Exclusive: Fervo raises $138M for geothermal energy

Fervo Energy, a Houston-based geothermal energy developer, closed what appears to be the largest investment round ever in the geothermal energy sector.

Why it matters: Geothermal energy is a sliver of zero-emissions electricity generation in the U.S. But as a source of round-the-clock clean power — not to mention heating and cooling — it's seen as vital for achieving full decarbonization.

Details: DCVC, which focuses on companies taking on especially difficult scientific or engineering challenges, led the round.

• The Canadian Pension Plan Investment Board, Liberty Energy, Macquarie, Grantham Foundation, Impact Science Ventures and Prelude Ventures participated as new investors.
• Existing investors Capricorn’s Technology Impact Fund, Breakthrough Energy Ventures, Congruent Ventures, Helmerich & Payne, 3x5 Partners, and Elemental Excelerator also joined the round.

What's happening: Fervo deploys drilling tech from the oil and gas sectors to generate electricity from hot rock deep beneath the Earth's surface.

• The company is building a 5-MW site in Nevada to support Google data centers and infrastructure.
• It's also constructing a 40-MW site in California for East Bay Community Energy.
• “This is a quintessential deep-tech deal,” DCVC co-founder Zachary Bogue tells Axios. “Understanding how to make these geothermal reservoirs work,” a task that takes “cutting edge analytics and proprietary dataset, coupled with solving a hard real-world problem.”

Zoom out: Geothermal last year accounted for just 0.4% of U.S. electricity generation. But with geothermal power plants in seven states, the country leads the world in geothermal electricity generation.

• The sector is poised to accelerate: California regulators, for example, last year issued a mandate for 1,000 MW of "non-weather-dependent" — read: neither solar nor wind — zero-emissions energy by 2026.
• The U.S. Department of Energy this summer said geothermal could account for 8.5% of U.S. electricity generation by 2050.

What's next: Fervo makes its money from power purchase agreements. The company has "several gigawatts" of projects in the pipeline, c0-founder and CEO Tim Latimer tells Axios. Those projects are 40 to 100 MW in size.

• Fervo is focused on the Western U.S., namely California, Idaho, Nevada and Utah. It's also eyeing overseas expansion.

What they're saying: "Because geothermal provides both clean electricity and clean heat, there’s a lot of opportunities for us to do different solutions and pair with different opportunities in interesting ways," Latimer says.

• One such example: supporting direct air capture, such as Climeworks' Orca plant in Iceland, which is powered by an adjacent geothermal plant.

Flashback: Latimer this spring spoke with Generate's Ben Geman at CERAweek.