Dive Brief:
- Next-generation geothermal company Fervo Energy has received $421 million in non-recourse debt financing for the first phase of its Cape Station geothermal plant, a 500-megawatt installation in Beaver County, Utah, Fervo announced Thursday.
- The funding includes a construction-to-term loan, a tax credit bridge loan and a credit facility, according to the March 19 press release. The lead arrangers on the deal all come from banks outside the U.S., including Barclays, HSBC and the Royal Bank of Canada, with Bank of America and JPMorgan also participating.
- Such financing “has historically been considered out of reach for first-of-a-kind projects,” Fervo Chief Financial Officer David Ulrey said in the release. The Cape Station plant is first expected to deliver power to the grid later this year and is expected to reach 100MW of capacity by early 2027.
Dive Insight:
Fervo uses proprietary technology to drill horizontally into geothermal reservoirs, which the company says allows it to access multiple wells from a single spot, lower its surface footprint and reduce drilling risks, according to its website. The Houston-headquartered geothermal company was approved by the Department of the Interior in 2024 to deploy up to 2 gigawatts of power at the Cape Station site.
The $421 million non-recourse financing includes $309 million in a construction loan, $61 million as a tax credit bridge loan and $51 million in a letter of credit facility, according to the release. The resulting power from the Cape Station plant has already been contracted through power purchase agreements with Shell Energy, Southern California Edison and “community choice aggregators,” Fervo said Thursday.
Ulrey said that the Cape Station facility “disrupts” the narrative about what type of financing is generally available for novel projects.
“With proven oil and gas technology paired with AI-enabled drilling and exploration, robust commercial offtake, operational consistency, and an unrelenting focus on health and safety, we have shown that [enhanced geothermal systems] is a highly bankable asset class,” Ulrey said in the release.
RBC, in addition to being a lead arranger of the deal, also was Fervo’s financial adviser for the deal. France-based bank Société Générale, the Spain-headquartered BBVA and Japan’s Mitsubishi UFJ Financial Group also participated as lead arrangers, and the New York branch of Sumitomo Mitsui Trust Bank Ltd. was also a lender on the deal.
Sean Pollock, managing director for project finance for RBC’s Capital Markets segment, said in the release that enhanced geothermal systems are “set to become a core energy asset class for infrastructure lenders,” as power demands increase.
The latest financing, which Fervo said was “oversubscribed,” follows a $462 million funding round led by Google, Bill Gates’ Breakthrough Energy Ventures and venture capital firm B Capital that closed in December. Fervo also closed a $206 million funding round in June 2025 and a $255 million funding round in December 2024.
Fervo expects the Cape Station project to be fully online by 2028 and also has other projects in the pipeline.
