Fervo now has $12B in orders for its geothermal power tech

Geothermal company Fervo couldn't have picked a better time to deliver its first power plants.

In its third quarter earnings report, released Monday, the company said it now has $11.9 billion worth of contracted revenue on the books, up from $7.2 billion last quarter.

Fervo has been hitting its deadlines recently, which undoubtedly has helped to drive orders.

As hyperscalers scour the earth for electricity to power their AI data centers, Fervo is on track to complete a 396 megawatt power plant for Google by the end of 2028. The geothermal company connected its first 100 megawatt power plant to the grid earlier this year.

Both projects are built at Cape Station in Utah, a resource that could generate 8.4 gigawatts of electricity. Previously, experts told Fervo the site could only produce about 4 gigawatts.

The Google project, now called Cape Google 400, will be grid connected, co-founder and CEO Tim Latimer said in an earnings call Monday. The arrangement means that Google can draw power from the deal and sell it to other customers if it's not ready to use it.

"We build Cape Station on our schedule. Google can develop a potential data center on their schedule, and neither party is waiting on the other," he said.

Latimer's statement also underlines an advantage that geothermal has over competing generating sources like large nuclear or natural gas power plants — the phased nature of its construction.

Fervo newer wells are deeper and hotter, each capable of generating 15 megawatts gross power, and several are linked together into what the company calls a GeoBlock. The first completed GeoBlock generated 33 megawatts, while recent ones hit 50 megawatts. They're sized to match the demand of a typical data center hall, so hyperscalers can bring them online as they're completed.

As a business, Fervo is still in the early stages. It ended the quarter with an operating loss of $43.7 million, though it holds cash and cash equivalents of $1.9 billion and long-term debt of $301.6 million, which should give it plenty of runway.

Much will depend on the company bringing down the cost of its power plants. While hyperscalers are hungry for power today, they may not always be as price indiscriminate.

Yet if Fervo can deliver on its promises, it could end up winning on price. The first phase of its Cape Station project cost $7,000 per kilowatt of capacity, the company said. The cost for its Google project is $5,500 per kilowatt, a significant drop that suggests Fervo is on the right path. With subsidies, that's about equivalent to a new natural gas power plant running on fuel that costs $6 per million BTUs. Still about twice what natural gas costs today, but trending closer to where it needs to be.

But if Fervo can hit its long-term target of $3,000 per kilowatt, it could significantly undercut natural gas power, even at today's prices. That's a pretty ambitious target, but the company has made significant strides in just a few years. No wonder Google is getting in early.