A massive clean energy IPO made enhanced geothermal the hot renewable. What has to happen next for it to succeed
For decades, geothermal was the clean energy technology that was stuck in the margins, a tiny sliver on a pie chart dominated by solar and wind.
Despite providing power around the clock, regardless of the weather, it was geographically limited and expensive to build.
Over the past two decades, as wind and solar boomed across the grid, geothermal continued to make up only a minuscule fraction of the American electricity supply—more a piece of energy trivia than a viable source of power.
But in May 2026, geothermal startup https://fervoenergy.com/">Fervo Energy went public—and eventually raised $2.2 billion, making it the largest clean energy IPO ever.
Later this year, the company will open the first utility-scale next-generation geothermal power plant.
And this is all happening at an incredibly fraught moment for the clean energy industry.
Wind projects are being canceled—in some cases, developers are being https://www.fastcompany.com/91518402/trump-administration-totalenergies-wind-farms-legality" rel="noreferrer noopener" target="_blank">paid by the Trump administration to pivot to fossil fuels.
Solar developments are also facing https://www.cnn.com/2025/10/14/climate/trump-solar-project-nevada-electricity" rel="noreferrer noopener" target="_blank">cancellations, delays, and a much less certain policy environment.
As the federal government has attacked other renewables, https://www.fastcompany.com/91571382/the-economic-cost-of-trumps-clean-energy-rollbacks-has-been-enormous-and-its-still-growing" rel="noreferrer noopener" target="_blank">billions of dollars in clean energy projects have been put at risk.
And yet geothermal seems to be getting a pass, somehow untouched by President Donald Trump’s antipathy for other renewable power sources.
Fervo’s approach rests on a strange irony: The company realized that the oil and gas technology that helped unlock the shale boom could finally make geothermal scalable.
Founder Tim Latimer, a former oil and gas engineer, saw an opportunity to repurpose the technology that others had missed—using new drilling techniques to make geothermal feasible in many more places than it ever had been before.
Can the advances in drilling that powered the fracking boom also create a new thriving sector of the clean energy economy—one that escapes the fraught politics of the rest of the sector?
For the past three years, Fervo has shown that its technology works in a 3.5-megawatt https://www.fastcompany.com/90988226/this-new-geothermal-plant-in-the-nevada-desert-is-helping-power-google-data-centers" rel="noopener" target="_blank">pilot project in Nevada that helps power a Google data center.
Now, in a remote part of the Utah desert, the company is putting the final touches on Cape Station, a https://capestation.com/" rel="noopener" target="_blank">new power plant that will begin delivering power to the grid later this year.
As it continues to scale up over the next two years, it will eventually deliver 500 megawatts, the equivalent of powering more than 375,000 homes.
The timing matters: Fervo has arrived just as the country desperately needs more power.
As demand for electricity is surging because of https://www.fastcompany.com/section/artificial-intelligence" title="AI">AI data centers—and many projects are turning back to fossil fuels—Fervo has a renewable solution and rare political support.
The question now is whether Fervo and other startups in the space can turn geothermal into a major new industry with growth curves that look like solar and wind before them.
Why an oil and gas engineer bet on geothermal
Latimer didn’t set out to launch a clean energy company.
He grew up in rural Texas and studied engineering at the University of Tulsa, then started his career in the oil and gas industry as the shale boom was underway.
But he was increasingly interested in ways to combat climate change.
And as he was researching drilling techniques at work, he started to learn about geothermal power.
The basic approach is more than a century old.
In certain places where the geological conditions are right—with natural underground reservoirs of water next to hot rock—it’s possible to tap into the Earth’s heat.
A power plant can use the hot water or steam from those reservoirs to run a turbine and generate clean electricity 24/7.
Still, only a limited number of locations are the right fit.
Across Iceland, for example, the volcanic landscape means that nearly a third of its electricity comes from geothermal power; 90% of its homes also use geothermal heat.
In the U.S, while some places have the right conditions (including hot spots in California and Nevada), they’re often less obvious, and exploration to test potential sites is often prohibitively expensive.
Historically, geothermal has struggled to compete with other forms of energy because of the geographic limitations.
Today it makes up less than 1% of American electricity.
In the 1970s, scientists at Los Alamos National Laboratory started researching an alternative: “hot dry rock” geothermal, an approach that involved drilling artificial reservoirs to make geothermal energy more widely accessible.
