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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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In a Heatmap exclusive interview, CEO Alfred Johnson discusses the clean energy financing marketplace’s latest big move.
Crux is expanding again.
Until earlier this year, the clean energy finance startup was a digital marketplace exclusively for buying and selling tax credits unlocked by the Inflation Reduction Act. But in March, as Republicans in Congress briefly threatened to eliminate tax credit transferability, the company moved into debt financing, a market Crux CEO Alfred Johnson told me later on is more than seven times bigger.
Now, in its quest to become a one-stop shop for efficient project financing, Crux has told Heatmap that it’s growing once more into the tax and preferred equity markets, two additional funding avenues for clean energy projects that could certainly stand to be organized, standardized, and digitized as they grow in importance. “The tax equity market was a $20 billion market before the IRA, and is now a $32 billion to $35 billion market,” Johnson told me, citing numbers from the company’s forthcoming mid-year market intelligence report. That’s a 10% to 20% increase over last year.
Johnson said that Crux’s platform will ameliorate some of the complexity and high costs that have historically made tax equity financing so difficult to access. In these deals, clean energy developers partner with tax equity investors, typically banks, which provide them with cash in exchange for an equity stake in their project — and the associated tax benefits.
In one way, it’s a funny move for Crux. Before the IRA passed, tax equity was essentially the only way for project developers with low tax burdens to monetize their credits, and transferability itself was billed as a solution to these kludgy deals. But even though the transferable tax credit marketplace has proven to be a valuable option for many developers, there are reasons why some still prefer tax equity financing.
For one, tax equity partnerships can actually be the cheapest form of project financing for large developers overall. That’s in large part because tax equity is such a scarce but critical form of capital that if a developer can secure it, they can often then raise other forms of funding, such as bridge loans, more easily. Tax equity deals also serve to establish the fair market value of a project, which thus ensures that project developers can maximize the value of their tax benefits.
Lastly, Johnson explained that tax equity financing allows project developers to capture the value of a tax benefit known as “accelerated depreciation,” in which a large percent of a project’s asset costs can be deducted in the first few years of operation as opposed to evenly over the project’s useful life. Unlike with tax credit transferability, there’s no direct way for developers to monetize accelerated depreciation benefits other than via tax equity partnerships.
These types of partnerships will, in all likelihood, still only make sense for well-capitalized projects deploying proven technologies such as solar, wind, and storage. More novel tech such as advanced nuclear, long-duration storage, or next-generation geothermal will probably continue to rely primarily on the tax credit transfer market. But as Johnson told me, “for the developers that have really strong financials, have large projects, are able to secure tax equity, that is often preferred as a way of monetizing their credits to selling directly in the transfer market.”
At the same time, the markets for tax equity and credits are increasingly converging. That’s because it’s become more common for tax equity investors — or the partnership itself — to sell the credits they now hold into the transfer market, Johnson told me. This provides the investor or partnership with immediate liquidity, which can then be invested into other projects. This type of hybrid structure has thus far made up over 60% of tax equity commitments in 2025, according to the company’s mid-year market report.
Crux is also expanding into preferred equity, a type of financing that allows project developers to raise additional capital closer to the start of commercial operations. Then, once operation commences, preferred equity investors typically receive fixed, priority returns before any distributions are made to common equity holders. This structure reduces risks for preferred investors, giving them a more predictable income stream. It’s a smaller market than tax equity financing, but still an important piece of the puzzle, Johnson said.
And then there’s — what else? — artificial intelligence.
As developers and investors that have used Crux’s tax credit marketplace “graduate” into new, often more complex forms of project financing such as tax and preferred equity, Johnson told me there are “huge opportunities” to make these deals more efficient. As he sees it, this will involve integrating the company’s current workflow management and documentation tools with AI language models designed to streamline document organization and synthesis, along with other administrative processes. The idea is to save time “without any deterioration in the quality of the underwriting,” Johnson said.
These latest expansionary moves will be far from Crux’s last, Johnson told me. There’s all sorts of equity financing Crux could theoretically help to facilitate, along with transactions between equipment manufacturers and project developers or project developers and utilities.
It’s all on the table, Johnson said. “I think we will continue to find that this mix of liquidity, efficiency, and intelligence makes sense in lots of different categories.”
On PJM’s inflexible giants, another wind attack, and a Sino-Russia mega deal
Current conditions: In the Pacific, Tropical Storm Kiko has strengthened into a hurricane on its way toward Hawaii • Unusually cool air in the Upper Midwest and Appalachians could drop temperatures to as much as 20 degrees Fahrenheit below average • Nearly one million people are displaced in Pakistan’s most populous state as Punjab suffers the biggest flood in its history.
