Fervo Energy, developer, owner, and operator of next-generation geothermal assets, has announced the successful close of US$421mn in non-recourse debt financing for the first phase of its Cape Station development, a considerable achievement for a “first of a kind” project and an indication of the bankability of enhanced geothermal systems (EGS) as the demand for clean power continues to rise.
This oversubscribed financing marks Cape Station’s transition from early stage and bridge funding to a long-term, non-recourse project capital structure and will fund the remaining construction costs for the first phase of Cape Station, while supporting the project’s counterpart credit support requirements. RBC Capital Markets was a coordinating lead arranger with Barclays, BBVA, HSBC, MUFG and Société Générale.
This timely development comes as demand for reliable, affordable, carbon-free energy is soaring, thanks to the surging power demand from data centres as well as from domestic manufacturing and accelerating electrification.
Cape Station, located in Beaver County, Utah, will begin delivering power to the grid in 2026, rising to around 100 MW by early 2027. The aim is to scale to 500 MW, enough to power around US 355,000 homes annually. Power purchase agreements (PPAs) have been secured with Southern California Edison, Shell Energy and other aggregators.
The project will see Fervo Energy employ advanced drilling techniques to drill horizontal wells in geothermal reservoirs, allowing multiple wells from a single well pad, thereby reducing surface footprint, minimising drilling risks and unlocking previously inaccessible geothermal resources.
“Non-recourse financing has historically been considered out of reach for first-of-a-kind projects,” said David Ulrey, Chief Financial Officer at Ferco 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.”
“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.”