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Fervo Energy is producing clean power at Cape Station in Utah. It’s a big milestone, but the industry must tackle high costs and other barriers in order to scale.
The geothermal startup Fervo Energy is now selling power to the grid from its Cape Station project in Utah — marking the first time a utility-scale, next-generation geothermal facility has achieved such a feat worldwide.
The Houston-based firm turned on an initial 33-megawatt unit late last week and has been testing and ramping up output since then. On Thursday, Fervo will officially begin commercial operations, supplying carbon-free electricity to Shell Energy, a retail power provider in California.
Cape Station, a $2 billion project that will eventually be 500 MW, is unique among the world’s commercial geothermal plants. While other facilities draw on naturally occurring hot water and steam, Fervo has engineered its own geothermal resource deep underground. The startup uses drilling techniques from the oil and gas industry to create reservoirs in hot, dry rocks that generate steam to produce electricity.
“Traditional geothermal would have never been done in southern Utah,” said Dawn Owens, Fervo’s senior vice president and head of development and commercial markets.
With the first unit online, Fervo said it is working to commission two more 33-MW power blocks by Jan. 1, 2027. The project’s remaining 400 MW — which is supported by a new agreement with Google — is under construction and slated to come online in 2028.
Fervo already operates a 3.5-MW commercial pilot plant in Nevada, which went online in late 2023. Owens said the pilot, called Project Red, was important for demonstrating the technology itself. But firing up Cape Station proves that Fervo’s approach can achieve utility scale and export power to wider markets.
“This is massive for both Fervo and the geothermal industry at large,” she said.
Fervo, which went public in May, is leading the fast-growing movement to develop clean, always-on geothermal power to meet soaring demand from data centers and balance growing supplies of intermittent solar and wind energy. Next-generation geothermal firms have raised billions of dollars in private capital in recent years to develop and deploy technologies that can harness energy in harsh, deep environments.
Today, geothermal represents just 0.4% of total U.S. electricity generation every year. Expanding geothermal’s share of the mix will require not just building more projects like Cape Station but also tackling high upfront drilling costs and other economic and regulatory barriers — all while working to limit potential impacts on communities and the environment, experts say.
“Fervo’s first power achievement shows investors the size and scale of the opportunity to fuel many more such milestones across developers and sites in the future,” said Mitchell Smith, who serves as grid lead for the Mountain West Geothermal Consortium. The bipartisan initiative is calling for increased public and private financing “to help bring more projects online responsibly and at the speed of demand,” he added.
Fervo has declined to disclose the terms of its power purchase agreements for in-progress and future development, which together represent about 1,000 MW, or enough to power roughly 1 million U.S. homes every year. Phase 1 of Cape Station is set to deliver power at $7,000 per kilowatt, while Phase 2 should come at $5,500 per kW, the company previously told Canary Media. (By comparison, the average cost to build a natural gas–fired power plant was $2,157 per kW in 2025.)
Along with slashing drilling costs, enhanced geothermal projects could improve their economics by delivering power when it’s most valuable to utilities, according to researchers. While geothermal plants traditionally provide around-the-clock, baseload power, next-generation facilities might operate flexibly during certain periods — like in the evening, when solar output declines — to reduce overall grid costs. Geothermal plants could also operate “behind the meter” to directly power data centers, so that the costs of adding new electricity capacity aren’t passed on to utility customers, Owens said.
“We’ve been saying all along that our technology makes geothermal more scalable and affordable in more places,” she said. On Cape Station’s powering-up, she added, “That’s just something no next-generation geothermal company has ever been able to do before.”
The startup hit a milestone last year when it drilled the world’s hottest next-gen geothermal well. Now it’s working to prove its tech can scale commercially.
The startup Mazama Energy just nabbed $135 million to accelerate its next-generation geothermal activities near Oregon’s Newberry Volcano.
Mazama is seeking to generate clean electricity from superhot rocks — an emerging and largely unproven approach that could have an enormous payoff for the power sector. That’s because the hotter the geothermal resource, the fewer expensive wells companies have to drill to build powerful and efficient systems.
“Superhot rock is almost essential for geothermal to become cost-competitive with fossil fuels,” Sriram Vasantharajan, Mazama’s CEO, told Canary Media ahead of Thursday’s announcement.
The Frisco, Texas–based company said its new funding includes an oversubscribed Series B led by the billionaire John Arnold’s Centaurus Capital and Doerr Capital. Oil and gas giants ConocoPhillips and Shell Ventures also participated, as did existing investors Khosla Ventures and Gates Frontier.
“Superhot geothermal offers the promise of firm, carbon-free power with a relatively small footprint, but realizing that promise requires significant technical innovation,” Arnold said in a news release. “Mazama has made impressive progress, and I am excited to support its next phase of development.”
Mazama’s announcement follows a flurry of activity within the next-gen geothermal sector. The startup Fervo Energy went public earlier this year, then its Utah project landed a huge power-purchase deal with Google. Sage Geosystems recently started producing power from its first pilot system in Texas. And Quaise Energy — which is also drilling a geothermal well near Newberry Volcano — closed a $180 million funding round last month.
All these geothermal companies are trying to break the constraints that have held back traditional projects in the U.S. and globally.
Conventional plants rely on natural pockets of hot water to heat fluids and drive turbines. Newer firms and old-school geothermal giants alike are developing technologies to harness heat from hot, dry rocks that could potentially unlock hundreds of gigawatts of around-the-clock power in the western U.S. Enhanced geothermal systems in particular involve drilling several miles into the earth and fracturing rocks to create artificial reservoirs.
Mazama, like many of its competitors, has its roots in the fossil fuel industry.
