geothermal power purchase agreement signed to date: a 15-year, grid-connected, take-or-pay deal for 396 megawatts across eight GeoBlocks, with fixed terms. First power is expected in mid-2028, with full capacity targeted by the end of that year. Fervo has also committed to offer Google an option to expand by about 600 megawatts, which would bring the partnership to nearly 1 gigawatt.

That expansion could take a different shape. Fervo and Google are pursuing behind-the-meter, direct-to-load delivery under Utah's SB132 framework, which could let Fervo directly power a potential regional data center in Beaver County, Utah. If Google accepts, it would be the first qualifying project under a framework agreement Fervo signed in March for up to 3 gigawatts of geothermal capacity through 2033.

Co-founder and chief executive Tim Latimer explained why the main project stays on the grid. Google can draw power from the deal and sell it to other customers if it is not ready to use it, TechCrunch reported. On the earnings call he put it simply: "We build Cape Station on our schedule." Google, he said, can develop a potential data center on its own timeline.

The delivery record is starting to back up the sales. Fervo declared commercial operation at the first 33-megawatt GeoBlock of its Cape Station project in Utah on Sept. 30, ahead of its contractual date. A second unit has synchronized with the grid and is exporting test energy, and a third is in cold commissioning. Both are expected to reach commercial operation by Jan. 1, 2027, completing the roughly 100-megawatt first phase. Capacity in operation reached 36 megawatts at the end of the quarter, up from 3 megawatts at the end of the second quarter.

The resource looks bigger than first thought. An independent study by DeGolyer and MacNaughton now supports about 8.4 gigawatts of capacity potential at Cape Station, nearly double the prior estimate of 4.3 gigawatts. The Google units, now called Cape Google 400, use what Fervo calls its 3.0 well design, with longer laterals, wider casing and deeper targets. The first set of 50-megawatt turbines has passed factory acceptance testing, and drilling for the units is about 18% complete.

Cost is the number to watch. The first phase of Cape Station is expected to cost about $7,000 per kilowatt. Fervo is targeting $5,500 per kilowatt for the Google project and has a long-term goal of $3,000. TechCrunch noted that with subsidies, the $5,500 level is roughly equivalent to a new natural gas plant burning fuel that costs $6 per million BTUs, still about twice what gas costs today. Hitting $3,000 could let geothermal undercut gas even at current prices.

The company is still early as a business. Fervo, which went public this year and trades on Nasdaq under the ticker FRVO, reported a third-quarter operating loss of $43.7 million, with general and administrative expense rising to $39.4 million from $27.4 million in the second quarter. It posted net income of $11.7 million, helped by interest income, an $11.8 million gain on interest rate swaps and a $29.9 million tax benefit. Capital spending was $256.7 million in the quarter.

The balance sheet gives it room. Fervo ended September with $1.9 billion in unrestricted cash and $301.6 million of debt. It cut its second-half capital spending forecast to $700.0 million to $750.0 million, from $850.0 million to $900.0 million, citing construction efficiencies that let some Google project spending happen later, with no change to expected operating dates or total investment. It expects the fourth quarter to be its first full quarter of revenue from Cape Station.

Fervo will host an investor open house at Cape Station on Nov. 19. More on the companies building the power behind AI is in the Tech Sector.