The Trump administration’s plan to kill a $20 billion clean energy financing program got the green light from a federal appeals court on Tuesday. The Greenhouse Gas Reduction Fund, housed under the Environmental Protection Agency, was designed to provide low-cost loans for solar installations, building efficiency upgrades, and other local efforts to reduce planet-heating emissions. The three-judge panel overturned a lower court’s injunction temporarily requiring the EPA to resume payments, ruling that most of the plaintiffs’ claims were contract disputes and belonged in the Court of Federal Claims. If the case now moves to that court, Heatmap’s Emily Pontecorvo wrote, “the plaintiffs would only be able to sue for damages and any possibility of reinstating the grants would be gone.”
Before leaving office, the Biden-era EPA finalized awards to eight nonprofits that would “create a national financing network for clean energy and climate solutions across the country.” The move was meant to insulate the program from cuts, but it stirred the new administration’s ire. The Trump EPA called the move a scam to give taxpayer-funded slush funds to nonprofits stacked with former Biden administration appointees. The recipients could still appeal the decision, which experts told Emily could still have significant ramifications. Watch this space.
The country’s largest electrical grid, the PJM Interconnection, put out a conceptual proposal in August for a plan to ask large electricity users such as data centers to voluntarily reduce their power consumption when there’s a shortage of electrons on the grid — and potentially require them to do so if too few step up. The plan is largely in line with what the Data Center Coalition, a trade association representing server companies, recently backed in a legal filing in North Carolina, as this newsletter previously reported. Yet big tech companies balked at the proposal, according to comments submitted in response. Microsoft warned that imposing curtailment undermines investor confidence. Amazon said targeting large power users to cut back on demand is discriminatory. Talen Energy, an independent power producer, said the 13-state-spanning PJM has no authority to make such a rule, and that individual state law governs load. The Data Center Coalition itself criticized the rule’s assumption that big power users have on-site back-up generation as overly broad and not reflective of reality.
The idea itself derives from an influential paper released by Duke University researchers in February that found the U.S. could add gigawatts’ worth of additional demand from new data centers without building out an equivalent amount of power plants if those facilities could curtail electricity usage when demand was particularly high. Heatmap’s Matthew Zeitlin described the strategy as “one weird trick for getting more data centers on the grid,” boiling down the approach simply as: “Just turn them off sometimes.”
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The Trump administration said it would reconsider the permit for SouthCoast Wind, a Massachusetts offshore wind farm approved last year by the Biden administration, according to legal filings seen by Reuters on Tuesday. In a motion filed to the U.S. District Court for the District of Columbia on Friday, lawyers at the Department of Justice said the Department of the Interior would review the project’s construction and operations plan.
The move came a week after Trump yanked back approvals for the nearly-complete Revolution Wind project off Rhode Island’s coast. It’s just the latest escalation in what Heatmap’s Jael Holzman called “Trump’s total war on wind.” As I reported yesterday in this newsletter, the Department of Transportation was the most recent agency to join the effort this week, axing $679 million in funding for infrastructure to support offshore wind development. But the Interior Department has led the charge with a witch hunt against policies that favor wind power, the de-designation of millions of acres of federal waters for offshore turbine construction, and a new investigation into bird deaths near windmills. The Department of Commerce tapped in last month by teeing up future tariffs with its own probe into whether imported turbine components pose a national security threat. The assault is prompting pushback. On Monday, the Democratic governors of five Northeastern states called on Trump to “uphold all offshore wind permits already granted.”
The BRICS brothers. Suo Takekuma - Pool/Getty Images
In spite of Trump administration pressure aimed at convincing countries around the world to reject Russian oil, the Kremlin netted an energy deal with the world’s second-most populous nation on Tuesday in a sign of what Russian President Vladimir Putin called an “unprecedentedly high level” of good relations between Moscow and Beijing. Under the new agreement, China will buy Russian gas through a new pipeline from Siberia. Once complete, the Power of Siberia 2 pipeline will carry 50 billion cubic meters of gas through Mongolia to northern China every year.
The deal came at the tail end of a summit in China between Putin, Chinese President Xi Jinping, and Indian Prime Minister Narendra Modi. The trio of hardline leaders, who represent the three biggest economies in the world, came together for a photo depicting a friendly three-way handshake widely interpreted as a show of unity and defiance against Washington’s attempts to impose its will through economic sanctions.
