Geothermal energy group Fervo Energy, known as a pioneer of 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 on March 19 said the oversubscribed financing marks the project’s transition from early stage and bridge funding to a long-term, non-recourse project capital structure. Fervo said it underscores enhanced geothermal systems’ (EGS’s) bankability as a utility-scale infrastructure asset.
Cape Station has been touted as a model for how geothermal energy can help meet surging power demand from data centers and artificial intelligence (AI), and from industrial manufacturing and accelerating electrification. Cape Station, located in Beaver County, Utah, is expected to begin delivering first power to the grid this year. The project is designed to have about 100 MW of operating generation capacity by early next year, and eventually scale to 500 MW. The geothermal station is fully contracted through power purchase agreements with Southern California Edison, Shell Energy, and community choice aggregators.
Non-Recourse Financing
“Non-recourse financing has historically been considered out of reach for first-of-a-kind projects,” said David Ulrey, chief financial officer at Fervo Energy. “Cape Station disrupts that narrative. With proven oil and gas technology paired with AI-enabled drilling and exploration, robust commercial offtake, operational consistency, and an unrelenting focus on health and safety, we have shown that EGS is a highly bankable asset class.”
The $421-million financing package includes a $309-million construction-to-term loan, a $61-million tax credit bridge loan, and a $51-million letter of credit facility. Those facilities together will fund the remaining construction costs for the first phase of Cape Station and support the project’s counterparty credit support requirements.
RBC Capital Markets served as Fervo’s financial advisor and was a coordinating lead arranger alongside Barclays, BBVA, HSBC, MUFG and Société Générale. Other participating lenders included J.P. Morgan, Bank of America, and Sumitomo Mitsui Trust Bank, Limited, New York Branch. White & Case LLP acted as sponsor counsel for Fervo, while Norton Rose Fulbright acted as counsel for the lender group.
“As demand for firm, clean, affordable power accelerates, EGS is set to become a core energy asset class for infrastructure lenders,” said Sean Pollock, managing director, Project Finance at RBC Capital Markets. “Fervo is pioneering this step change with Cape Station, a vital contribution to American energy security that RBC is proud to support.”
—Darrell Proctor is a senior editor for POWER.
