Geothermal company Vervo launches over Death Valley

Enhanced geothermal power has had a promising few years, driven by data centers’ insatiable demand for electricity. Fervo Energy struck deals with those tailwinds, suggesting, but not guaranteeing, that the company was passing through a “valley of death.”

This term describes when a startup has proven its technological capabilities, but has not raised enough money to show that it can operate profitably on a large scale. Many startups fail past this point and end up dying.

Exactly when a startup will exit Death Valley is a matter of debate. One measure is whether it can raise venture financing debt not tied to the startup itself. Fervo has raised debt before, but today it announced a $421 million loan that is considered “non-recourse,” meaning the loan liability is tied to the specific project. A default will sink the project, not necessarily the company.

This does not mean that the project is in any danger. The funding is for Vervo’s Cape Station power station in Utah, which will begin operation this year before ramping up to 100 megawatts in early 2027 and eventually 500 megawatts when its construction is complete. All the power has been bought at this point.

Vervo noted that non-recourse financing typically does not apply to first-of-its-kind facilities, which is Cape Station — sort of. Although the site is not fully developed, Fervo has data on more than a dozen wells it has drilled there. This undoubtedly helped the company seal the deal.