Fervo Energy shares surge 33 per cent on Nasdaq debut as AI demand fuels $10 billion valuation
Investor appetite for reliable energy sources pushes Fervo’s market value past $10 billion, with Google securing power agreements and Utah plant targeting 500MW capacity.
Geothermal energy startup Fervo Energy saw its shares rise 33 per cent on its Nasdaq debut, pushing its market valuation past $10 billion. The company raised $1.89 billion in an upsized initial public offering, with the share price settling at $27. Demand was driven by AI data centres seeking reliable baseload power. Fervo plans to develop its Cape Station power plant in Utah, targeting 500 megawatts of capacity, and has secured a power purchase agreement with Google for its Corsac Station project in Nevada.
The IPO was significantly oversubscribed, with potential investors questioning why the company was not raising more capital during the roadshow. Sarah Jewett, Fervo’s senior vice president of strategy, noted that the strong signals from the market encouraged the underwriters to upsized the offering several times. This involved selling an additional 14.6 million shares and lifting the price range twice, ultimately settling on $27 per share. The initial offering had valued the company at approximately $7.6 billion, but the surge in trading on Wednesday, under the ticker FRVO, elevated that figure beyond the $10 billion mark.
Interest in Fervo’s stock mirrors a broader trend in the energy sector, where artificial intelligence data centres are desperate to secure consistent electricity. This demand has also benefited other energy startups, such as nuclear developer X-energy, which recently completed an upsized IPO. Unlike intermittent renewable sources, geothermal energy provides baseload power, generating electricity 24/7 regardless of weather conditions. This reliability commands a premium from data center operators who prioritise high uptime for their facilities.
Fervo intends to utilise the capital to develop its Cape Station power plant in Utah, aiming for a 500-megawatt capacity. The company expects the first phase of the project to take around three years to complete. While the initial grid connection limits the plant to 500 megawatts, Fervo has permits to develop up to 2 gigawatts at the site and has applied to increase interconnection sizes. Internal assessments suggest the site holds enough heat for up to 4 gigawatts of capacity, with the company already fielding inquiries from commercial entities interested in behind-the-meter connections.
In Nevada, Fervo is advancing its Corsac Station project, for which it has already secured a power purchase agreement with Google for 115 megawatts of electricity. The company has been working to reduce costs by applying directional drilling techniques from the oil and gas industry to enhanced geothermal systems. Since its first wells, which cost more than $1,000 per foot, Fervo has reduced drilling time and cost per foot by two-thirds across 14 wells. This operational efficiency, combined with a $462 million funding round closed in December, suggests the company has moved past early-stage risks and is well-positioned for growth.