Vasantharajan is a chemical engineer who previously worked on complex oil and gas wells, including in deep-water and heavy petroleum reservoirs. In 2023, Mazama launched with the goal of developing innovative drilling tools and techniques to extract heat from harsh, superhot environments.
The startup hit its first major milestone last October: Mazama said it built the world’s hottest enhanced geothermal system — reaching 331 degrees Celsius (629 degrees Fahrenheit) — at its pilot site near the Newberry Volcano. The project, which received a U.S. Department of Energy grant, earned praise at the time from industry experts.
“This proof of concept opens the door to deeper and hotter opportunities at Newberry and beyond,” said John McLennan of Utah Forge, a federally funded geothermal laboratory in Beaver County, Utah.
Mazama reached a depth of 10,350 feet for its first well. For its second, the company hit the same depth about 80% faster this year — a key improvement when rigs can cost over $100,000 per day to operate. Mazama continues to drill down thousands more feet as it seeks to hit 400℃, a temperature at which such a project could deliver up to 10 times more power than a conventional 200℃ well, according to Mazama.
The new financing will fund Mazama’s next initiative: Project Ceres, which is supported by the Department of Energy. It involves drilling horizontally to demonstrate the potential for 15 megawatts of clean electricity capacity from each well. Vasantharajan said the startup plans to start drilling wells later this year and start testing the system early next year.
“Ceres becomes our blueprint for our scalable, commercial pathway for deployment of superhot rock,” he said.
The firm just wrapped work on a heating and cooling system for a Boston office. It says its rig makes drilling cheaper, quieter, and less water-intensive.
Dig Energy, a startup on a quest to vastly improve geothermal drilling, has completed its first commercial project, digging seven boreholes for a geothermal heating and cooling system at the headquarters of Boston general contracting firm Suffolk Construction.
Dig first stepped into the public eye almost exactly a year ago, when it announced a $5 million funding round after some five years of developing its technology behind the closed doors of a barn in New Hampshire. At the same time, Dig was selected to participate in Boost, an accelerator program run by Suffolk Technologies, the venture capital affiliate of Suffolk Construction.
Dig’s innovation: a rig purpose-built to drill geothermal boreholes with less noise, less water usage, and far lower cost than conventional drilling equipment.
Geothermal systems, which use all-electric heat pumps to tap into thermal energy stored underground, are widely hailed as the most efficient way to warm and cool buildings. However, the upfront price of accessing this clean source of energy can be a major barrier. The expense of installing a geothermal system can be up to five times that of an equivalent air-source heat pump. Only about 1% of buildings in the United States use geothermal systems for heating and cooling, estimated Dig Energy co-founder and CEO Dulcie Madden.
Dig says its technology could upend this math, cutting the cost of drilling by up to 80% as compared to conventional geothermal drilling. The companies declined to share specific numbers, but Dig “put some early proof points out there that, from a cost and schedule perspective, they’re going to be very competitive in the market,” said Parker Mundt, a partner at Suffolk Technologies.
In the standard process, the borehole is drilled first, typically with a metal bit or compressor, and shored up along the way with a casing to prevent collapse before a heat exchange pipe is inserted.
Dig’s system, by contrast, uses a high-pressure nozzle that sprays water at 10,000 pounds per square inch to bore through soil and rock. The approach was explored by the oil and gas industry decades ago, but never gained traction because it didn’t increase productivity in those sectors, Madden said. She and her partners saw an opportunity to adapt the idea for geothermal and spent years honing the technology.
“It’s a known industry practice that’s being adopted in a novel way for the first time,” Madden said.
The team engineered a drill string — the long vertical pieces that connect the surface equipment to the drill tip — that stays in the ground once the hole is complete, becoming the heat exchanger that transfers thermal energy to and from the surrounding earth. The nozzle stays behind as well; it was designed to be cheap enough that it is still economical to use a new one each time.
That innovation means the hole can have a smaller diameter than in conventional geothermal systems, because no extra room is needed for casing and the insertion of the heat exchanger. This process reduces debris and, perhaps counterintuitively, even water usage, because standard drilling uses large amounts of water to lubricate and cool the drill bits, as well as to turn displaced earth into mud that can be more easily removed from the hole.
Drilling at the Boston jobsite last month used one-tenth the water that the conventional drilling would’ve used and created 75% less material to be carted away, Madden said.
The process was also much quieter than standard drilling operations, which Madden likened to a demolition site. Dig’s equipment operated at such a low volume that workers could hold a conversation right near the rig and people in nearby buildings couldn’t hear a thing, she said. Also, the rig’s small size — about the same footprint as a parking spot, Mundt said — made it easy to maneuver in a dense urban environment.
“You can have people working around the rig without any disruption,” Mundt said.
Dig has several more jobs lined up after its inaugural success; the company is booked until mid-summer 2027, Madden said. And work is underway on a new version of the rig that aims to cut down on drilling time, she said.
Already, though, Dig’s performance on its first outing bodes very well for its future, Mundt said.
“The results from this initial commercial project at our headquarters were incredibly exciting for us,” he said.
The geothermal startup will supply 400 MW from its Cape Station project to a Google data center in Utah. An initial phase of the project will come online this fall.
Fervo Energy inked a landmark deal to supply Google with nearly 400 megawatts of clean electricity from the startup’s geothermal project in southwest Utah.
The agreement is the largest of its kind for a next-generation geothermal system — an emerging technology that involves drilling deep into hot, dry rock to use underground heat for producing power. Fervo is investing over $2 billion to build what could become the biggest such system in the world when it is completed in 2028.
Securing customer contracts is an essential step for a novel project like Fervo’s Cape Station. Without a clear buyer, it can be difficult to attract financing for first-of-a-kind facilities, even if they promise transformative benefits for the power sector. Fervo, which went public in May, saw its shares jump 15% on Tuesday morning following news of the Google power deal.