But there were technical challenges in drilling, and as funding dwindled, progress slowed down.
Some projects continued around the world, and the technology made incremental progress in the decades that followed.
But it wasn’t yet commercially viable.
The breakthrough came when Latimer realized that some of the newer horizontal drilling and fracking techniques used in oil and gas had the potential to help geothermal finally scale up.
He tried, at first, to convince his own company to pivot to geothermal.
Then he started cold-calling existing geothermal companies to explain the approach; they didn’t believe that it would work for them.
Whenever he wasn’t at work, Latimer kept researching the idea—and eventually decided to go to Stanford for business school as he considered launching a startup.
At Stanford he faced more skepticism.
But he also met Jack Norbeck, an expert in geothermal who had recently finished his PhD; he became Fervo’s cofounder and CTO. Latimer then met Dave Danielson, a partner at the climate tech VC firm Breakthrough Energy Ventures, who had deeply researched options for clean, always-available power and was very familiar with geothermal.
“When I started talking to [Danielson] about what we wanted to do about bringing horizontal drilling to geothermal, I think the light bulb went off for him,” Latimer says. “He realized that this was new and different, and actually had a strong thesis for why it was worth taking another look at geothermal.”
Latimer tried to pitch oil and gas companies—a natural fit since they were using the same equipment.
But he found that a lot of the industry “really had a surface-level understanding of geothermal,” he says.
At one point, the ventures team at an oil and gas company was interested but then pulled out.
When Latimer asked why, they cited an internal report that claimed geothermal was infeasible—but the report turned out to be nearly 20 years old and outdated.
“The irony is sometimes we felt like we were doing geothermal right under their noses,” he says.
Because the industry felt like it understood geothermal, it didn’t dive deeper, giving Fervo the opportunity to later establish itself as a leader.
Breakthrough Energy Ventures became one of the company’s first investors as Fervo raised $11 million in its Series A in 2019.
“We always look and try and figure out, is there something unusual about the entrepreneur operator that gives them an unfair, unusual advantage on what they’re doing?” says Carmichael Roberts, a partner at Breakthrough.
Latimer’s insight about using oil and gas technology to industrialize geothermal “just made sense,” Roberts says. “He was the right person, it was the right story.”
Fervo joined https://activate.org/the-fellowship" rel="noreferrer noopener" target="_blank">Activate, a fellowship program that helps scientists commercialize research.
As the team developed the technology and began planning the first site, Latimer hustled to meet potential customers—eventually convincing Google to be part of the pilot plant, as the tech giant looked for new ways to https://www.fastcompany.com/90251085/google-aims-for-100-percent-renewable-energy-all-day-every-day" rel="noreferrer noopener" target="_blank">source 24/7 clean energy for its data centers.
In 2023, the https://www.fastcompany.com/90988226/this-new-geothermal-plant-in-the-nevada-desert-is-helping-power-google-data-centers" rel="noreferrer noopener" target="_blank">pilot project started running in Nevada, bringing 3 megawatts of power production to the state’s grid.
Fervo had shown that its innovative approach could work, and the race to scale it up began.
Turning geothermal into a repeatable product
From the beginning, the team focused on creating a modular system—something that hadn’t been possible in the industry before.
“If you’re doing traditional geothermal, you’re really just subject to what the natural geothermal reservoir will give you,” Latimer says.
One well might be 300 degrees and support a 20-megawatt power plant; the next might happen to be 380 degrees, meaning the power plant will be bigger and need its own engineering design. “They couldn’t really standardize power plant design,” he says.
Fervo’s approach is designed to eliminate that variability.
Since Fervo creates its own artificial reservoirs, it’s possible to drill to different depths to hit around the same temperature each time—430 degrees Fahrenheit.
That makes it possible to have a repeatable design for the power plant, made in units the company calls GeoBlocks.
Each GeoBlock is similar to a standard industrial power unit, with a compact footprint and off-the-shelf equipment.
The design includes adapted oil and gas components from existing suppliers.
Having the same basic design means that the company can enter into long-term supply agreements with manufacturers of turbines and other parts.
“We know that our design will be pretty standard across the next 100 plants that we build, and that is something we have brought to the industry that never really has been possible before,” Latimer says.
Already, performance has significantly improved.
In 2022, in the first commercial well in the pilot, it took 70 days to drill more than 11,000 feet deep and more than 3,000 feet horizontally.
