Fervo Energy has signed its largest power agreement to date: a deal to supply Google with nearly 400 megawatts of electricity from the company's Cape Station geothermal project in southwest Utah.

The Houston-based developer went public in May and saw its shares climb 15% on Tuesday morning after the announcement. The contract underpins the second, 400-MW phase of Cape Station, which Fervo expects to bring online within roughly two years — targeting completion in 2028. Fervo is investing more than $2 billion to build what could become the world's largest next-generation geothermal system.

The companies did not disclose PPA terms. Fervo has previously quantified capital costs for the project: Sarah Jewett, the company's chief operating officer, told Canary Media that Phase 1 of Cape Station is set to deliver power at $7,000 per kilowatt, with Phase 2 expected to come in at $5,500 per kW.

Phase status: built versus announced

Fervo is currently developing the first, 100-MW phase of Cape Station and expects to begin generating test power from a 33-MW unit in the fourth quarter of this year. The Google agreement supports the buildout of the second phase — announced capacity, distinct from the infrastructure already under construction.

For a first-of-a-kind facility, securing an offtaker is the financing gate. Without a clear buyer, novel projects struggle to attract capital even when the underlying technology performs. The Google contract removes that hurdle for Phase 2.

Google said it intends to route the geothermal power to a potential data center in Utah, though the company has not determined where it will build the facility.

"Even though right now we don't have clarity yet on how this will service a data center … we know that it will be a foundational building block of power generation for a data center presence in Utah," Lucia Tian, Google's director of advanced energy technologies, told The Wall Street Journal on Tuesday.

"As demand for reliable electricity grows, customers like Google need energy resources that can be deployed at scale, operate around the clock, and deliver where power is needed," Tim Latimer, Fervo's CEO and co-founder, said in a Tuesday news release.

Expansion options compound the deal

The agreement carries two forward commitments worth tracking. Google holds an option to expand its Cape Station offtake by roughly 600 MW by June 2030. Separately, the companies maintain a standing arrangement giving Google the right of first refusal to purchase up to 3 gigawatts of electricity from certain new geothermal plants Fervo develops.

The relationship predates this deal. In 2021, Fervo and Google signed an agreement to develop a next-generation geothermal project. Two years later, Fervo commissioned its 3.5-MW commercial pilot plant in Nevada — still the largest operating enhanced geothermal system in the United States. Another developer, Sage Geosystems, recently began producing power from its 3-MW next-generation pilot project in Texas, signaling an emerging field of competitors. Before Tuesday's announcement, Fervo and Google had also signed a 115-MW power purchase agreement through the Las Vegas-based utility NV Energy to supply geothermal power to the tech giant's Nevada data centers.

Why next-gen geothermal

Geothermal accounts for just 0.4% of total U.S. electricity generation today. Conventional geothermal depends on natural features such as hot springs, which constrains siting. Next-generation systems — including Fervo's enhanced geothermal approach — drill deep into hot, dry rock and often borrow tools and techniques from oil and gas drilling to access underground heat in a far wider range of locations.

For data center operators facing surging load growth, the technology offers firm, around-the-clock generation without the siting constraints of conventional geothermal. That profile is what the Fervo-Google agreements are structured to monetize.

The near-term milestone to watch: first test power from the 33-MW unit at Cape Station in Q4 of this year, which will provide the first operational validation of Phase 1 ahead of the 2028 buildout deadline for the full system.