Houston-based Fervo is now developing the first, 100-MW phase of Cape Station and expects to start generating test power from a 33-MW unit in the fourth quarter of this year. The deal with Google supports the buildout of the second, 400-MW phase, which is slated to be up and running in about two years.
Google said it intends to buy the geothermal power for a potential data center in Utah.
“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.
The companies did not disclose PPA terms. Phase 1 of Fervo’s Cape Station is set to deliver power at $7,000 per kilowatt, while Phase 2 should come in at $5,500 per kW, Sarah Jewett, Fervo’s chief operating officer, previously told Canary Media.
Geothermal energy generates just 0.4% of total U.S. electricity today. Conventional geothermal relies on natural features like hot springs, limiting where such facilities can go. Fervo is part of a rapidly growing effort to deploy innovative tools and techniques — often derived from oil and gas drilling — to access the earth’s heat in more diverse places.
The startup has been working with Google in this pursuit for years.
In 2021, the two companies signed an agreement to develop a next-generation geothermal project. Two years later, Fervo turned on its 3.5-MW commercial pilot plant in Nevada. The first-of-a-kind facility is still the largest operating “enhanced geothermal system” in the country — though another firm, Sage Geosystems, recently began producing power from its 3-MW, next-gen pilot project in Texas.
Before Tuesday, Fervo and Google had previously signed a 115-MW power purchase agreement with the Las Vegas–based utility NV Energy to develop more geothermal for the tech giant’s data centers in Nevada.
Google said it hasn’t determined where it will build the Utah data center that will run on Cape Station’s power.
“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.
Under the new deal, Google has the option to expand its Cape Station agreement by around 600 MW by June 2030. The tech company and Fervo also have a deal in place allowing Google the right of first refusal to purchase up to 3 GW of electricity from certain new geothermal power plants the startup develops.
For next-gen geothermal to scale, drilling costs must drop. Startup Hephae says its novel tech can make that happen — and developers like Fervo are giving it a try.
Thousands of feet beneath the desert valley of southwest Utah, a slender tool tucked inside a drill pipe is barreling through hot granite. The rod-shaped device, built by the startup Hephae Energy Technology, is a tracker of sorts, wirelessly sending data to help operators above steer the drill below and to measure rock conditions.
The work is underway at Fervo Energy’s Cape Station, the largest project in the nation using nascent techniques to tap earth’s heat for clean energy. The 500-megawatt endeavor could usher in an era of next-generation geothermal development — but only if the industry can bring down drilling costs.
That’s where tools like Hephae’s can help.
Oil and gas firms have long used similar “measurement-while-drilling systems” to bore holes underground. But off-the-shelf parts aren’t designed to withstand the higher rock temperatures that geothermal companies aim to reach, which makes the equipment less efficient and costlier to operate.
Hephae’s founders, veterans of the fossil fuel industry, saw an opportunity to create a more advanced version for the burgeoning next-gen geothermal market. “We realized that companies like Fervo need the same exact tools that we’ve been working on for the last 45 years,” Steve Krase, Hephae’s CEO, recently recalled.
“They just need to work a hell of a lot hotter,” he added.
Hephae deployed its high-temperature device for the first time commercially at Cape Station earlier this year and has since used it there it additional times, Krase said. His firm will soon ship another of its high-tech rods to the startup Mazama Energy, which has started drilling its commercial pilot facility near the Newberry Volcano in central Oregon.
These and other next-generation geothermal projects are poised to become a significant source of on-demand electricity in the western U.S. over the coming decades. Unlike traditional geothermal plants, the newer systems don’t rely on finding natural hot-water pockets to generate heat; they can go wherever rocks are sufficiently scalding.
Yet the fledgling sector will struggle to scale unless companies dramatically reduce the time and money it takes to drill new wells — each of which can require millions of dollars, and together represent as much as half the expense of building new geothermal plants.
“Any way that you can get geothermal to be [cost] competitive with other sources of energy, like nuclear, solar, and wind, … will be pretty crucial,” said Zainab Gilani, an energy and power research associate at Cleantech Group, a consulting firm.
Houston-based Hephae is among a growing number of drilling-focused firms working to reach that goal. The company — whose name evokes the ancient Greek god of fire, Hephaestus — raised nearly $18 million in venture capital funding in July to build more tools to rent to geothermal developers.
All told, seven startups have secured $393 million in total venture investment since 2021 to develop cutting-edge drilling systems and components for geothermal power, according to Cleantech Group. That includes Quaise Energy’s recent $134 million fundraise to advance its rock-melting technology and build its first geothermal plant, also near Oregon’s Newberry Volcano.
Geothermal firms “are basically trying to get underground as cheaply as possible,” said Stephanie Díaz, a senior associate for technology and innovation at BloombergNEF. She said the pursuit is a “rising tide that lifts all boats,” given how innovation spreads.
Investors are backing firms along the supply chain as a way to get exposure to the geothermal market, but without taking on the risk of building a first-of-a-kind project. “Instead of having to figure out an entire power plant, you just need to figure out one component that is essential to creating the power plant,” Díaz said.
Krase and his co-founder, John Clegg, launched Hephae in 2020 to adapt their oil and gas expertise for geothermal wells.
Their measurement-while-drilling system fits into a thick steel tube that connects to the rock-cutting drill bit. Sensors and rounded circuit boards — stacked like chips in a Pringles can — gather subsurface data and transmit it through a sequence of pressure pulses, enabling engineers to steer the drill through the challenging environment.
Conventional versions of the tool are built to operate at relatively lower temperatures — around 175 degrees Celsius (347 degrees Fahrenheit) — where oil and gas reserves are typically found. But for geothermal firms, the higher the rock temperature, the more energy they can wring out of the system, making each well more cost-effective and productive.
