Fervo Energy's enhanced geothermal project to reach commercial operation next month, powering data centers

A drill rig stands at a Fervo Energy geothermal site under construction near Milford, Utah, Nov. 26, 2023. Ellen Schmidt | AP

MILFORD, Utah — Deep in the Utah desert, down miles of gravel roads and hours from a major city, Fervo Energy is betting it can economically harness heat from the Earth's core for power. The company aims to unlock dozens of gigawatts of baseload, emissions-free electricity at a time when U.S. power demand is meaningfully growing for the first time in decades.

Key Milestones

• Fervo Energy's Cape Station project in Milford, Utah, is on pace to send power to the grid next month.
• This would make it the first enhanced geothermal system in the U.S. to reach commercial operation.
• Fervo, which had its public markets debut in May, recently announced a new power purchase agreement with Google.

A New Approach to Geothermal Power

Geothermal power is not new. Traditionally, it required specific geological formations, vastly limiting its potential. Now, Fervo aims to prove that by utilizing the same drilling and hydraulic fracturing techniques developed by the oil and gas industry, what is known as enhanced geothermal can become a key power source for the U.S.

The company's Cape Station project in Milford is on track to send power to the grid next month, which would make it the first enhanced geothermal system in the U.S. to reach commercial operation. After an initial public offering in May and a new offtake agreement with Google, Fervo must prove it can provide cost-competitive enhanced geothermal at scale.

watch now VIDEO 11:41 Inside Fervo Energy's enhanced geothermal project in Utah

A Transformation in the Demand for Power

The company's roots precede the data center power boom. CEO Tim Latimer began his career as a drilling engineer in South Texas before founding the company in 2017 with Chief Technology Officer Jack Norbeck. As Latimer tells it, when they first tried to raise venture capital funds, a common response was, "Why would we invest in a power generation company? The electric grid's not growing."

Oil and gas companies also dismissed Fervo, with the prevailing assumption being that the kind of drilling the company was looking to do — hotter wells through harder granite — would not work. Now, less than a decade later, that narrative has flipped.

"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."

Strategic Land Acquisition

Recognizing the importance of prime acreage, Latimer, in Fervo's early days, started acquiring geothermal rights on land across the Western U.S., amassing a portfolio of nearly 600,000 acres. The company acquired the rights at an average price of $4 per acre — a move that now seems prescient. The same land can now go for north of $400 per acre.

Fervo's land grab included acreage across Beaver County, Utah, which is also where the Department of Energy set out to prove the case for enhanced geothermal via its Frontier Observatory for Research in Geothermal Energy (Forge), amassing data aimed at helping private players commercialize enhanced geothermal system technology. Cape Station, Fervo's flagship project, sits adjacent to Forge.

watch now VIDEO 3:01 Fervo looking to launch first commercially-operated enhanced geothermal energy center in the U.S. Closing Bell: Overtime

The Goal of Emissions-Free Power

On a tour of Cape Station, Latimer pointed out many of the same things you might see in the Permian Basin, down to drill rigs provided by Helmerich & Payne. The difference is that in Utah, the goal is emissions-free power.

While traditional geothermal projects required specific reservoirs, in enhanced geothermal systems, companies are creating their own reservoirs.

Fervo drills a pair of wells more than 2 miles deep, including a lateral well that...