Advanced Geothermal Startups Are Just Getting Warmed Up

When congressional Republicans took a sledgehammer to the Inflation Reduction Act last summer, advanced geothermal startups were largely spared. Drilling for renewable energy appears to be one of the few things that engenders bipartisan support.

Now, with the uncertainty settled, geothermal companies are announcing deals that promise to pave the way for broader deployment of their technology.

Houston-based Fervo Energy said on Tuesday it has picked a supplier for key parts of its power plants, signaling that the second phase of the Cape Station project in Utah was moving full steam ahead. The startup said that Baker Hughes, the major oil field services and energy technology company, would design and deliver five steam turbines. Altogether, they'll generate 300 megawatts of electricity 24/7, enough to power around 180,000 homes.

Fervo is one of several startups pursuing deeper, hotter geothermal wells. The company has adapted directional drilling techniques used by the oil and gas industry to tap rocks nearly 16,000 feet below the surface. At that depth, temperatures are expected to maintain a steady 520° F.

Behind the Baker Hughes deal is $206 million in financing that Fervo secured in June, which is split between $100 million in project-level preferred equity from Breakthrough Energy Catalyst, Bill Gates' climate investment fund; a $60 million bump to an existing loan from Mercuria, a global energy trading company; and $45.6 million in bridge debt financing from an X-Caliber Rural Capital affiliate, a rural infrastructure investment firm. Trump energy secretary Chris Wright oversaw an investment into Fervo in 2022 when he was CEO of Liberty Energy.

Meanwhile, fellow startup Sage Geosystems said last week that it had signed an agreement with geothermal developer Ormat Technologies to deploy its technology at one of Ormat's existing power plants.

If all goes as planned, Ormat will license Sage's Pressure Geothermal technology, which injects water into fractured rock under pressure, where it absorbs heat. When the water returns to the surface, Sage harvests both the heat and pressure from it, using both to spin turbines to generate electricity.

Because geothermal power plants generate heat around the clock, they've attracted the interest of data center developers. A recent analysis said that the technology could generate enough electricity to supply nearly two-thirds of data center demand by 2030.