Right now, that means geothermal developers must occasionally pause for extended periods to cool the drilling fluid inside the wells to avoid overheating the electronics. This “nonproductive time” can cost operators roughly $500,000 to $1 million per well, since they’re still paying to rent a drilling rig they’re not using, according to Krase.
Hephae says its unique design can withstand temperatures up to 210℃, reducing work delays by directing heat away from the sensors and circuits as they operate. Before shipping the tool to Cape Station, the company put the technology through its paces at an Oklahoma test facility and in Texas at a high-temperature gas well — another possible market for Hephae.
“Fervo has been really supportive, because they know their success depends on being able to get to the good rock,” Krase said.
Fervo, for its part, has already made significant strides in recent years to reduce drilling times and access deeper resources in Utah. In May, the startup became the first next-gen geothermal firm to go public, and Cape Station is expected to be the largest project of its kind in the world when it comes fully online by 2028.
The company declined to comment for this story, but it shared an earlier statement from Elliot Howard, Fervo’s director of drilling and completions.
“Fervo is encouraged by the early progress of our collaboration with Hephae, whose novel high-temperature innovations have the potential to contribute positively to [enhanced-geothermal-system] economics, unlock higher-energy geothermal resources, and further cement the competitiveness of next-generation geothermal power,” Howard said in a July press release announcing Hephae’s fundraise.
With its new funding, Hephae plans to triple the number of tools in its arsenal, from six to 18 by the second quarter of next year. That total could reach 40 tools by the end of 2027 as Fervo, Mazama, and future partners advance their geothermal projects.
Hephae is also investing in R&D to design systems for temperatures above 300℃, which it hopes to launch by 2030.
Gilani of Cleantech Group said that Hephae’s partnerships with Fervo and Mazama make it well positioned to grow with the wider next-gen geothermal industry. If Hephae can play a part in bringing the projects online, “that will both help Hephae to scale and will also help the industry overall,” she said.
It’s only the third such project to hook up to the U.S. grid. It comes as surging electricity demand drives interest in the source of around-the-clock clean power.
Sage Geosystems has hit a big milestone out on a rugged tract near San Antonio: The startup is producing power from its first next-generation geothermal plant. The system is just the third of its kind to come online in the U.S. as the sector races to commercialize the source of on-demand clean electricity.
The novel geothermal facility in Texas has been running since April, Sage exclusively shared with Canary Media. The Houston-based firm said the 3-megawatt pilot plant has performed reliably and as predicted after more than 120 days of grid-connected operations.
Cindy Taff, Sage’s CEO, said the results will “directly inform and de-risk” an upcoming collaboration in Nevada with Ormat Technologies, a conventional geothermal leader that is increasingly dipping its toes into next-generation technology. The Nevada project is a necessary precursor to Sage’s deal with Meta to develop 150 MW of geothermal power.
Sage’s enhanced geothermal system is a type of nascent tech that involves drilling deep into hot rocks and fracturing them to create water pockets, then using the heat to generate power. It’s distinct from the decades-old traditional geothermal plants that rely on what Taff called “very unicorn geology” — the few places in the world where a combination of water, heat, and permeable rocks are easily accessible.
For all the buzz around the technology, just two other enhanced systems have connected to the U.S. grid so far.
In 2013, Reno-based Ormat completed a 1.7-MW demonstration project at its conventional Desert Peak facility in western Nevada, before returning its focus to old-school geothermal for a time. That demo is no longer producing power, Ormat confirmed.
A decade later, Fervo Energy began operating a 3.5-MW geothermal plant in northern Nevada in partnership with Google. Building off that project, Fervo is now constructing a 500-MW facility in Utah, which is set to come partially online in October.
Sage likewise expects its early success in Texas to fuel its commercial-scale ambitions.
The startup has been developing the pilot since 2024, when it reached a deal with San Miguel Electric Cooperative to use land near a coal-fired power plant in the town of Christine. Sage built its own substation there and intermittently sells power to the Texas grid.
Taff said that one of the most promising outcomes has been the relatively limited water loss from the underground system. Sage’s approach involves creating a network of fractures, into which it pumps and stores large volumes of water. As hot water pushes up against the rocks around it, mechanical pressure builds, which is released when the crew opens a valve at the top. This is different from other enhanced projects, which use fractures to flow water between two wells without pressure.
In both cases, water can migrate into surrounding rock formations as it moves through the fractures. The more water a project loses along the way, the less efficient it becomes at producing energy.
Sage lost less than 10% of the water that it cycled through the Texas system on multiple occasions, which Taff said bodes well not just for the company but also for the larger universe of enhanced geothermal, if it adopts similar methods.
“The net power output that you can produce from these technologies is going to go up, she said, noting that curbing water loss will enable enhanced systems to scale commercially at a competitive cost.
Initially, Sage planned to use similar geothermal techniques to develop a long-duration energy storage system near the coal plant. But in recent years, Texas has built one of the largest grid-battery fleets in the world, making the timing less ripe for rolling out a novel storage technology. So Sage is now primarily focused on meeting the nation’s growing demand for around-the-clock clean electricity.
To that end, Taff said Sage expects to begin drilling its first well at one of Ormat’s conventional geothermal plants in Nevada later this year. Sage will provide the hot water it produces to Ormat to generate electricity at the existing facility — allowing Sage to demonstrate its technology without going through the costly, lengthy steps of connecting to the grid or building a power plant.
Sage hasn’t yet specified how large this system will be, but does expect to start producing electricity in 2027 and reach full-scale production in 2028. Once that happens, Sage will begin working with Meta to start developing 150 MW of next-gen geothermal power somewhere east of the Rocky Mountains. All told, Sage has lined up about a gigawatt’s worth of projects on paper.