By 2024, the company had drilled a deeper well at Cape Station in 21 days.
This July, it announced the next milestone: a well that was even longer—nearly 20,000 feet deep, plus a 7,500-foot horizontal section—that also only took 21 days to drill.
As the drilling process has gotten faster, it’s also gotten substantially cheaper.
To be clear, the capital cost of geothermal is still high, and wind and solar remain the cheapest forms of energy to build.
In the second phase of Cape Station, Fervo expects its cost to be $5,500 per kilowatt of installed capacity, or roughly three to five times more expensive than a solar farm, with an aim to eventually hit $3,000 per kilowatt.
But geothermal can fill an important gap in the grid when the sun isn’t shining and wind isn’t blowing.
Because it can run continuously, it produces more electricity than a solar farm.
And as the cost of enhanced geothermal keeps coming down, the International Energy Agency has predicted that it could reach $50 per megawatt-hour by 2035, making it competitive with wind and solar.
But the threshold Fervo is looking for is simply to beat natural gas, the usual fossil power that data centers run on when there isn’t enough clean energy available.
“We’ve always thought that chasing the cost of natural gas power generation was the goal and we had our road map to get there,” Latimer says. “I think what’s happened is it’s happening sooner than we thought because natural gas is not a fixed target.
It’s getting more expensive.
And every time you turn around, the turbine lead times are longer and construction costs are bigger.”
The strange politics that give geothermal an edge right now
Geothermal power has another advantage at the moment: Unlike wind and solar, it hasn’t been attacked by the Trump administration.
The government has done everything from pausing permits and attempting to shut down offshore wind—both of which failed in court—to paying developers to abandon projects.
When Trump successfully pushed to roll back tax credits for wind and solar, geothermal’s tax credits stayed in place.
One of Trump’s executive orders described geothermal as an “essential” energy source.
“Geothermal is unique—it has probably more bipartisan support than any other energy source I can think of, all the way from the far left to the far right,” says Jason Lipton, senior manager of strategic finance for a geothermal program at the nonprofit https://www.catf.us/" rel="noreferrer noopener" target="_blank">Clean Air Task Force. “It checks the boxes for all sides of the political spectrum.”
It’s clean, renewable, and a domestic source of power.
It provides power around the clock.
It’s a source of jobs for former oil and gas workers.
In Fervo’s case, in particular, it uses oil and gas industry equipment.
The land footprint is small compared to solar.
Energy Secretary Chris Wright, who has been pushing for geothermal, previously founded Liberty Energy—a fracking company that invested in Fervo in 2022.
Right now, American companies are also leading in geothermal technology globally, another reason for bipartisan support. “We’re No. 1 in the rankings of amount of geothermal deployed,” says Ryan Panchadsaram, an adviser at the VC firm Kleiner Perkins and a partner at Doerr Capital, an LP (limited partner) at Breakthrough Energy Ventures.
Since it’s an area where the country excels, he says, there’s an opportunity for America to dominate.
While the Trump administration has invested more in nuclear energy than geothermal, there’s a base level of support that solar and wind don’t have right now.
That support helps give companies like Fervo more of a sense of predictability in planning.
“I think what you’re seeing is the market’s reaction to the thing that all businesses crave, which is regulatory and political certainty,” says Mike O’Connor, director of the https://www.mountainwestgeo.org/" rel="noreferrer noopener" target="_blank">Mountain West Geothermal Consortium, an industry group working with state governments to help geothermal scale up.
Can geothermal scale up?
Fervo’s fundamental approach is also helping make geothermal less risky for investors and lenders.
In the past, companies might spend millions drilling a well and then find that the conditions aren’t right for a power plant.
“They don’t have something called ‘dry hole’ risk—there’s not a risk that they drill a hole and there’s no output,” O’Connor says. “The question is, is it going to be more, about the same, or less than what they expected it to be?
And that’s a much better question for an investor to write a diligence sheet around, or an insurance company to frame.”
The company still faces some risks.
The other rural locations where it plans to build have transmission constraints.
Water is another challenge in the Western states where Fervo will operate, though the company notes that it can use non-potable water, so it’s not competing with drinking water supplies.
Over the long term, there’s also a risk of something called thermal decline, where a geothermal plant produces less power over time.
But that is an engineering challenge Fervo believes it can address if needed.
