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$3B fund closes, top movers and shakers, and more trending Houston energy transition news from the week

Here are the top stories for the week within Houston energy transition news. Photo via Getty Images

Editor's note: It's been a busy news week for energy transition in Houston, and some of this week's headlines resonated with EnergyCapital readers on social media and daily newsletter. Trending news included the closing of Ara Partners' $3 billion fund, a report on Houston as a climate tech hub, and more.

Houston energy tech PE group raises $3B third fund

Ara Partners has announced the closing of its third fund. Photo via Getty Images

A Houston-based private equity firm that focuses on industrial decarbonization investments has closed its latest fund.

Ara Partners has secured over $3 billion of new capital commitments for its Ara Fund III, closing $2.8 billion of limited partner commitments, which represents an oversubscription of its $2 billion initial target.

"We are grateful for the extraordinary interest in Fund III demonstrated by Ara's increasingly global, blue-chip investor base," Charles Cherington, managing partner of Ara, says in a news release. "The strong support from new and existing investors, is a testament to their confidence in our talented team, our investment strategy, and the compelling opportunities in the industrial decarbonization sector." Continue reading.

Houston energy workforce-focused startup raises $2.5M seed funding

Digital Wildcatters, founded by Collin McLelland (right) and Jacob Corley, just raised $2.5 million in funding. Photo courtesy

With $2.5 million in fresh funding, Digital Wildcatters is on its way to keep empowering the evolving energy workforce.

Digital Wildcatters, a Houston company that's providing a community for the next generation of energy professionals, has closed its seed plus funding round at $2.5 million. The round by energy industry veteran Chuck Yates, who also hosts his podcast "Chuck Yates Needs a Job" on the Digital Wildcatters' podcast network.

"Our industry's survival depends on recruiting the next generation of energy workers. We must adapt to their digital, content-rich world, as we currently lag behind, like a VHS tape in a Netflix world. Digital Wildcatters is our path to modernization," Yates, based in Richmond, Texas, says in the news release. Continue reading.

Movers and shakers: Top executive moves in Houston energy transition of 2023

Promotions, corporate ladder climbing, and other top mover and shaker stories on EnergyCapital this year. Photos courtesy

From new board seats to internal promotions, this year marked a big one for some of Houston's energy leaders. Here were the top five most-read articles covering the mover and shaker news of 2023. Continue reading.

Report evaluates Houston's potential as a climatetech hub with 6 key takeaways

The Texas Climate Tech Collective issued its 2023 report tracking Houston's progress as a climatetech hub. Photo via Getty Images

Three Houston energy tech innovators sought to quantify Houston's growth as an energy tech ecosystem, and, after 200 survey respondents and dozens of interviews, they've created six calls to action for the city.

Taylor Chapman, Gabe Malek, and Deanna Zhang created the Texas Climate Tech Collective to issue the Houston's Climate Tech Ecosystem 2023 report. The trio revealed some of its key takeaways at Greentown Houston's Climatetech Summit last month.

"We wanted to understand how the city has evolved," Malek, who's also chief of staff at Fervo Energy, said at the event. "We went into this project with a shared belief that Houston has unique characteristics that set it apart from the other cities thinking about climate, and if we could really lean into those characteristics, develop them, and amplify them, we could help grow the ecosystem in Houston and build climate solutions ... to accelerate the energy transition." Continue reading.

City of Houston takes step toward resiliency with $1.7B project milestone

The plant has the capacity to provide the city with over 400 million gallons of clean drinking water daily due to the state-of-the-art intake pump system located 900 feet from the shore of Lake Houston. Photo courtesy of the Mayor's Office

A new project that will increase Houston's resilience in the face of climate change-driven storms has delivered.

Houston Mayor Sylvester Turner and Houston Public Works and other water provider organizations celebrated the newly operational Northeast Water Purification Plant Expansion, which is the culmination of a $1.7 billion project.

The multi-year construction project began in 2017. The plant has the capacity to provide the city with over 400 million gallons of clean drinking water daily due to the state-of-the-art intake pump system located 900 feet from the shore of Lake Houston. Continue reading.

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A View From HETI

Fervo Energy has closed financing to support the remaining construction costs for the first phase of Cape Station. Photo via fervoenergy.com

Houston geothermal unicorn Fervo Energy has closed $421 million in non-recourse debt financing for the first phase of its flagship Cape Station project in Beaver County, Utah.

Fervo believes Cape Station can meet the needs of surging power demand from data centers, domestic manufacturing and an energy market aiming to use clean and reliable power. According to the company, Cape Station will begin delivering its first power to the grid this year and is expected to reach approximately 100 megwatts of operating capacity by early 2027. Fervo added that it plans to scale to 500 megawatts.

The $421 million financing package includes a $309 million construction-to-term loan, a $61 million tax credit bridge loan, and a $51 million letter of credit facility. The facilities will fund the remaining construction costs for the first phase of Cape Station, and will also support the project’s counterparty credit support requirements.

Coordinating lead arrangers include Barclays, BBVA, HSBC, MUFG, RBC and Société Générale, with additional participation from Bank of America, J.P. Morgan and Sumitomo Mitsui Trust Bank, Limited, New York Branch.

“As demand for firm, clean, affordable power accelerates, EGS (Enhanced Geothermal Systems) is set to become a core energy asset class for infrastructure lenders,” Sean Pollock, managing director, project Finance at RBC Capital Markets, said in a news release. “Fervo is pioneering this step change with Cape Station, a vital contribution to American energy security that RBC is proud to support.”

The oversubscribed financing marks Cape Station’s shift from early-stage and bridge funding to a long-term, non-recourse capital structure, according to the news release.

“Non-recourse financing has historically been considered out of reach for first-of-a-kind projects,” David Ulrey, CFO of Fervo Energy, said in a news release. “Cape Station disrupts that narrative. With proven oil and gas technology paired with AI-enabled drilling and exploration, robust commercial offtake, operational consistency, and an unrelenting focus on health and safety, we have shown that EGS is a highly bankable asset class.”

Fervo continues to be one of the top-funded startups in the Houston area. The company has raised about $1.5 billion prior to the latest $421 million. It also closed a $462 million Series E in December.

According to Axios Pro, Fervo filed for an IPO that would value the company between $2 billion and $3 billion in January.

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