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The new funding comes as tax credits for geothermal hang in the balance.
The good news is pouring in for the next-generation geothermal developer Fervo Energy. On Tuesday the company reported that it was able to drill its deepest and hottest geothermal well to date in a mere 16 days. Now on Wednesday, the company is announcing an additional $206 million in financing for its Cape Station project in Utah.
With this latest tranche of funding, the firm’s 500-megawatt development in rural Beaver County is on track to deliver 24/7 clean power to the grid beginning in 2026, reaching full operation in 2028. The development is shaping up to be an all-too-rare phenomenon: A first-of-a-kind clean energy project that has remained on track to hit its deadlines while securing the trust of institutional investors, who are often wary of betting on novel infrastructure projects.
The bulk of this latest financing comes from the Bill Gates-backed Breakthrough Energy Catalyst program, which provided $100 million in project-level equity funding. The energy and commodity trading company Mercuria provided $60 million in corporate loans, increasing its existing fixed-term loan from $40 million to $100 million. An additional $45.6 million in short-term debt financing came from XRL-ALC, an affiliate of X-Caliber Rural Capital, which provides loans to infrastructure projects in rural areas. That comes on top of a previous $100 million loan from the firm.
The plan is for Cape Station to deliver 100 megawatts of grid power in 2026, with the additional 400 megawatts by 2028. The facility has the necessary permitting to expand production to two gigawatts — twice the size of a standard nuclear reactor. And on Monday, the company announced that an independent report from the consulting firm DeGolyer & MacNaughton confirms that the project could expand further still — eventually supporting over 5 gigawatts of clean power at depths of up to 13,000 feet. The company’s latest drilling results, which reached 15,765 feet at 520 degrees Fahrenheit, could push the project’s potential power output even higher.
Traditional geothermal wells normally max out at around 10,000 feet, and must be built in locations where a lucky confluence of geological features come together: high temperatures, porous rock, and naturally occurring water or steam. But because Fervo can drill thousands of feet deeper, it’s able to access hot rocks in locations that weren’t previously suitable for geothermal development, pumping high-pressure water down into the wells to fracture rocks and thus create its own geothermal reservoirs.
The primary customer for Fervo’s Cape Station project is Southern California Edison, which signed a 320-megawatt power purchase agreement with the company last year, advertised as the largest geothermal PPA ever. Shell was also announced as a customer this year. Fervo is already providing 3.5 megawatts of power to Google via a pilot project in Nevada, which it’s seeking to expand, entering into a 115 megawatt PPA with NV Energy and the tech giant to further build out production at this location.
Fervo’s latest funding comes on top of last February’s $244 million Series D round led by Devon Energy, as well as an additional $255 million in corporate equity and debt financing that it announced last December. On top of investments from well known climate tech venture firms such as Breakthrough Energy Ventures and Galvanize Climate Solutions, the company has secured institutional investment from Liberty Mutual as well as public pension funds such as the California State Teachers’ Retirement System and the Canada Pension Plan Investment Board.
Fervo, like all clean energy startups, also stands to benefit greatly from the Inflation Reduction Act’s clean energy tax credits, which are now in jeopardy as President Trump’s One Big, Beautiful Bill works its way through the Senate. While Secretary of Energy Chris Wright has traditionally been a booster of geothermal energy and is advocating to keep tax incentives for the technology in place through 2031, the bill as it stands would essentially erase incentives for all geothermal projects that start construction more than 60 days after the bill’s passage.
Fervo broke ground on Cape Station in 2023, so that project will make the cut. For future Fervo developments, it’s much less clear. But for now, the company seems to be flush with cash and potential in a climate tech world awash in ill omens.
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The grant from Washington State will fund a facility where all kinds of fusion labs can run tests of their own.
Flash back to four summers ago, when aspiring fusion pioneers Robin Langtry and Brian Riordan were stuck designing rockets at Blue Origin, Amazon CEO Jeff Bezos’ aerospace and space tourism company. More specifically, they were ruminating on how their engine’s large size was preventing the team from iterating quickly.
