Google Signs World's Largest Next-Generation Geothermal Energy Deal

Google Signs World's Largest Next-Generation Geothermal Energy Deal

Google will purchase 396 MW of electricity from Fervo's Cape Station project for a planned data center. This marks the largest agreement to date in the field of next-generation geothermal energy.

Fervo Energy and Google have reached an agreement for approximately 400 MW of geothermal electricity to power a data center to be built in Utah. The deal is the largest energy purchase agreement to date in the field of next-generation geothermal systems, which generate electricity by utilizing heat from very deep dry rocks beneath the surface.

Google Guarantees $2 Billion Project

US-based Fervo Energy is developing its Cape Station project in southwest Utah. The company aims to establish one of the world's largest next-generation geothermal energy systems by 2028 upon completion of the project, investing over $2 billion for this purpose.

The agreement signed with Google is also critical for the project's financing. This is because having a predetermined buyer for large-scale energy projects being implemented for the first time facilitates investment and financing. Following the announcement of the agreement, Fervo shares rose by approximately 15 percent on Tuesday morning.

Fervo is currently developing the first 100 MW phase of Cape Station. Within this scope, initial test electricity generation from a 33 MW unit is expected to commence in the fourth quarter of 2026. The agreement with Google will support the construction of the second phase, with an approximate capacity of 400 MW. This section is planned to be commissioned in about two years.

Google will use the aforementioned geothermal electricity for a potential data center planned for construction in Utah. However, the company has not yet decided where the data center will be built.

How Does Next-Generation Geothermal Work?

Fervo's technology, unlike traditional geothermal power plants, relies on drilling into hot and dry rocks located deep underground. Traditional geothermal energy requires features such as hot water sources and natural geological formations, limiting the number of regions where plants can be built. Fervo and similar companies aim to access underground heat sources across a wider geographical area by utilizing drilling techniques developed in the oil and natural gas sectors.

The widespread adoption of next-generation systems aims to reduce the geographical limitations of geothermal energy and provide a continuous energy source, especially for data centers that consume electricity around the clock.

Google May Purchase an Additional 600 MW

Fervo and Google have actually been partners for quite some time. The two companies agreed to develop a next-generation geothermal energy project in 2021. Two years later, Fervo commissioned its 3.5 MW commercial pilot plant in Nevada. The facility remains the largest example of an "enhanced geothermal system" (EGS) operating in the US.

Google and Fervo had previously signed a 115 MW electricity purchase agreement with Las Vegas-based utility company NV Energy to provide geothermal energy to the technology company's data centers in Nevada.

The financial terms of the new agreement were not disclosed by the parties. However, according to Fervo's previously shared cost estimates, the cost of electricity generation capacity in the first phase of Cape Station will be $7,000 per kilowatt, and in the second phase, it will be $5,500/kW.

Furthermore, Google has the right to expand the agreement. The company has an option to add approximately 600 MW more to the Cape Station agreement by June 2030. This could bring the potential size of Google's energy agreement with Fervo to approximately 1 gigawatt.