Google signed a 396-megawatt power purchase agreement with Fervo Energy on Sept. 1, the largest enhanced geothermal deal to date. The agreement also gives Google the option to expand its offtake by 600 MW, pushing the total potential capacity to roughly 1 GW by June 2030, as the tech giant looks to secure round-the-clock clean power for its AI data centers.
Google expands its geothermal bet with Fervo
Google, a subsidiary of Alphabet (NASDAQ: GOOGL), has deepened its partnership with Fervo Energy (NASDAQ: FRVO) to secure clean geothermal power. On Sept. 1, Fervo signed a 396-megawatt power purchase agreement with Google, the largest enhanced geothermal PPA signed to date.
Fervo will supply the energy from its Cape Station development in Utah and aims to deliver power by 2028. Google also holds an agreement to expand its offtake by 600 MW, bringing the deal's total potential capacity to roughly 1 GW by June 2030.
A partnership that started with a pilot project
The relationship between the two companies goes back to 2021, when they collaborated on Project Red, Fervo's commercial proof-of-concept pilot that demonstrated its Enhanced Geothermal Systems (EGS) technology. In June 2024, Fervo entered a 115 MW power purchase agreement with Google and NV Energy, letting Google add geothermal capacity while shielding ratepayers from the cost. Fervo has since committed to developing 3 GW of geothermal projects overall.
Unlike traditional geothermal power, which depends on naturally occurring sites near tectonic boundaries or volcanoes, Fervo's EGS uses horizontal drilling to reach hot rock wherever a well can be drilled deep enough. The Google agreement brings Fervo's total contracted power sales to about 1.1 GW and gives it visibility into future contracted revenue.
What Fervo still has to deliver
Fervo, which made its stock market debut on May 12 and raised about $2.2 billion in the process, still has significant work ahead. In Phase I, the company aims to deliver around 100 MW of power, with commercial operations beginning later this year or in early 2027. In Phase II, it plans to add another 400 MW, using its GeoBlock architecture to build eight self-contained 50 MW generation blocks, with commercial operations projected to begin in 2028.
Management projects the company will incur $850 million to $900 million in capital expenditures over the next 12 months and expects net losses over the next several years as it expands its infrastructure. The deal with Google marks a step forward for Fervo, but the company will keep burning cash as it scales to meet the agreement's terms.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