“If your rocket engine is 12 feet tall, there’s like, three places in the country where you can get castings,” Langtry told me. One simple design change could mean another eight to nine months before the redesigned part came in. Smaller designs, they hypothesized, would lead to faster development cycles.
They decided to quit their jobs in June of 2021 and put their thesis to the test with what would become Avalanche Energy, a fusion startup aiming to commercialize tabletop-sized reactors via magneto-electrostatic fusion, a nascent technology that’s far less well-understood than even still-experimental large-scale fusion machines like tokamaks and stellarators. Today, though, Washington State is giving this emergent tech a big vote of confidence by announcing one of the largest government-led fusion investments to date: A $10 million grant for Avalanche to build out a commercial-scale test facility for fusion technologies.
This facility, called FusionWERX, is where Avalanche will test its own prototypes with the goal of achieving scientific breakeven — the point at which a fusion reaction produces more energy than the energy used to initiate the reaction. But as Langtry, the company’s CEO, explained to me, it will also be a hub where other fusion companies, universities, and national labs can come test their own proprietary technologies while keeping their intellectual property intact.
“It’s almost like a commercial wind tunnel test facility, but for fusion,” Langtry told me. For example, Avalanche’s early-stage reactors will produce neutrons that researchers can use to test novel materials and ensure they can withstand the extreme conditions found inside fusion reactors. Organizations can also test their own neutron capture methods, often referred to as "neutron blankets,” which are critical for producing the tritium fuel that’s needed for a sustained fusion reaction.
Thus, Avalanche will earn revenue from the groups using the FusionWERX facility well before it makes any money from commercial energy production. The startup also plans to bring in additional income by making and selling radioisotopes — atoms that emit radiation as they decay — for medical and energy applications such as diagnostic imaging, radiation therapy, and nuclear batteries that can generate electricity in space or remote areas like the deep ocean.
Langtry told me these additional opportunities make Avalanche attractive to a wider variety of investors than simply climate tech venture capitalists interested in fusion’s potential for utility-scale power generation. “There’s much bigger sources of capital if you can build a true business that commercializes this technology and generates revenue and scales it,” Langtry told me. “That’s really what we’re about.”
Prior to the $10 million grant, Avalanche had raised a total of $50 million from investors such as Lowercarbon Capital, Peter Thiel’s Founders Fund, and Toyota Ventures. And while the startup’s lineup of near-term use cases sets it apart, Avalanche too is ultimately aiming to produce commercially-relevant energy, with an eye towards replacing diesel generators for data center backup power or for use in remote communities or military outposts.
Avalanche’s chosen method, magneto-electrostatic fusion, uses ions that are injected into the reactor’s chamber and confined with extremely high voltage. This strong electric field accelerates the ions towards the center of the reactor, where they collide to produce a fusion reaction. Magnets surrounding the chamber also work to trap electrons alongside the ions, increasing the density of the plasma to achieve high fusion rates.
Avalanche announced today that it has successfully operated its machine at 300 kilovolts for multiple hours. When adjusted for size, this equates to 6 megavolts per meter, twice the voltage density of lightning. To reach breakeven, the company will need to operate its machine at about 700 kilovolts, which Langtry told me can be done by doubling the size of the reactor’s radius from 6 centimeters to 12 centimeters. Avalanche said in a follow up email that the company is waiting to gain operational experience at its current scale before raising the capital it will take to build a larger reactor.
The magneto-electrostatic method is well-suited to micro reactors as it doesn’t rely on giant magnets or lasers to create the fusion reaction. Ultimately, Avalanche plans to produce modular reactors from 5 kilowatts to 1 megawatt in size — enough to power just a couple homes at the least, and about 1,000 homes at the most.
But powering homes isn’t what Avalanche will actually do. Before energy dominance was even in vogue, the company was already focused on military applications for its tech. It received a contract from the Department of Defense’s Defense Innovation Unit in 2022 to develop technology for a nuclear-powered spacecraft by 2027. Avalanche did not elaborate on what its initial prototype might look like or be used for, only writing in a follow-up email that it’s “in active discussions about next steps for maturing this technology with DOD.”