The Tennessee Valley Authority is broadening its effort to remake itself as the testing ground for new American small modular reactors. On Tuesday, the federally-owned utility announced plans to buy 6 gigawatts of reactors from NuScale Power, the first and only SMR developer whose design has won approval from the Nuclear Regulatory Commission. Shares of NuScale — which has struggled since the high-profile failure of what was supposed to be the nation’s debut SMR power plant in Utah two years ago — surged nearly 8%.
The TVA had already planned to build the first U.S. units of GE Vernova-Hitachi Nuclear Energy’s 300-megawatt reactors, and last month became the country’s first utility to sign a power purchase agreement with a fourth-generation reactor developer, the Google-backed Kairos Power. The deals come amid what Heatmap’s Katie Brigham called a “nuclear power dealmaking boom.” On Tuesday an industrial standard-setting group that includes Exxon Mobil, Chevron, Shell, Rio Tinto, and IBM launched a new consortium to streamline processes around building advanced nuclear reactors. On Wednesday, Kairos inked a deal with nuclear fuel producer BWXT to work together on producing the rare type of uranium fuel the reactor company needs for its plants.
Wind turbines are notoriously not always recyclable. But they are reusable. Just ask Jos de Krieger, the co-founder of a Dutch company called Blade Made that purchases used turbines and transforms them into sleek, minimalist tiny homes. “Everything in the built environment — everything that you see around you — has an end of life,” Krieger told CNN. “And we need solutions besides waste or landfill, incineration or something without value… Changing that perception is really something that has to happen in the eyes of everyone,” he added, calling for “processes that create stories, instead of waste.”
Rob talks to Peter Brannen, author of the new book The Story of CO2 Is the Story of Everything.
How did life first form on Earth? What does entropy have to do with the origins of mammalian life — or the creation of the modern economy? And what chemical process do people, insects, Volkswagens, and coal power plants all share?
On this week’s episode of Shift Key, Rob chats with Peter Brannen, the author of a new history of the planet, The Story of CO2 Is the Story of Everything. The book weaves together a single narrative from the Big Bang to the Permian explosion to the oil-devouring economy of today by means of a single common thread: CO2, the same molecule now threatening our continued flourishing.
Brannen is a contributing writer at The Atlantic and the author of The Ends of the World, a history of mass extinctions on Earth. He is an affiliate at the Institute of Arctic and Alpine Research at the University of Colorado, Boulder. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University. Jesse is off this week.
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Here is an excerpt from our conversation:
Robinson Meyer: Why do we have a surplus of oxygen in the air in the first place? It was, for me, also something I did not understand at all before I read the book.
Peter Brannen: So there’s this common trope that two out of the next three breaths you have is from phytoplankton the ocean, or a quarter of it is from the Amazon alive today. And there’s a sense in which that’s true because oxygen and CO2 are being exchanged very quickly in the biosphere. But there is something like 800 times more oxygen in the air than can be produced by the entire biosphere. And all of the oxygen that’s produced by the rainforest, say — the rainforest is a living system where everything else is consuming that organic matter and feeding off of it. And it’s kind of a wash — just as much oxygen is created by the trees as is consumed by the bugs and fungi and jaguars and all the things that are living in the rainforest that are feeding off those plants and respiring that plant matter back to things like CO2 and water. So on a net scale it’s a wash.
So that gets you a planet with close to zero oxygen, and instead we have this absurd abundance of this thing that wants to react with everything. And the only way you can do that is if, say, you imagine a tree and when it dies, rather than being decomposed by fungi and beetles and on and on, that tree suddenly gets buried in sediment and falls into the crust and becomes part of the rock record, and the oxygen it made in life is not used in its own destruction. And by shielding that tree in the earth, you leave this surplus of oxygen in the air. And over all of Earth history, as a vanishingly small amount of this organic matter, things like plants and algae, do make it into the rock record, they leave an equivalent gift of oxygen in the air as a surplus.
We are more familiar with plant matter in the crust where it’s economically exploitable — we call those fossil fuels. So in a weird way, the fact that me and you can breathe — I don’t think a lot of people attribute that to the fact that there’s fossil fuels in the ground. Luckily most, you know, quote-unquote fossil fuels are very diffuse in mudstones, and they’re not economically exploitable. And we’re never going to run out of oxygen by burning fossil fuels because, you know, we worry about CO2 going up in parts per million and oxygens in whole percent. So, you know, it is true that for every molecule of CO2 we burn we’re bringing down oxygen by an equivalent amount, it’s just not that concerning.
But yeah, there is this astounding way of reframing, of looking at the world where the plant surface is breathable only because of what’s happened in the rocks beneath it.
Mentioned:
Peter’s book, The Story of CO2 Is the Story of Everything
This episode of Shift Key is sponsored by …
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Music for Shift Key is by Adam Kromelow.