The Texas pilot enables Sage to “actually model and predict how the [reservoir] behavior is going to be going forward,” she said. “And that sets us up very nicely for scaling and building commercial facilities with our approach.”
An update was made on Aug. 19, 2026, to confirm that Ormat’s Desert Peak project is no longer generating power.
Next-generation geothermal projects are underway in the U.S. West, but states will need more targeted policies for the industry to scale, a new report argues.
Next-generation geothermal energy has massive potential in the western United States, but it won’t be realized unless developers can overcome the big economic barriers these novel systems face.
Unlike traditional geothermal plants, next-gen projects use innovative underground techniques to produce power wherever rocks are sufficiently hot, making it possible to harness heat in more locations. The energy source could provide hundreds of gigawatts of clean electricity around the clock, up from just 4 GW nationwide today.
Amid ballooning energy demand from data centers and electrification, western states are increasing their support for the industry, using tools like direct investment and permitting reform. These state-level efforts are supporting a wave of pilot projects and first-of-a-kind systems across the region, where heat is accessible at relatively shallow depths.
Still, states will need to adopt more sweeping and coordinated policies to help companies secure the kind of large-scale financing necessary to scale up next-gen geothermal, said Ann Garth, policy manager for superhot rock geothermal at the nonprofit Clean Air Task Force.
Garth is the lead author of a new report, shared first with Canary Media, that describes how states can “de-risk” geothermal for infrastructure investors, who typically pick up where venture-capital funds and federal research programs leave off.
Geothermal’s high upfront drilling costs, the slow trickle of investment returns, and the uncertainty around project development — like how long permitting will take or how profitable the resource will be — are major stumbling blocks for project financiers. Whereas some investors can stomach any two of the factors, “the three in combination will make financing very difficult,” Garth said.
Many western states have made some policy changes to address these challenges, though none have put all the pieces together yet. In its new report, Clean Air Task Force outlines what the states should focus on and highlights which steps they’re already taking.
Perhaps the most meaningful move that states can make is to create demand for utility-scale geothermal.
Take California, as an example. In 2021, the California Public Utilities Commission adopted a procurement order calling on utilities to add at least 1 GW of “clean firm resources,” such as geothermal, to meet the state’s long-term climate goals and grid reliability requirements. The mandate is largely responsible for the rise in power purchase agreements for next-generation projects — including Fervo Energy’s Cape Station in Utah. Southern California Edison has agreed to buy 320 megawatts of power from the 500-MW project, which is set to come partially online this fall.
“That has been an incredibly important driver of the growth in the geothermal industry,” Garth said. “Seeing those PPAs come in has given a lot of confidence [to investors].”
California itself has installed almost 2.9 gigawatts of conventional geothermal capacity, making it the nation’s leader. Colorado, by contrast, is working to land its first geothermal power plants of any kind.
In June, Colorado’s legislature passed a bipartisan bill that requires investor-owned utilities to solicit proposals for the development of large geothermal projects greater than 25 MW, as well as smaller systems. The state also awarded $494,000 to Fervo to evaluate the potential for developing geothermal power projects in two regions of the state.
New Mexico, meanwhile, is backing the commercial deployment of a novel geothermal system through its $75 billion sovereign wealth fund that draws on oil and gas royalties. Through the fund’s venture-capital investments, the state is supporting the startup XGS Energy as it develops a 150-MW closed-loop system in New Mexico along with Meta.
However, before developers get to the point of proposing projects, they need to scour geologic data to understand what rock formations are like, and how hot they are at certain depths. Many states already have this information from earlier oil and gas development, but the files aren’t easy to access.
Some states are working to make geological records more readily available. North Dakota has scanned and digitized the bulk of its historic data, which it provides to academics for free and to companies for a fee. Earlier this year, Arizona invested $1 million in the state’s geological survey to integrate historic subsurface data with new information, gathered using airborne and laser-based imaging, to bring geothermal development to Arizona.
Washington state, which also doesn’t produce geothermal power, passed a bipartisan law in 2024 that directs the state’s geological survey to compile a public database of subsurface information. It also creates grant programs for companies to do deep exploratory drilling in areas with high geothermal potential.
State permitting agencies, meanwhile, are still wrapping their heads around next-gen geothermal.
As a result, permitting can be a slow and unpredictable process — and a source of anxiety for investors. “The longer you have to wait before you can actually start generating revenue, the more expensive it gets,” Garth said.
Nevada devised a solution to this problem in 2008 to support its conventional geothermal sector. The state’s environmental protection and minerals divisions entered a cooperative agreement to clarify which agency has jurisdiction over certain aspects of drilling and operating geothermal wells, avoiding confusion and delays. Nevada has installed 892 MW of conventional geothermal capacity, making it second to California, and Fervo is developing a 115-MW “enhanced geothermal system” with Google in the state.
Texas, which is home to several test projects but no commercial geothermal, resolved a bureaucratic conundrum that had slowed next-gen development. In 2023, lawmakers passed a law to clarify who owned the geothermal resources on a given property: the surface landowner, not the owner of subsurface oil, gas, and minerals.
Another major barrier to scaling next-generation geothermal is access to transmission lines. This plagues every energy source in the U.S., and it can’t necessarily be tackled by individual states.
Connecting rural geothermal plants over long distances to pockets of demand requires coordinated, long-term efforts within regions, and that work has hardly begun in the West, according to Clean Air Task Force.
The group also recommends creating innovation test beds as a way for states to reduce project risks in specific areas. For example, the federally funded Utah Forge is an underground field laboratory in Beaver County, Utah, that has developed and refined enhanced geothermal using oil and gas techniques. Fervo said it built Cape Station next door so the company could collaborate with researchers who have extensively explored the area’s geology.
