Fervo Energy IPO Hits $10B Valuation on Geothermal Power

Fervo Energy's first day on Wall Street just rewrote the clean energy playbook with a market value topping $10 billion.

The Houston-based startup raised $1.89 billion in its May 13 IPO, making it the largest clean energy public offering in history. Shares opened at $27 and closed at $36.54, leaving even nuclear startups backed by Amazon in the dust.

What makes Fervo different? The company combines old-school geothermal science with modern oil drilling techniques to tap the earth's heat anywhere customers need power. Traditional geothermal plants can only work near naturally hot spots like geysers, but Fervo drills down two miles and then horizontally to create its own underground heat reservoirs.

CEO Tim Latimer, 36, started as an oil drilling engineer before realizing the same fracking technology could unlock carbon-free power. "Geothermal is resonating because it's a proven technology," he told Fortune. "The product offering we have is 24/7, carbon-free, and can be built quickly."

The company already built a pilot plant for Google in Nevada and is constructing Cape Station in Utah. That 500-megawatt project will power nearly 400,000 homes starting later this year, with full operation by 2028.

Here's why investors are excited: geothermal doesn't stop working when the wind dies or the sun sets. It needs no fuel, produces no waste, and keeps federal tax credits through 2033. Solar and wind credits are expiring, and nuclear plants still face fuel and waste challenges.

The costs are dropping fast too. Fervo expects to reach $5,500 per kilowatt later this year, down from $7,000, with a goal of hitting $3,000. That would make geothermal cheaper than solar farms and gas plants, even without tax breaks.

President Biden's 2022 climate law gave geothermal the same tax benefits as wind and solar for the first time. The Trump administration kept those benefits in place while cutting support for other renewables, showing rare bipartisan agreement.

The Bright Side

Tech giants like Google and oil industry players like Devon Energy are both investing in Fervo, creating an unusual alliance. Bill Gates' Breakthrough Energy fund is backing the company alongside traditional energy investors who see geothermal as the bridge between fossil fuels and renewable power.

The technology works especially well in the western United States, where underground heat sits closer to the surface. But Latimer says improving costs will eventually let the company expand nationwide, tapping heat that exists everywhere under our feet.

AI data centers need constant electricity that solar and wind can't always provide. Geothermal fills that gap perfectly, running nonstop without emissions while drilling companies put their expertise to work on climate solutions instead of oil extraction.

The earth's been heating water underground for billions of years, and now Wall Street believes we're finally ready to use it.