“We were sort of contrarian, in that we always thought our path to commercial operations was through DOD and space, whereas most of the fusion companies were raising on climate and clean energy and building massive clean energy power plants,” Langtry told me. He cited support from Thiel, perhaps Silicon Valley’s most influential conservative voice, as helping influence the company’s direction.
At this moment, Langtry told me, there’s excitement around using Avalanche’s tech to make President Trump’s vision of a so-called “Golden Dome” missile defense system a reality. This would involve using satellites — theoretically powered by Avalanche — that could track and shoot down ballistic missiles fired at the U.S. “Right now, with solar, [satellites] could probably only take one shot during an engagement. But if you had 100 kilowatts or a megawatt, you could shoot continuously, and that system would be a lot more capable,” Langtry explained to me.
Depending on your feelings about nuclear war, this vision may bring more anxiety than comfort. It’s also a far cry from the more typical — and endlessly more idyllic — narrative of limitless clean energy and unprecedented prosperity that I’m used to hearing fusion enthusiasts promote. But such is the moment. And if the path to commercial fusion ends up running through a satellite-powered missile defense system, it probably won’t be the weirdest clean energy story of the Trump era.
On House drama, the good and bad of solar, and earnings season
Current conditions: Djibouti, eastern Ethiopia, and southern Eritrea are roasting in higher-than-average triple-digit temperatures • Argentina’s brutal cold snap is back after a brief pause, threatening gas infrastructure and freezing crops • Millions of Americans are facing a new round of heat waves from the upper Midwest down to the Gulf.
The Environmental Protection Agency is days away from proposing a rule to rescind the endangerment finding, the 2009 decision that established the federal government’s legal right to regulate greenhouse gas emissions under the Clean Air Act. That’s according to a scoop late last night in The New York Times, confirmed hours later by The Washington Post. The finding came in response to the 2007 Supreme Court case Massachusetts v. EPA, in which the nation’s highest court ruled that the danger planet-heating emissions posed to human health made them subject to limits under the same law that restricts other forms of air pollution. The endangerment finding was previously considered so untouchable that the first Trump administration tried to work within the parameters of the rule rather than eliminate it outright.
Revoking the endangerment finding would undo all federal greenhouse gas rules on automobiles, factories, and power plants, fundamentally ending any national policy designed to curb emissions. The proposal will almost certainly face political challenges. It’s unclear how the Supreme Court — now overwhelmingly conservative compared to the bench of 18 years ago — would decide the case today. One “highly unusual” wrinkle in the story: E&E News reports that EPA has been absent from recent meetings the White House has held with industry and environmental groups on the endangerment finding, which “raises questions about who within the Trump administration is leading the effort.”
House Speaker Mike Johnson closed up shop early this week, sending Congress’ lower chamber home until September. In so doing, the Republican leader hoped to halt a push to investigate President Donald Trump’s connections to the disgraced financier and accused sex trafficker Jeffrey Epstein.
The move effectively pauses negotiations over energy policy, too. Both chambers of Congress are in the process of setting their budget priorities for the coming year, and President Trump has called for major cuts to programs overseeing clean energy development and deployment. Talks are also set to begin soon over the reauthorization of the Energy Act of 2020, the programs of which largely expire this year, and the Infrastructure Investment and Jobs Act, which is scheduled to expire next year. The House going into recess early will shift attention to the Senate, where eyes will be on Republican moderates such as Senators Susan Collins of Maine and Lisa Murkowski of Alaska, both of whom defended clean energy programs in negotiations over the One Big Beautiful Bill.
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Even before Trump took office, the U.S. electric vehicle revolution appeared to be stalling. Now the elimination of the main tax credit to encourage EV sales threatens to zap any remaining momentum. So far at least, that hasn’t halted GM’s EV sales. In its latest quarterly earnings announced Tuesday, the Detroit auto giant reported its EV sales had doubled over the previous three months, thanks in part to the launch of the battery-powered version of the Chevrolet Equinox, an SUV with a starting price of $35,000. GM now claims 16% of the American EV market, placing the company second behind Tesla, which reports its earnings today.