So far, states have adopted “an interesting hodgepodge of efforts” to attract geothermal investment, Dan West, senior Western regional policy manager at Clean Air Task Force, said by phone.
But “no state has checked all the boxes and pulled all the policy levers yet,” he said.
Startup Zanskar has created one of the most productive geothermal wells in the U.S. by squeezing more life out of a power plant that had been in decline for years.
Geothermal company Zanskar bought a New Mexico power plant in 2024 that appeared from the outside to be failing. The shallow wells had been rapidly losing heat, and the plant was having trouble generating power as a result.
Now, after drilling a new well and operating the power plant for a full year, Zanskar says that it has made a complete turnaround. The Lightning Dock site, according to figures from the company shared exclusively with WIRED, has become one of the most productive pumped geothermal wells in the U.S., providing enough heat to run the power plant with no issues.
The productivity over the past year at the Lightning Dock site “fundamentally changes how people think about these types of systems that we really thought we understood in the past,” says Zanskar co-founder Joel Edwards.
It’s the latest bit of good news for the long-neglected geothermal industry, which is experiencing an investment renaissance. Innovative drilling technology and artificial intelligence — along with a little bit of luck — played roles in the milestone. And while not all traditional wells may have the same set of circumstances as Zanskar had at Lightning Dock, the company says that its success is a wake-up call that old well sites are still worth further exploration.
Traditional geothermal energy relies on tapping hot water within the earth to generate electricity by pumping it to the surface and spinning turbines. In theory, it’s an excellent way of generating renewable baseload power: People have been harnessing steam from hot springs for thousands of years. But geographic constraints — power plants need to be situated on geothermal reserves, which are overwhelmingly in the western U.S. — as well as the difficulty and expense traditionally involved in finding new wells mean geothermal energy constitutes less than 1 percent of the electricity mix in the U.S.
Another challenge for the industry is that most wells gradually see declines in productivity. But Lightning Dock’s decline had been particularly steep, losing between five and 10 times as much heat each year as average wells, Zanskar says. When the company bought the site, temperatures in the original wells, which were less than 2,500 feet deep, had cooled some 50 degrees Fahrenheit (10 degrees Celsius) to about 250°F by 2024. The on-site 15-megawatt power plant, which supplies electricity to New Mexico’s largest utility, was designed to operate at temperatures above 300°F.
While conventional geothermal wells usually go down 3,000 to 5,000 feet, drilling deeper wells can tap into hotter reserves of water to use for power. But tighter rock formations deep underground make drilling more challenging — and costly. Whether or not to drill deeper is “basically a question of economics,” says Roland Horne, a senior fellow at the Precourt Institute for Energy at Stanford University. The cost, Horne says, is not linear: “If you drill twice as deep, it costs four times as much.”
To help make better bets on drilling, Zanskar uses artificial intelligence to identify what are known as hidden systems — that is, sites with ample geothermal potential but little to no signs of their viability on the surface. The company used the technology last year to make a discovery in Nevada, and it says that same modeling also helped pinpoint where to most productively drill at the Lightning Dock site. It combined those models with drill bit technology refined by the oil and gas industry, which helped it drill deeper holes 35% faster at what Zanskar says is a “competitive cost.” (The company didn’t provide specifics.) The new 8,000-foot well has been operating for a full year, with heat levels above where they were before the decline.
“We knew that if we were going to buy this field, we were committed to drilling deeper and going after it,” says Edwards. Edwards says that the new well is so productive that it has, on occasion, supplied “too much heat” to the existing power plant, suggesting that it could power a larger facility.
“We expect, if you look at peers of this well, it has the attributes to be productive for decades,” Edwards says.
Horne points out that by buying a developed site with an existing power plant, Zanskar offset a big cost sink compared to starting from scratch. Another company had also already drilled a deep exploratory well at Lightning Dock in 2022, which, Horne says, gave Zanskar valuable geologic information to help with its modeling. (Ben Brenner, Zanskar’s director of federal affairs, tells WIRED in an email that data from the other well was incorporated into its modeling, but the company “never saw that particular well’s data as somehow definitive or essential.”)
“They haven’t discovered anything revolutionary,” Horne says of the techniques used at the Lightning Dock site. Still, he says that the statistics provided by Zanskar “hold up” to make it one of the wells with the highest flow rates — a measure of productivity — in the U.S. While at least one other facility in Nevada has wells with higher flow rates than Lightning Dock, Brenner says that those wells are “much colder” than Lightning Dock’s, which will make them less productive over the long run.
“It’s a really good well,” Horne says.
This has been a big year for the geothermal industry, particularly for companies that are using new technologies to tap the earth’s heat. Enhanced geothermal company Fervo Energy went public in May, raising $2.2 billion, although there has been a pullback in stock prices since its debut. Venture capital investors — who typically have veered away from geothermal — have also been putting money into the industry, says Stephanie Díaz, a senior associate at BloombergNEF. Venture capital and private equity investment in geothermal startups has hit $432 million through the first six months of this year, meaning that “2026 is shaping up to be the best-funded year for geothermal startups since BNEF began tracking in 2022,” Díaz says. That total includes Zanskar, which raised $115 million in a funding round in January, one of the largest raises in the sector this year.
Unlike what Zanskar is doing, enhanced geothermal uses a technique similar to fracking and requires hot rocks rather than hot water, opening up the possibility of drilling wells in areas that have been off limits. Because of this, companies like Fervo have been the focus of much of the recent investment and attention in the industry, Díaz says.
But Díaz says data-driven approaches like Zanskar’s can help de-risk traditional geothermal development. Lightning Dock, Díaz says, is also a good example of finding “adjacent areas to work that have worked historically.”
Decades-old Ormat is seizing geothermal’s superhot moment by branching into next-generation technology and expanding its traditional plants.
