Fervo Energy, a geothermal energy startup, achieved a market valuation of over $10 billion in its public market debut, driven by demand for AI data centers and the energy that can power them.
Furbo raised $1.89 billion in an enhanced initial public offering Wednesday, which originally valued the company at about $7.6 billion. Demand for Furbo stock was so great that the company and its bankers increased the offering several times, raising the price range twice while selling an additional 14.6 million shares, ultimately settling at $27 per share.
The stock, which trades on the Nasdaq under FRVO, soared another 33% at the start of trading on Wednesday, giving it a valuation of more than $10 billion.
“I’ve been asked several times during roadshows, ‘Why aren’t you raising more money?'” Sarah Jewett, Fervo’s senior vice president of strategy, told TechCrunch. “As we saw the demand coming in, there were enough signals that upsizing was not only within the realm of possibility, but within the realm of being encouraged.”
Like many other energy companies, Furbo has been buoyed by a surge in demand from data centers and AI companies scrambling to secure power to power their facilities. This is the second energy stock offering in recent weeks that has seen nuclear startup X-energy raise $1 billion in its own blockbuster IPO to a rapturous reception.
While the basic concept of geothermal energy – harnessing the Earth’s heat to generate electricity – has been around for decades, Fervo is part of a new class of startups developing enhanced geothermal energy, which drills deeper to tap into hotter rocks. To take full advantage of this attractive geothermal field, Fervo uses directional drilling techniques pioneered by the oil and gas industry.
“As we reiterate our strategy for the shale energy industry, the answer is set in stone,” Jewett said.
Furbo’s IPO will give the company $500 million more than expected and give it a cash cushion that will give it more room to maneuver as it prepares to develop its Cape Station power plant in Utah, which is scheduled to start operating this year. The company ultimately plans to generate 500 megawatts of power when the first phase of Cape Station is completed, which it expects to take about three years.
While the 500 MW size of Cape Station was determined by the size of the grid connection the company was able to secure, Fervo was permitted to develop 2 GW of geothermal energy at Cape Station and the company applied to increase the size of the interconnection accordingly. But even that may be a conservative estimate. Jewett said third-party engineers reported enough heat on site for up to 4 gigawatts of capacity.
As the size of the interconnect increases, additional power can flow into the power grid. But even if this isn’t the case, Fervo is open to inquiries from businesses that would like to connect directly. “We’re seeing a growing commercial interest beyond the meter,” Jewett said.
Fervo has begun development on another project. Corsac Station in Nevada. Google plans to buy 115 megawatts of power from it.
One of the attractions of geothermal is that this technology can provide so-called baseload power, a power source that can be generated 24/7, regardless of weather conditions. These days, data center operators who value high uptime are willing to pay a premium for reliable power. This has transformed geothermal from just a clean energy technology competing for space on the power grid to a popular technology among technology companies and now investors.
The Houston-based company is trying to cut costs by cutting the time it takes to drill new oil wells. Fervo’s first well took dozens of days to complete and cost more than $1,000 per foot. After drilling 14 wells, the company reduced both drilling time and cost per foot by two-thirds.
This IPO may have been premature, but with the growing interest in energy, the timing couldn’t have been better.
Fervo announced in December that it had closed on $462 million in funding, and climate tech and energy investors TechCrunch spoke to late last year were almost universally expecting the company to go public. Demand from hyperscalers and data from the Cape Station project suggested the company had overcome the “valley of death.” With an IPO in sight, Fervo now appears to be firmly on the other side.
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