When the NASDAQ opens on Wednesday morning, the exchange will include a new ticker symbol: FRVO. The company, Fervo Energy, is in the geothermal electricity business and aims to raise $1.8 billion. An initial public offering of that magnitude would be one of the biggest Wall Street debuts for renewable energy in U.S. history and a promising sign for clean tech’s future.
“This is a very, very big deal,” said Gernot Wagner, a climate economist at Columbia Business School. “Money speaks.”
At the simplest level, geothermal generation is the process of harnessing the heat within the earth to produce steam, which then spins turbines to generate much-needed electricity. But locating suitable geology and getting deep enough to make power on a utility-scale isn’t easy. Fervo uses horizontal drilling and fiber-optic sensing to tap previously out-of-reach sources.
“Innovation is allowing these technologies to cover a wider variety of sites,” said Zainab Gilani, a geothermal analyst with research firm Cleantech Group. Fervo, she noted, is using some of the same techniques that the oil and gas industry uses, with the hope of cutting the price of geothermal from $7,000 to $3,000 per kilowatt as it grows. This initial public offering, or IPO, could prove a bellwether for not only that technology, but cleantech more broadly.
“If Fervo demonstrates that there is money to be made for investors,” said Wagner, that “is going to draw a lot of attention well beyond just the narrow advanced geothermal community.”
Fervo has successfully deployed its technology in Nevada, producing enough clean energy to power about 2,600 homes. It is building a much bigger facility, Cape Station, in Utah that would produce more than 100 times that amount of electricity and is slated to go online later this year. The prospect has attracted a slew of high-profile investors, including Bill Gates’ Breakthrough Energy Ventures, and Alphabet, the parent company of Google, which has also signed contracts with the company to supply power to its data centers.
Now it’s the public’s turn to weigh in.
When Fervo announced it was going public earlier this year, it said it would sell 55.6 million shares at around $21 to $24 each. Its debut comes as electricity demand is rapidly rising in the U.S. The race to build the data centers needed to sustain the artificial intelligence boom has strained grids nationwide, and has made the appetite for reliable energy seem insatiable. The Iran war has only exacerbated high energy prices, and this week Fervo boosted its target to 70 million shares, at around $25 or $26, which would value the company at $7.4 billion. The line has reportedly been out the door.
Still, the road ahead won’t be easy, and bringing the price of geothermal down will take time. “They’re just not here yet on any large scale,” said Rob Gramlich, president of Grid Strategies, a power sector consultant. “They are great 2040 and 2050 options.”
Regardless of whether Fervo’s stock sinks or sails in the coming months or years, some see its initial offering as a promising sign for a clean energy industry that has faced political whiplash in recent years. The Inflation Reduction Act that President Joseph Biden signed in 2022 was the nation’s most ambitious climate legislation ever and included billions for solar, wind, geothermal, and other green technologies. But, since returning to office, President Donald Trump and Congress have largely dismantled that legislation, rolled back much of the nation’s wind development, and pushed fossil fuel as the answer to the country’s energy woes.
While many major projects were canceled in the wake of those changes, Fervo has secured hundreds of millions of dollars in additional financing for Cape Station, and could be about to have a blockbuster IPO. “You’re in this situation where it is very obvious that the oil and gas sector is doing the best it can,” said Jigar Shah, a former senior official at the Department of Energy under Biden. “But the climate sector is the one that’s surging.”
Earlier this year, Amazon-backed nuclear reactor developer X-Energy raised $1 billion with its public offering and is valued at more than $9 billion. Shah, who is a managing partner at the investment firm Multiplier, says IPOs like these bode well for clean tech.
“There is a level of confidence coming to our sector, which I think is great,” said Shah. “For a long time, our space has acted as if we’re alternative energy. But when you’re 90 percent of everything that gets added to the grid every year, you’re no longer alternative.”
