Fervo Energy (FRVO +27.89%), a young company that went public only in May 2026, just signed a massive geothermal deal with Google, owned by Alphabet (GOOGL -1.58%)(GOOG -1.34%), to supply power to a data center in Utah. Fervo shares popped over 25% in Tuesday’s trading after the big announcement.
Fervo describes it as the world’s largest “enhanced” geothermal power purchase agreement ever signed.
Although other companies have run bigger geothermal operations for decades, they tap naturally occurring steam reservoirs.
Fervo’s bet is different: Enhanced geothermal systems don’t need a natural hot spring or steam vent, just hot rock within drilling reach. That means a much wider scope and range of locations to tap — a prospect that is luring tech giants and data center operators.
Image source: Getty Images.
Why is Google going after geothermal, and why Fervo?
Under the agreement, Fervo will sell 396 megawatts (MW) of electricity from its Cape Station project in southwestern Utah, beginning in 2028. Google has the option to increase power purchases to 1 gigawatt (GW) by mid-2030.
Google and Fervo have been building toward this since 2021, when the tech giant first signed Fervo up to jointly develop a next-generation geothermal power project that will provide around-the-clock electricity.
This 396 MW deal highlights the biggest hurdle facing hyperscalers and tech companies amid the rapid artificial intelligence (AI) build-out: securing steady and clean power for their AI data centers. Solar and wind are intermittent, and the queue to connect to the existing grid stretches into years. Geothermal solves that problem at the source by providing reliable, uninterrupted, clean energy that’s also scalable.
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That is why companies like Google are locking in electricity even before they know where a data center will sit or when it’ll break ground. For the Fervo deal, Google still has to gain regulatory approvals and decide the data center’s location, but it believes geothermal is the way to go.
What Fervo investors should know
Fervo reported its first full quarter as a public company in early August. It posted a net loss of $55.9 million and spent $226.5 million in capital expenditures as it continues to build Cape Station. The company projected capex of up to $900 million in just the second half of 2026, but that’s before the Google deal.
Cape Station is the world’s largest enhanced geothermal system, with a potential capacity of 4.3 GW. Fervo had 500 MW under construction at the project, but the Google deal straight away pushes that up by 80%, and 3x if the deal expands to 1 GW.
Going into this deal, Fervo had already locked in binding contracts for 658 MW worth $7.2 billion in revenue backlog. Today’s Google agreement adds significantly to that base, with the tech giant now making up a significant portion of Fervo’s backlog.
Securing deals with major clients like Google validates Fervo’s model, making it easier to attract future contracts and secure project financing from lenders that require guaranteed revenue before funding drilling.
Here’s what investors should know: Fervo is still an early-stage company and has to generate meaningful revenue from power sales, but it boasts strong backing — including investment from oil and gas giant Devon Energy (DVN +1.18%), which owns a 13% stake– and a rapidly expanding backlog.
For energy investors, this highlights a broader trend: the AI data center boom is driving massive power demand, positioning first-mover clean energy providers for significant growth.