With earnings season is upon us, and dramatic shifts in federal policy and geopolitics promising some notable results, I went through all the companies reporting financial results to Wall Street this week and rounded up the big ones:
On Wednesday:
On Thursday:
On Friday:
The consultancy McKinsey is out with a new report on the effect of varying degrees of tariffs on the energy transition. The results are mixed. The good news: Solar capacity could more than double in the U.S. and the European Union by 2035 under any tariff scenario. The bad news: Strict tariffs could mean 9% less solar installed in the U.S. by 2035, and 7% less in the European Union.
In reality, the outcomes could be even worse. The report did not take into account how Republicans’ One Big Beautiful Bill pared down tax credits, or how the Trump administration may further limit access to federal incentives through the president’s executive order directing the Internal Revenue Service to restrict eligibility for wind and solar projects.
The Trump administration’s attacks on solar power aren’t changing the favorable economics for photovoltaics just yet. Facebook-owner Meta just inked a deal with energy developer Enbridge to build a 600-megawatt solar farm in Texas to power its data centers. Construction is already underway on the nearly $1 billion facility near San Antonio.
A fire in Oregon. FireSat
A new satellite project resulting from a collaboration between Google, the satellite company Muon Space, and the nonprofit Earth Fire Alliance can detect wildfires as small as 5 meters squared in size, giving firefighters a new tool to identify and potentially contain blazes before they erupt into conflagrations. The companies released the first images from the project this morning.
A fire in Ontario, Canada. FireSat
Jesse teaches Rob all about where solar and wind energy come from.
The two fastest-growing sources of electricity generation in the world represent a radical break with the energy technologies that came before them. That’s not just because their fuels are the wind and the sun.
This is our third episode of Shift Key Summer School, a series of “lecture conversations” about the basics of energy, electricity, and the power grid. This week, we dive into the history and mechanics of wind turbines and solar panels, the two lynchpin technologies of the energy transition. What do solar panels have in common with semiconductors? Why did it take so long for them to achieve scale? And what’s an inverter and why is it so important for the grid of the future?
Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Jesse Jenkins: And so then the other thing, of course, that helps is putting it at a place that’s sunnier, right? In addition to pointing it at the sun, you need to have the sun in the first place. If you go from a cloudy northern latitude to a sunny southern latitude, you’re going to get more production. That variation isn’t as large as you might think, though, from the best site in, say, Arizona and New Mexico to the worst 10th percentile sites in northern Maine or Portland, Oregon, where I grew up, where it’s very cloudy. That difference in solar resource potential is only about a factor of two. So I get about twice as much solar output from an ideally placed panel in Arizona as I do in Portland, Oregon, or Portland, Maine. That’s a lot, but we can find much better resources much closer to Portland, Maine, and Portland, Oregon, right?
And so this is why it doesn’t really make sense to build a giant solar farm in Arizona and then send all that power everywhere else in the country — because the transmission lines are so expensive and the efficiency gain is not that huge, it doesn’t make sense to send power that far away. It might make sense to put my solar panel on the east side of the Cascade Mountains and send them to Portland, Oregon, but not to go all the way to Arizona. Because the variation in solar potential is much more gradual across different locations and doesn’t span quite as much of a range as wind power, which we can talk about.
Robinson Meyer: I was going to say, this idea that solar only varies by, it sounds like, about 100% in its efficiency.
Jenkins: Or capacity factor.
Meyer: Yeah. I suspect, in fact, from previous conversations that this is going to be an important tool that comes back later — this idea that solar only really varies by 100% in its resource potential, that Arizona solar is only twice as good as Maine solar, is going to be really important after we talk about wind.
Mentioned:
How Solar Energy Became Cheap, by Gregory F. Nemet
More on what wind energy has to do with Star Trek
This episode of Shift Key is sponsored by …
Accelerate your clean energy career with Yale’s online certificate programs. Gain real-world skills, build strong networks, and keep working while you learn. Explore the year-long Financing and Deploying Clean Energy program or the 5-month Clean and Equitable Energy Development program. Learn more here.
Music for Shift Key is by Adam Kromelow.