Geothermal startup Fervo Energy pops 33% in IPO exposure boosted by AI data center

Fervo Energy, a geothermal energy startup, saw its market value surpass $10 billion on its public market, an increase driven by demand for AI data centers — and the energy that can power them.

Fervo raised $1.89 billion in an initial public offering on Wednesday, which previously valued the company at about $7.6 billion. The demand for Fervo stock was so great that the company and its banks raised the offer several times, selling an additional 14.6 million shares and raising its price twice, settling at $27 per share.

The stock, which trades under FRVO on the Nasdaq, also jumped 33% in early trading on Wednesday, pushing its valuation above $10 billion.

“We were asked several times on the show, ‘Why don’t you raise more money?’ “Where we saw demand coming in, there were enough signs pointing to expanding not only the potential, but also the motivated sector.”

Like many other energy companies, Fervo has been boosted by the increasing demand for data centers and AI companies, who have been eager to get electricity to use their facilities. It is the second energy that has been given a warm welcome in the past few weeks, and the introduction of nuclear X-energy raise $1 billion in its highly publicized IPO.

The basic concept of geothermal energy – harnessing the heat of the earth to generate energy – has been around for years, but Fervo is part of a new group of developers who are developing gas turbines, which drill deep enough to penetrate very hot rocks. To get the most out of the beautiful geothermal field, Fervo uses direct drilling techniques pioneered by the oil and gas industry.

“We’re repeating the playbook from the shale energy industry but it’s a secret solution,” Jewett said.

Fervo’s IPO netted the company $500 million more than expected, an investment that will give the company control as it develops electricity at Cape Station in Utah, which is expected to start operating this year. Ultimately, the company plans to generate 500 megawatts once the first phase of the Cape Station is completed, which it hopes to capture. about three years.

Cape Station’s size of 500 megawatts was limited by the size of the grid connection the company was able to achieve, but Fervo is allowed to produce 2 gigawatts of geothermal energy at Cape Station, and the company has requested to increase the size of its connection accordingly. However even this may be a conservative estimate. Jewett said a third-party engineer reported the facility’s thermal capacity to be up to 4 gigawatts.

Additional electricity can go to the grid as the size of the connection grows. But if not, Fervo has been fielding inquiries from companies looking to connect directly. “We’re seeing an increase in the number of products that are generating interest,” Jewett said.

Fervo is already developing another project. Corsac Station in Nevada, where Google will buy 115 megawatts of electricity.

One of the exciting things about geothermal is that the technology can provide so-called baseload power, a source that can generate electricity 24/7, regardless of the weather. Data center users with long-term needs are willing to pay more today for more stable power. This has helped transform geothermal heat from another clean technology that fights for a place on the grid into a favorite in the middle technology companies and, now, investors.

The Houston-based company has been racing to cut costs by reducing the time it takes to drill a new well. Fervo’s first wells took days to complete and cost more than $1,000 a foot. After drilling 14 wells, the company has reduced drilling time and cost per foot for two thirds.

This IPO may have been delayed, although with interest on the rise, the timing could not have been better.

Fervo announced in December that it was closing a $462 million roundand climate and financial experts that TechCrunch spoke to late last year almost all over the world to wait IPO company. Demand from hyperscalers combined with data from its Cape Station project shows that the company was able to “valley of death.” With the IPO behind it, it seems that Fervo is now on the other side.