Over two decades ago, Ormat Technologies began a big experiment on a swath of rugged land near the Hot Springs Mountains in western Nevada.
The geothermal company was already producing electricity there, using the heat found naturally in hot water and steam trapped beneath the earth’s surface. But in 2002, Ormat and its research partners decided to deploy an emerging approach to boost output at the Desert Peak power plant. They’d drill deep into hot, dry rocks and pump them full of liquids, creating geothermal resources where nature hadn’t provided.
In 2013, the 1.7-megawatt demonstration project connected to the grid, becoming the nation’s first “enhanced geothermal system” to hit that milestone. At the time, though, the industry still lacked the technology innovations and favorable economics needed to support a full-throttle scale-up of enhanced systems, which the U.S. has studied for over 50 years.
Today, that calculus is shifting.
The idea that companies can harvest energy without tapping hot springs or geysers is driving a surge of interest — and billions of dollars of investment — in America’s once-stagnant geothermal industry.
Startups are racing to build next-generation facilities that can supply clean, around-the-clock power to data centers and states with decarbonization mandates. Technology breakthroughs are making it cheaper and faster to develop new wells. Policymakers of all political stripes are working to uphold federal geothermal tax credits and to ease permitting and regulatory challenges that can slow down projects.
And Ormat itself is getting back into the enhanced geothermal game, having focused mainly on its conventional projects in the intervening years.
Ormat, whose headquarters is in Reno, Nevada, is a leading developer and operator of geothermal power plants. The 61-year-old firm owns dozens of clean energy projects globally, including over 1 gigawatt of geothermal capacity, mainly in the western United States. Those facilities all tap into hydrothermal resources, the naturally occurring reservoirs that are typically found near the boundaries of major tectonic plates.
It’s now planning to build a new enhanced pilot project at Desert Peak, together with the oilfield services giant SLB, as the companies work to commercialize the approach.
“We’re going back to where we started the journey, and it feels a bit like closing the loop,” said Daniel Moelk, Ormat’s executive vice president for subsurface, wells, and next-generation geothermal. The companies are gathering new geophysical data at the site to determine where to drill wells, he added, though he couldn’t say when the project might be completed.
Ormat is separately developing an enhanced pilot system with the Houston-based company Sage Geosystems, which will deploy its next-generation technology at one of Ormat’s existing sites in Nevada or Utah. Ormat invested $25 million in Sage in January as part of the startup’s $97 million Series B funding round.
“Opportunities are expanding with new emerging technologies, and we want to be part of it,” Moelk said.
That’s also true for Ormat’s manufacturing operation in Yavne, Israel, where the company was founded. In June, Ormat unveiled designs for power plant equipment that can operate in the higher-temperature and higher-capacity conditions that next-generation systems are expected to achieve. The 100-megawatt power-generation unit is meant to make any developer’s geothermal projects cheaper and more efficient overall by unlocking economies of scale, Ormat said.
Still, the new design reflects the world that the geothermal industry is building toward, not where it stands today.
The United States has just about 4 gigawatts of geothermal power capacity divided among 99 plants, over half of which are in California. Together, they supply a mere 0.4% of the nation’s total electricity generation. But the U.S. Department of Energy predicts geothermal could provide 90 gigawatts of always-on, carbon-free power to America’s grid by 2050 if the industry can significantly accelerate its ongoing cost reductions and enable large-scale enhanced systems to catch on.
Ormat and a growing crop of newcomers are being propelled toward that reality by the soaring energy demand from data centers. In California, Oregon, Washington, and other states, clean-power needs are rising as well, as buildings, factories, and vehicles transition away from fossil fuels and toward electrified solutions.
“There’s growth across the industry driven by the fact that power prices are higher than they’ve ever been,” said Michael O’Connor, director of the Mountain West Geothermal Consortium, a new initiative to accelerate geothermal deployment in the Mountain States.
He noted that, in some markets, developers and utilities are striking long-term agreements for “firm,” or on-demand, power that are two to three times higher than they were in 2021, incentivizing more geothermal companies to pursue new projects.
The recent momentum is also thanks to the geothermal drilling advances that have emerged in the years since Ormat launched its first Desert Peak pilot.
Fervo Energy, for example, uses horizontal drilling techniques and fiber-optic sensing tools from the oil and gas industry to fracture hard, impermeable rocks and create artificial reservoirs. In 2023, the Houston-based startup turned on a first-of-a-kind enhanced geothermal system in Nevada. The 3.5-MW project sends electricity to the grid to help satisfy some of Google’s power appetite in the state.
Simultaneously, Fervo has been developing its 500-MW Cape Station project in Utah, which is set to become the world’s largest enhanced geothermal system when fully completed, potentially by 2028. While developing the project, the company said it reduced drilling times by about 75% and slashed per-foot drilling costs by about 70% between 2022 and 2025, marking a significant achievement for the nascent industry.
To fund its scale-up, the nine-year-old company in May became the first next-generation geothermal firm to go public, netting about $1.9 billion. (Ormat, which hit almost $1 billion in revenue in 2025, joined the stock exchange back in 2004.)
The startup Quaise Energy recently credited Fervo’s IPO with giving it a fundraising boost. Quaise raised $134 million this month to advance its first superhot geothermal project near an Oregon volcano. The company XGS Energy, which is pursuing a novel closed-loop technology, has been hiring veteran finance executives as it evaluates going public itself.
“Fervo definitely led the way, in terms of showing a path to the public equity markets for pre-revenue development companies like us,” said Richard Chong, who joined XGS in May as the company’s chief financial officer. Chong previously worked at Calpine, where he helped secure over $2 billion in financing to expand The Geysers, a decades-old geothermal development in Sonoma County, California.
