Betty Jung

Betty Jung asked about the economic drivers behind the sub-$80 LCOE for Project Permian compared to the roughly $100 LCOE for Northern MISO, including CapEx considerations and carbon credit stacking. She also questioned NET Power's shift from a capital-light licensing model to a more capital-heavy project development model and the strategy for project financing and long-term capital needs.

Answer

CEO Danny Rice explained that Project Permian's lower LCOE is due to West Texas's ultra-low-cost natural gas and the ability to sell captured CO2 for industrial use (enhanced oil recovery) to buyers like Oxy, effectively "carbon stacking" on top of 45Q credits. This contrasts with Northern MISO, where CO2 is permanently sequestered, incurring transport and sequestration costs. Regarding the business model pivot, Rice stated that NET Power is right-sizing initial projects (e.g., 60 MW Phase 1) to manage equity capital requirements, leveraging project financing for proven technologies. He noted that with an expected $390-$400 million cash balance, NET Power can prudently invest a smaller portion ($75-$90 million for Phase 1 equity) by reallocating capital from oxycombustion development, aiming to demonstrate economic projects that will attract further capital for scaling to multi-gigawatt campuses.

Betty Jung asked for an explanation of the economic factors enabling the sub-$80 LCOE in the Permian compared to the roughly $100 LCOE in MISO, including CapEx and credit stacking. She also questioned the pivot from a capital-light licensing model to a more capital-heavy one, and how NET Power plans to manage project financing and long-term capital needs for scaling the business.

Answer

CEO Danny Rice attributed the Permian's lower LCOE to significantly lower natural gas feedstock costs and the ability to utilize captured CO2 for industrial purposes like Enhanced Oil Recovery (EOR). This allows NET Power to receive the $85/ton 45Q credit *and* an additional payment for selling the CO2, effectively 'carbon stacking,' which lowers the required power price. In contrast, MISO projects incur costs for CO2 transport and sequestration. Regarding the business model pivot, Mr. Rice stated that facilities are being right-sized for NET Power's balance sheet. Phase one's estimated total installed CapEx of $375M-$425M, with 50-70% project financing, would require an equity contribution of approximately $75M-$90M from NET Power (for a 50% stake). This is manageable given current cash reserves and allows for prudent scaling and demonstration of economic projects to attract further capital.