The view from heti

Key takeaways from HETI's Climate Equity Report

The Climate Equity Report was developed to help foster positive, two-way communication and engagement between Houston-area energy companies and the communities they impact. Photo via Getty Images

The mission of the Houston Energy Transition Initiative (HETI) is to drive sustainable and equitable economic growth for an energy-abundant, low-carbon future in the greater Houston region.

Community engagement will play a key role in ensuring the environmental and economic benefits of the energy transition flow to all members of Greater Houston. This requires a shared understanding of concerns, values, and goals.

“As we make this transition to a lower-carbon energy future, we’re doing it in a way that creates economic opportunity for all Houstonians,” said Jane Stricker, Senior Vice President, Energy Transition and Executive Director of HETI. “When we think about what role community plays in that work, HETI is supported by industry leaders and a community advisory board to ensure that as this work moves forward, it moves forward in a way that benefits everyone.”

HETI recently collaborated with the Houston Advanced Research Center (HARC), Sallie Greenberg Consulting (SGC), energy companies with a presence in the region, and impacted community organization stakeholders and leaders to develop a baseline understanding of current corporate climate action, community needs, and preferred methods of engagement.

“We engaged HARC and SGC to help us to explore the intersection of the energy transition and community engagement,” said Stricker. “They helped us create a collaborative framework to support both companies and communities in advancing solutions for an equitable energy transition. The team has done a truly outstanding job to develop this report and framework.”

The Climate Equity Report, which includes the Framework for an Equitable Energy Transition and the Community Engagement Toolkit for an Equitable Energy Transition, was developed to help foster positive, two-way communication and engagement between Houston-area energy companies and the communities they impact. The Framework and Toolkit are based on in-depth research and interviews — with the aim of bridging the gap between corporate climate action, community engagement, and the federal government’s approach to diversity, equity, inclusion, and accessibility.

“We have the opportunity to reassess how we approach these very important issues,” said John Hall, President and CEO of HARC. “Community members are not just interested in talking and becoming acquainted with the industry — they want to engage in constructive dialogue with the aim of delivering meaningful benefits that will improve the quality of their lives and those of their neighbors.”

“What I see for the first time in the 25 years that I’ve been working in this space is that we have a significant opportunity—right now—to change how we work in communities, how we work with communities, and how we can enter in a partnership to be able to drive equitable energy transition activities forward,” said Dr. Sallie Greenberg, Scientist, Strategic Advisor, and Engagement Specialist at Sallie Greenberg Consulting.

Findings from the Climate Equity Report highlight best practices and strategies to improve relationships, build trust, and address concerns. Ten key findings include:

  • Basic needs
    Helping the community address basic needs and reduce existing risks can reduce barriers to participation and improve community member engagement around the energy transition.
  • Equity considerations
    Equity considerations are growing increasingly important. Communities are looking for authentic processes that include community input on the highest-priority challenges.
  • Two-way engagement
    Successful two-way engagement requires information to flow in both directions. Authentic, targeted community engagement will be a key enabler of climate equity and decarbonization in Houston.
  • Transparency
    As energy companies seek to broaden engagement efforts, transparency is key. Project information must be as transparent and available as possible.
  • Trust flow
    There is a gap between company and community perceptions of engagement largely based on a “trust deficit” that will take time to address.
  • Engagement frequency
    Engagement alone isn’t enough. Consistent, frequent, organic engagement is required to build trust and overcome the “trust deficit” between energy companies and communities.
  • Accountability
    Impacts can be tangible and intangible. Community engagement work must be evaluated using a data-driven approach that measures how engagement activities address inequalities and benefit impacted groups.
  • Shifting priorities
    The type of engagement the community and the federal government wants and expects has changed. Companies must address this change to ensure community needs are acknowledged and met.
  • Stakeholder identification
    Not all stakeholders have the same voice or level of influence. Truly equitable engagement requires the inclusion of marginalized groups, especially those in frontline communities.
  • Program evaluation
    The evaluation process helps companies determine if engagement goals are being met. This includes conducting observations, surveys, and interviews throughout the evaluation process before sharing results with stakeholders and making program improvements based on the collected information.

Read the full report here. Watch the Connect on Climate Equity webinar.

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This article originally ran on the Greater Houston Partnership's Houston Energy Transition Initiative blog. HETI exists to support Houston's future as an energy leader. For more information about the Houston Energy Transition Initiative, EnergyCapitalHTX's presenting sponsor, visit htxenergytransition.org.

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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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