Fervo Energy is set to close project financing for its USD 650m Cape Station project in what would be the first next-generation geothermal project financing, sources told Infralogic.

The deal will be the first formal project financing for superhot rock geothermal technology and the company. A next-generation system, Fervo’s enhanced geothermal systems (EGS) can tap subsurface temperatures exceeding 400 degrees Celsius (750 degrees Fahrenheit) and have no geological constraints like conventional hydrothermal.

Earlier this year, Fervo’s CEO Tim Latimer told Infralogic that the developer was looking to raise as much as USD 2 billion in project financing over the next two years to support projects in the western US.

The financing will support Fervo’s flagship project, the 500 MW Cape Station in Beaver County, Utah.

RBC, HSBC, and SMBC are lenders in the financing, according to sources familiar.

Other participants include X-Caliber Rural Capital (XRC), which already provided a USD 100m bridge loan to the project in September 2024 and is now lending USD 50m;, and Breakthrough Energy Catalyst, providing USD 100m in equity, according to the first source familiar.

SMBC, HSBC, Fervo Energy, XRC, and Breakthrough did not respond to requests for comment. RBC declined to comment.

Powering up 

In April, Fervo signed a power purchase agreement (PPA) for the Cape Station project, contracting 31 MW to Shell Energy North America. Shell Energy will utilize the power to serve its retail load customers once the 100 MW Phase I of the project comes online in 2026.

Along with the PPA, Fervo increased its project capacity from 400 MW to 500 MW by expanding casing diameter and optimizing well spacing with fiber optic sensing. By doing so, Fervo can generate more MWs per well and allow a 100 MW capacity increase without additional drilling.

Fervo earlier signed a 15-year PPA with Southern California Edison for 320 MW of power in 2024 and contracted 53 MW to California community choice aggregators in 2022. The second phase of the project will be operational in 2028.

Other investors that have participated in Fervo funding include:

• Devon Energy

• Galvanize Climate Solutions

• John Arnold

• Liberty Mutual Investments

• Marunouchi Innovation Partners

• Mercuria

• Mitsubishi Heavy Industries

• Capricorn’s Technology Impact Fund

• Congruent Ventures

• DCVC

• Elemental Excelerator

• Helmerich & Payne

• Impact Science Ventures

Today, Fervo announced in a press release the successful drilling and logging of the Sugarloaf appraisal well, showcasing what it called the rapid progress and scalability of EGS. The well, which reached a depth of 15,765 feet at a temperature of 520 degrees Fahrenheit, was completed in just 16 days, marking a 79% reduction in drilling time compared to the US Department of Energy’s baseline for ultradeep geothermal wells.

In 2022, Fervo commissioned ‘Project Red,’ its pioneering project in Nevada, and began testing drilling efficiency with one vertical and two horizontal wells. The company uses oil and gas technology, including drill bits designed for shale basins to cut hard granite, while mud coolers mitigate high subsurface temperatures that often impede geothermal exploration.