Fervo Energy is preparing to send power to the grid from its Cape Station project in Utah next month, a milestone that would make it the first enhanced geothermal system in the U.S. to reach commercial operation. The project, located in the desert near Milford, Utah, is central to the company’s bet that oil-and-gas-style drilling techniques can unlock a new source of baseload, emissions-free electricity.
Geothermal power has traditionally been limited to specific geological formations, but Fervo says it can create its own reservoirs by drilling deep wells and fracturing rock, using methods developed by the oil and gas industry. CEO Tim Latimer, who founded the company in 2017 with CTO Jack Norbeck, said the shift in perception has been dramatic.
“It’s a total transformation from 10 years ago, when people were questioning even the need for more new electricity,” Latimer told CNBC. “This is a once-in-a-generation boom moment where hyperscalers, utilities and other customers need [power] now, and it’s our power that will be an important part of the electric grid.”
Fervo’s Cape Station sits adjacent to a Department of Energy research site known as Forge, which was set up to advance enhanced geothermal technology. The company began acquiring geothermal rights across the western U.S. years ago, amassing nearly 600,000 acres at an average cost of about $4 per acre — land that now can go for more than $400 per acre.
Drilling improvements drive cost reductions
The company’s drilling operations resemble those in the Permian Basin, down to rigs supplied by Helmerich & Payne, but the goal is emissions-free power. Fervo drills pairs of wells more than two miles deep, including laterals that extend more than a mile horizontally. Water is injected, heated by rock temperatures above 400 degrees Fahrenheit, and returned to the surface to drive turbines in a closed-loop system.
Latimer said the hard granite, high temperatures and long well life present challenges beyond those of traditional shale drilling, prompting innovations in drill bits, drilling fluids and rig operations. Those improvements have cut drilling times sharply. Initial wells at Fervo’s Nevada pilot took 70 days to reach a measured depth of 11,220 feet. At Cape Station Phase I, the average dropped to 21 days for wells reaching 14,483 feet.
Phase I wells cost about $7,000 per kilowatt, and Fervo aims to bring Phase II costs down to about $5,500 per kilowatt with even deeper wells at 19,448 feet. The company says it can eventually reach $3,000 per kilowatt, driven by standardization and modular design.
Power plant construction times are also improving. The first plant at Cape Station, at 33 megawatts, was built with individually delivered parts, while Phase II plants are standardized at 50 megawatts and are on track for a more than 30% reduction in construction time.
Data center demand and commercial momentum
Fervo has secured offtake agreements with Google, Southern California Edison, Shell Energy and NV Energy, bringing its total contracted power to about 1 gigawatt. The company said it is in advanced negotiations with additional buyers. Faster build-out timelines, supported by existing oil and gas supply chains and Organic Rankine Cycle turbines, could give it an edge over other power sources, as gas turbine makers like GE Vernova report being sold out for years ahead.
Fervo went public in May with an initial public offering that raised nearly $2 billion, with shares hitting a record high on May 15. Since then, the stock has fallen about 57%.
Looking ahead, Latimer sees opportunity for behind-the-meter projects that deliver power directly to customers such as data centers. “We are developing a model where we are both going to be pursuing at the right locations transmission and grid-connected projects, as well as customers who want faster delivery. Behind-the-meter is a great opportunity there,” he said.
The company plans to use its IPO capital to expand across the western U.S. and beyond. “We have project sites throughout the entire Western United States. We now have the capital to pursue it, and we want to repeat these GeoBlocks all over the West and then all over the world until we realize a more reliable, affordable, and sustainable electric grid,” Latimer said.
Source: www.cnbc.com — https://www.cnbc.com/2026/09/05/fervo-energys-enhanced-geothermal-project-aims-to-power-data-center-boom.html
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