Geothermal power |
New technologies enhance prospects for geothermal power in the USA
Entry into operation of Fervo Energy’s Cape Station, expected before the end of 2026, promises to be a milestone event for geothermal power generation technology in the United States
Up to now, enhanced geothermal system (EGS) plants in the United States, have been small and experimental. However, the USA’s first large-scale commercial EGS power generating facility – Fervo Energy’s Cape Station in Beaver County Utah – is now under construction and expected to deliver first power to the grid by the end of 2026, reaching approximately 100 MW of generating capacity by early 2027, with plans to scale to 500 MW. The project has power purchase agreements with Southern California Edison, Shell Energy, and community choice aggregators, “demonstrating Fervo’s ability to meet customers’ growing needs in delivering firm power at scale,” the developer asserts. Fervo Energy has recently announced the close of $421 million in non-recourse debt financing for the first phase of Cape Station. This oversubscribed financing marks Cape Station’s transition from early stage and bridge funding to a long-term, non-recourse project capital structure, underscoring EGS’s bankability as a utility-scale infrastructure asset, says Fervo.
Amid surging power demand from data centres, a resurgence in domestic US manufacturing, and accelerating electrification, energy markets are racing to secure clean, affordable, and reliable power – and “Cape Station can meet that need,” Fervo contends. “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
Fervo Energy’s Cape Station geothermal power plant under construction. Photo: Fervo Energy.
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. Together, these facilities 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 co-ordinating 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. 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.”
Fervo aims to “leverage innovation in geoscience” in the development of geothermal power, for example building on advances in horizontal drilling and reservoir engineering, and deploying fibre optic cables downhole in geothermal wells to gather and analyse real-time data on flows, temperatures, and performance of the resource.
Why ESG?
Types of geothermal systems. Source: US Department of Energy/US Energy Information Administration.
30 | April 2026 |
www.modernpowersystems.com
Conventional geothermal systems generate electricity using hot water or steam pumped from naturally occurring hydrothermal reservoirs that are trapped in underground permeable and porous rock formations. These hydrothermal reservoirs are found in limited locations, typically
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