Shares of Fervo Energy ( FRVO +28.41% ) soared on Tuesday after the next-generation geothermal systems builder struck a landmark agreement with Alphabet 's ( GOOGL -1.28% ) ( GOOG -1.01% ) Google.
Demand for geothermal energy is rising
Fervo entered into a 396-megawatt (MW) power purchase agreement with Google. The deal is intended to help Fervo further the development of its flagship Cape Station enhanced geothermal systems GeoCluster in southwest Utah.
The multi-phase project is projected to go online in 2028. Google plans to use the carbon-free energy Fervo generates to power a data center in the area.
"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," Fervo CEO Tim Latimer said.
As part of the deal, Google also obtained the option to purchase an additional 600 MW by June 2030.
Notably, the plans are subject to engineering feasibility studies and regulatory approvals. In that regard, Fervo said the new electricity capacity would come at "no cost to existing ratepayers."
Joining forces to power AI
The two companies began working together in 2023. Fervo supplies power to Google's data centers in Nevada.
With Google now turning to Fervo for up to 1 GW of its potential energy needs, the partnership is apparently going very well.