Fervo Energy (NASDAQ:FRVO) shares rose 15% on Tuesday morning following a Wall Street Journal report that the geothermal company had secured its largest power agreement to date with Alphabet’s Google (NASDAQ:GOOG).
The agreement covers nearly 400 megawatts of electricity from Fervo’s Cape Station project in southwestern Utah.
Fervo plans to begin supplying electricity to Google in 2028 as it works to develop Cape Station into what the company intends to become the world’s largest enhanced geothermal facility.
Fervo invests more than $2 billion in Cape Station
Houston-based Fervo uses drilling and hydraulic fracturing techniques developed by the oil and gas industry to create geothermal reservoirs that can be used to generate electricity.
The company is investing more than $2 billion in Cape Station and expects the project’s first phase to begin supplying electricity to the grid later in 2026.
The planned development and delivery schedule represents Fervo’s current expectations and remains subject to the project’s execution and other applicable conditions.
Google plans to use electricity for Utah data centre
Google intends to use the electricity covered by the agreement for a data centre in Utah, although a location has not yet been selected.
The company will need to work with local communities and obtain relevant state and local regulatory approvals before proceeding with its data centre plans.
“Even though right now we don’t have clarity yet on how this will serve a data center…we know that it will be a foundational building block of power generation for a data center presence in Utah,” said Lucia Tian, Google’s director of advanced energy technologies.
Agreement could expand by another 600 megawatts
Google also has an option to expand the agreement by approximately 600 megawatts by June 2030.
If exercised in full, that option would substantially increase the amount of electricity covered by the arrangement. The additional capacity is optional, however, and should not be treated as committed demand unless Google exercises the provision.
Tuesday’s 15% increase in Fervo Energy shares followed the report of the nearly 400-megawatt agreement with Google. The eventual financial impact will depend on factors including project development, electricity deliveries and any future expansion of the agreement.
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