The enthusiasm for cutting-edge technologies is spilling over into the conventional geothermal market, which has grown at a tortoise-like pace in recent years.
Hydrothermal resources are generally easier and less expensive to tap, since they don’t require fracking deep underground. But scientists and companies have explored only a tiny fraction of America’s subsurface geothermal resources. For any developer, it can cost tens of millions of dollars just to do the preliminary drilling to locate those resources — and to confirm that they’re good enough to produce electricity for decades. Such an undertaking was harder to justify in the years when U.S. electricity demand was essentially flat.
Now, “the market conditions around electricity demand have driven a lot of developers to rethink their portfolios and their assumptions on if they should develop,” O’Connor said.
In June, Ormat received expedited approval for environmental permits from the Bureau of Land Management to begin developing the new 60-MW Pearl Geothermal Development Project on public lands in Esmeralda County, Nevada. The approval stems from the Trump administration’s 2025 emergency permitting procedures to accelerate energy development on federally managed lands — on which over 90% of identified U.S. geothermal resources are located.
The bureau has also awarded permits for Ormat’s other initiatives in Nevada, including the 30-MW Crescent Valley plant and the earlier-stage Diamond Flat and Pinto project sites, where the company will study and test for geothermal resources. All told, Ormat holds leases to some 400,000 acres across six states.
“Ormat has gone from a company that was focused on operating the assets it currently has to thinking about expanding, and they are not alone,” O’Connor said.
The startup Zanskar raised $40 million in April to build its first conventional geothermal plant. The company combines artificial intelligence with boots-on-the-ground surveying to identify hidden natural resources in the U.S. West. Last year, Zanskar said it had identified the first “blind” geothermal system — meaning it doesn’t have vents, geysers, or other visible features, or any historical records — for commercial use in more than 30 years.
“They’re taking advantage of the higher demand for the lower-hanging fruit,” O’Connor said of Zanskar’s conventional geothermal play. The startup and other firms “are either acting on leases that people have held for a while and not had motivation to use, or exploring for the first time.”
Ormat, for its part, will continue to rely on its “robust hydrothermal business” while also piloting the next-generation technologies that could enable geothermal to leave behind its niche position in the global energy market, Ormat’s Moelk said.
“Right now, we have what the world needs: renewable, local, baseload energy,” he said. “After 20 years in geothermal, I’ve never seen such a big opportunity.”
The startup closed the first tranche of Series B funding as it pushes to build a novel geothermal plant in Oregon and advance its rock-melting drilling tech.
Startup Quaise Energy has raised $134 million to advance its first superhot geothermal power plant in central Oregon.
On Tuesday, the Houston-based company announced the first tranche of its Series B financing round, which brings the firm’s total funding to $230 million. Quaise is developing a 50-megawatt plant near the Newberry Volcano that will use novel rock-melting technology to tap into significantly hotter geothermal resources than conventional plants can.
The fundraise comes as Quaise prepares to start drilling its first test well later this month for the Oregon plant, called Project Obsidian, which is slated to come online by 2030.
“Our ambition is to power civilization with Earth’s most compelling energy source,” Carlos Araque, CEO and president of Quaise, said in a statement. “This round takes us from field-proven technology to first commercial revenues.”
The Series B was led by Prelude Ventures, which backs early-stage climatetech firms, and included strategic investments from two major Japanese energy players: the power generation company JERA and the petroleum refiner Idemitsu Kosan. Japan is increasingly investing in cutting-edge geothermal projects to help meet the land-constrained nation’s need for clean, around-the-clock power — and to harness the potential of its 111 active volcanoes.
In the United States, the geothermal industry is experiencing a renaissance as new technologies make the energy resource viable in a wider range of geographies. Soaring power demand from data centers is fueling much of that interest, as are state renewable-energy targets and the electrification of vehicles and buildings.
In May, the startup Fervo Energy became the first next-generation geothermal firm to go public, netting about $1.9 billion. The company focuses on enhanced geothermal systems, an emerging approach that involves fracturing rocks and pumping them full of water to create artificial reservoirs. Fervo is developing a large-scale enhanced geothermal plant in Utah that is set to start sending power to the grid later this year.
At Quaise’s Project Obsidian site, the company will initially use standard drilling tools to build an enhanced system. But as early as next year, Quaise aims to deploy its millimeter-wave drilling techniques to access even hotter and deeper geothermal resources.
The technology uses high-frequency beams to melt and vaporize rocks at depths and temperatures that are too difficult or costly for conventional tools to access. Quaise aims to tap rocks at 300 to 500 degrees Celsius (572 to 932 degrees Fahrenheit) to heat fluids that drive steam turbines on the surface. The hotter the fluid, the more efficient and powerful the system, which means projects can derive more energy from a smaller number of wells.
Quaise isn’t alone in chasing the promise of superhot geothermal. The startup Mazama Energy is developing its own pilot project at the Newberry Volcano, where it says it can reach temperatures of over 330°C. And major research projects are moving forward in Iceland, Japan, and New Zealand.
As Quaise develops its Oregon plant, the company is continuously demonstrating its unique approach at its field site in central Texas. Quaise said it drilled through more than 100 meters (330 feet) of granite there last year and is now approaching 1 kilometer of depth, which would represent a milestone for its drilling technology.
Meanwhile, Quaise is looking to secure another $100 million in grants and debt for Project Obsidian, on top of the Series B funding. The firm has already inked a power-purchase agreement for the initial 50 MW with an undisclosed customer, and it’s working to sign deals for an additional 200 MW in future capacity.
“We have backed Quaise since the beginning because we believed accessing superhot rock would unlock geothermal energy at a scale the world has never seen,” Mark Cupta, managing director at Prelude Ventures, said in a press release. “What the team has achieved in the field and what they are now building at Project Obsidian validates that conviction.”
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