Google and Fervo Energy have agreed to a deal for about 400 megawatts of geothermal electricity to supply a data center planned in Utah, marking the largest energy purchase agreement to date for next-generation geothermal systems, which draw heat from deep, dry rock rather than from natural hot springs.
Fervo Energy, based in the United States, is developing the project behind the deal, known as Cape Station, in southwestern Utah. The company is investing more than $2 billion and aims to complete one of the world's largest next-generation geothermal energy systems by 2028.
Deal boosts Fervo's financing
The agreement with Google is also critical to how the project gets financed. Having a buyer lined up in advance makes it easier to secure investment and financing for large-scale energy projects that have never been built before at this scale. Fervo's shares rose by about 15% on Tuesday morning after the deal was announced.
Fervo is currently developing the first 100 megawatt phase of Cape Station. Test electricity production from a 33 megawatt unit is expected to begin in the fourth quarter of 2026. The agreement with Google will support construction of the project's second phase, with a capacity of about 400 megawatts, which is planned to come online in roughly two years.
Google will use the geothermal electricity for a data center it is planning to build in Utah. The company has not yet decided exactly where in the state the facility will be located. Data centers are large facilities packed with servers that power cloud computing and artificial intelligence services, and they require enormous, round-the-clock supplies of electricity to run.
How next-generation geothermal works
Unlike traditional geothermal plants, Fervo's technology relies on drilling into hot, dry rock found deep underground. Conventional geothermal energy depends on features such as hot water sources and specific natural geological formations, which limits the number of regions where a plant can be built.
Fervo and similar companies instead draw on drilling techniques developed in the oil and gas industry to reach underground heat sources across a much wider range of locations. If next-generation systems become more widespread, the goal is to reduce geothermal energy's geographic limitations and provide a steady power source for data centers, which consume electricity every hour of the day, unlike solar or wind installations that depend on weather and daylight.
A years-long partnership
Google and Fervo have worked together for some time. The two companies first agreed in 2021 to develop a next-generation geothermal project. Two years later, Fervo brought online a 3.5 megawatt commercial pilot plant in Nevada, which remains the largest enhanced geothermal system, or EGS, currently operating in the United States.
Google and Fervo had also previously signed a 115 megawatt power purchase agreement with NV Energy, a Las Vegas-based utility, to supply geothermal energy to Google's data centers in Nevada.
Room to expand further
The financial terms of the new agreement were not disclosed. However, based on cost estimates Fervo has previously shared, the electricity generation capacity in Cape Station's first phase is expected to cost $7,000 per kilowatt, falling to $5,500 per kilowatt in the second phase.
Google also has the right to expand the deal further. The company holds an option to add about 600 megawatts more to the Cape Station agreement by June 2030, which could bring the potential size of its energy agreement with Fervo to close to 1 gigawatt.