Like oil and gas fracking, the approach has some seismic risk; the industry contends that it’s manageable, but if a new geothermal plant triggers an earthquake, that could slow development.
There might still be some unknowns in terms of early performance. “My biggest concern is that they’re trying to be—let’s call it aspirational, almost, in how quickly they can produce power online for extended periods,” says Jefferson Tester, a Cornell University professor of sustainable energy who focuses on geothermal.
Tester says he does believe any challenges will be solvable, but it’s possible there may be issues that need to be addressed.
Meanwhile, customers are already making large bets that Fervo will deliver.
Drilling for the data centers
In March, Google signed an agreement with Fervo to support the development of 3 gigawatts of geothermal power, a deal that https://www.latitudemedia.com/news/how-fervo-plans-to-spend-its-1-9-billion-ipo/" rel="noreferrer noopener" target="_blank">gives the tech giant priority in new development.
Fervo’s sites are large enough, though, that it can support multiple customers; it has more than $7.2 billion in contracted revenue from Google, Southern California Edison, Shell, and others. (Since its initial public offering, however, the company’s stock price has declined by more than 50%.)
According to Panchadsaram, the number of offtakers is a sign of how compelling the company’s approach is. “The investments those companies are making are not charity,” he says. “They deeply see how if those technologies succeed, it can help them with their goals, which is to get clean, sustainable, abundant energy.”
Though demand from AI data centers is helping pull Fervo forward, the market for geothermal would likely remain even if the AI bubble pops.
“If you talk to any utility and tell them that you could potentially bring 100 megawatts or 500 megawatts online that would be up 90% of the time, and that would deliver ‘firm’ around-the-clock power . . . geothermal is going to be a very attractive thing,” the Clean Air Task Force’s Lipton says. “Utilities are going to be very interested in that.
So I think the benefits are much broader than data centers.”
As Cape Station begins sending power to the grid later this year, it will be a milestone for the industry: the first utility-scale proof point for enhanced geothermal.
The wells and equipment are all in place for the first phase of 100 megawatts, and Fervo is finishing the process of commissioning the plant.
Assuming that it runs as expected, it will likely mean more investment not just for Fervo but for other companies working on enhanced geothermal.
“The biggest challenge right now with the geothermal industry is that we have limited proof points,” says the Mountain West Geothermal Consortium’s O’Connor. “Every single proof point we design, the industry gobbles up very hungrily.” That’s happened with earlier milestones at Cape Station, he says, as well as at https://www.energy.gov/hgeo/geothermal/forge" rel="noreferrer noopener" target="_blank">Forge, a government testing ground for enhanced geothermal adjacent to Cape Station in Utah.
Multiple other startups are now using Fervo’s approach of applying oil and gas drilling techniques to geothermal. https://www.sagegeosystems.com/" rel="noreferrer noopener" target="_blank">Sage Geosystems, one competitor using a similar approach, recently announced that it https://www.canarymedia.com/articles/geothermal/sage-geosystems-next-gen-geothermal-online" rel="noreferrer noopener" target="_blank">connected a small power plant to the grid near San Antonio and is working on a project for Meta.
https://www.xgsenergy.com/" rel="noreferrer noopener" target="_blank">XGS Energy, which uses similar drilling techniques with a different closed-loop design, is also building power for https://www.esgdive.com/news/xgs-inks-partnership-to-advance-metas-new-mexico-geothermal-plant/815695/" rel="noreferrer noopener" target="_blank">Meta data centers.
Others are working on different “superhot” technology that reaches much farther underground, including the https://www.fastcompany.com/91572753/this-houston-geothermal-startup-is-betting-it-can-beat-fossil-fuels-on-cost" rel="noreferrer noopener" target="_blank">MIT spin-out Quaise.
“My personal perspective is that we’re going to need an all-of-the-above approach,” Lipton says.
Fervo has spent years acquiring leasing options on sites for future development—more than 650,000 acres across seven states in the American West.
More projects are ready to build in Utah and Nevada, and others are in the pipeline.
The focus is on Western states because they have the best access to hot rock underground.
If Cape Station works as planned, Fervo will have a repeatable model that it can take to its next sites.
As David Ulrey, Fervo’s CFO, says, “I think much of what we set out to do at Cape Station was demonstrate a blueprint for what we think could be a process and a technology that could really change the world.”