The artificial intelligence boom is doing something a decade of climate conferences could not: making clean energy startups attractive enough for public market investors to open their wallets.
X-energy, the nuclear developer backed by Amazon, raised $1 billion in an upsized initial public offering this week, with shares jumping 25% in the first hour of trading.
Days later, Fervo Energy, the enhanced geothermal developer, filed its own IPO prospectus, disclosing 3.65 gigawatts of projects in its pipeline and $7.2 billion in long-term contracted revenue.
If built as planned, Fervo's development portfolio would nearly double the entire installed base of geothermal energy in the United States.
Both companies chose traditional IPOs rather than the SPAC mergers that scarred climate tech investors during the 2021 bubble, signalling that the market believes the underlying demand is now real rather than aspirational.
The catalyst is electricity consumption.
Data centres are projected to consume an ever-growing share of US power output over the coming decade, and the hyperscale operators building them, Google, Amazon, Meta and Microsoft, need round-the-clock, carbon-free generation that solar and wind cannot reliably provide.
Enhanced geothermal, which borrows horizontal drilling techniques from the oil and gas industry to access heat deep underground, delivers firm baseload power regardless of weather or time of day.
A Rhodium Group analysis found that by 2030, enhanced geothermal could supply nearly two-thirds of new data centre power demand at or below what operators currently pay.
Fervo already supplies 3.5 megawatts to a Google data centre in Nevada and is building a 115-megawatt facility in the same state under a deal with Google and utility NV Energy, a 33-fold increase.
Its flagship Cape Station project in Utah, which at 500 megawatts under construction would become the world's largest enhanced geothermal system, is expected to deliver first power later this year.
Google is both an investor and an anchor customer.
Yet the broader climate tech landscape remains sharply divided.
Mark Cupta, managing director at Prelude Ventures, described the outcome as K-shaped: mature, build-ready technologies with contracted revenue are attracting enormous capital, while earlier-stage companies continue to struggle for funding.
Venture capital and growth funds raised roughly $6.5 billion for climate tech last year, according to Sightline Climate, but 42 infrastructure funds accounted for 75% of those dollars, concentrating investment in companies that have already proven their technology works.
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The two IPOs are expected to ease a separate pressure point for venture funds that have been unable to return capital to their limited partners after a prolonged drought of public offerings.
For the sector's earlier-stage companies, the question is whether the window that X-energy and Fervo have pushed open stays open long enough for them to walk through it.
The recap
- X-energy went public; Fervo filed for an initial public offering.
- $1 billion raised; stock rose 25% in first hour.
- Venture and growth funds raised about $6.5 billion last year.
