Geothermal energy group Fervo Energy, hailed as a pioneer in next-generation geothermal deployment, said it has successfully closed $421 million in non-recourse debt financing for the first phase of its flagship Cape Station development in Utah. Fervo said on March 19 that the oversubscribed financing marks the project’s shift from early-stage and bridge financing to a long-term, non-recourse project capital structure. Fervo said it highlighted the bankability of geothermal systems (EGS) as utility-scale infrastructure assets. Cape Station is being hailed as an example of how geothermal energy can help meet the growing power needs of data centers and artificial intelligence (AI), industrial manufacturing and accelerated electrification. The Cape Station in Beaver County, Utah, is expected to begin delivering its first electricity to the grid this year. The project is expected to have an operational power generation capacity of approximately 100 MW early next year and will eventually expand to 500 MW. The geothermal station is fully contracted through power purchase agreements with Southern California Edison, Shell Energy and Community Choice Aggregators.
“Historically, non-recourse financing has been considered unattainable for similar projects,” said David Ulrey, Chief Financial Officer of Fervo Energy. “Cape Station defies that narrative. With proven oil and gas technology, coupled with AI-powered drilling and exploration, strong commercial offtake, operational consistency and a relentless focus on health and safety, we have proven that EGS is a highly reliable asset class.” The $421 million financing package includes $309 billion in construction loans, a $61 million tax credit bridge loan and a $51 million letter of credit facility. Together, these facilities will fund the remaining construction costs of the first phase of Cape Station and support the project’s counterparty credit support requirements. RBC Capital Markets acted as financial advisor to Fervo and served as coordinating lead arranger along with Barclays, BBVA, HSBC, MUFG and Société Générale. Other participating lenders include JPMorgan Chase, Bank of America and Sumitomo Mitsui Trust & Trust Bank, New York Branch. White & Case LLP is acting as sponsor legal counsel to Fervo, while Norton Rose Fulbright is acting as legal counsel to the lender group. “As demand for stable, clean, affordable electricity accelerates, EGS will become a core energy asset class for infrastructure lenders,” said Sean Pollock, managing director of project finance at RBC Capital Markets. “Fervo is leading this significant change with Cape Station, an important contribution to U.S. energy security that RBC is proud to support.” —Darrell Proctor is a senior editor at POWER.
