Q3 2024 Summary
Published Feb 14, 2025, 5:34 PM UTC- Significant Cost Savings from Fleet Deployment of NET Power Plants: By integrating multiple NET Power plants on a single site in a fleet configuration, the company can achieve substantial cost savings through shared resources like control rooms and water treatment, as well as reduced construction overheads. This allows for gigawatt-scale deployments on just 60 acres, compared to other clean alternatives that require thousands of acres.
- Unique Ability to Provide Both Baseload and Peaking Power: NET Power's oxy-combustion process enables plants to supply 24/7 baseload power to co-located assets like data centers, while also offering peaking power to the grid through oxygen-based storage. This dual capability positions NET Power as a solution that addresses both the growing demand from data centers and grid reliability needs, potentially making it the lowest cost long-duration energy storage option in the world.
- Strategic Partnerships and Infrastructure Development Opportunities: The significant CO2 capture capability of NET Power plants (nearly 900,000 tons per plant annually) can justify the construction of new CO2 pipelines and infrastructure, fostering strategic relationships with gas infrastructure players. Fleet configurations can capture 3.5 million to 9 million tons of CO2 per year, catalyzing decarbonization efforts and creating additional revenue streams from CO2 transport and sequestration.
- Capital cost inflation could impact profitability, as NET Power expects continued inflation in capital equipment and construction costs compared to the previously provided guidance of $1.1 billion for Project Permian.
- Delay in project revenue generation, with the first utility-scale plant, Project Permian, not expected to come online until the latter half of 2027 to the first half of 2028, resulting in a long lead time without revenue.
- Potential policy risk regarding 45Q tax credits, as changes in legislation or reductions in carbon capture incentives could impact project economics.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Increased from US$0 in Q3 2023 to US$12K in Q3 2024 | Total Revenue increased as the company began generating revenue from the Feasibility Studies segment in Q3 2024, whereas there was no reported revenue in Q3 2023; this shift, although modest at US$12K, reflects a move toward monetizing testing and study services. |
Operating Income (EBIT) | Declined from –US$38,671K in Q3 2023 to –US$47,244K in Q3 2024 (≈22% deeper loss) | Operating losses deepened by about 22% in Q3 2024 despite the revenue uptick, likely due to increased operating expenses and potential inefficiencies as the company scaled its R&D, sales, and marketing efforts, aggravating the overall cost structure when compared to the previous period. |
Net Income | Turned positive to US$818K in Q3 2024 from a loss of –US$91,966K in Q3 2023 | A sharp turnaround in Net Income occurred as Q3 2024 saw a positive net income of US$818K compared to a significant loss in Q3 2023; this dramatic change suggests that reductions in non-recurring expense items or adjustments such as changes in earnout or warrant liabilities helped offset operating losses. |
Net Change in Cash | Improved from –US$103,399K in Q3 2023 to –US$18,871K in Q3 2024 (≈82% improvement) | Net Change in Cash improved substantially as the cash outflow decreased by roughly 82%, which likely reflects improvements in operating efficiency or financing activities that reduced the cash drain compared to the significant outflow seen in Q3 2023. |
Cash and Cash Equivalents | Decreased by approximately 29% from US$545,248K in Q3 2023 to US$386,257K in Q3 2024 | Cash and Cash Equivalents fell by about 29%, possibly due to increased capital expenditures, strategic investments, or operational cash outlays in support of growth initiatives, contrasting with the higher liquidity maintained in Q3 2023. |
Current Liabilities | Increased roughly 186% from US$9,409K in Q3 2023 to US$26,915K in Q3 2024 | A significant surge in Current Liabilities (up 186%) was observed in Q3 2024, driven by marked increases in accounts payable, accrued liabilities, and amounts due to related parties, indicating heightened operational gearing or new short-term obligations compared to Q3 2023. |
Shareholders’ Equity | Rebounded from US$104,021K in Q3 2023 to US$767,475K in Q3 2024 (over 600% increase) | Shareholders’ Equity rebounded dramatically due to major capital infusions through equity financing, share issuances, and favorable adjustments (such as those related to the tax receivable agreement), reflecting a recovery and strengthening of the company's balance sheet compared to the very low base in Q3 2023. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Project Permian Timeline | Q3 2024 | Startup scheduled between the back half of 2027 and the first half of 2028 | Initial power generation expected in the latter half of 2027 to the first half of 2028 | no change |
Project Permian Cost Estimate | Q3 2024 | no prior guidance | Total cost roll‐up expected in December 2024—with the initial estimate subject to review before executing the EPC contract | no prior guidance |
Capital Expenditures | Q3 2024 | no prior guidance (Q2 provided plant capex targets on a long‑term basis, not a quarterly comparison) | Total capital expenditures for Q3 2024 were approximately $22 million ($10M for Project Permian development; $13M for La Porte upgrades) | no prior guidance |
Cash Flow and Liquidity | Q3 2024 | no prior guidance | Ended Q3 2024 with approximately $580 million in cash and investments; Q3 cash flow used was around $8 million (including a $5 million payment) | no prior guidance |
Share Count | Q3 2024 | no prior guidance | Fully diluted share count as of September 30, 2024, was approximately 249 million shares | no prior guidance |
Inflation Impact on Project Permian | Q3 2024 | $1.1 billion guidance for Project Permian provided previously | Inflation in capital equipment and construction costs is expected compared to that $1.1 billion | no change |
Baker Hughes Validation Testing | Q3 2024 | First phase of turboexpander equipment validation scheduled to begin in Q4 2024 | Phase 1 of the equipment validation program has commenced and will progress through a 4‑phase testing program | lowered |
ASU Design | Q3 2024 | no prior guidance | The ASU for Project Permian will have a 2×50% configuration—with each unit delivering approximately 2,000 tons per day of oxygen (total 4,000 tpd) | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Strong data center demand for clean, firm power | Mentioned consistently in Q4 2023 , Q1 2024 , and Q2 2024 with a focus on long-term PPAs and the growing load from data centers. | Emphasized further, highlighting the dual capability of baseload and peaking power for data centers and the grid. | Consistent topic across periods, with increased focus on co-located projects and grid reliability. |
Reliance on 45Q tax credits and potential policy risk | Discussed in Q1 2024 , Q2 2024 , and not mentioned in Q4 2023. Emphasized bipartisan support and alignment with fossil fuel interests, reducing policy risk. | Reinforced confidence in bipartisan nature of carbon capture under 45Q, viewing it as a key decarbonization tool. | Continues with optimistic sentiment despite potential IRA changes; no major caution signaled. |
Delayed project timelines and revenue generation (Permian) | Mentioned in Q4 2023 , Q1 2024 , and Q2 2024 , all reiterating initial power generation around 2027-2028. | Reaffirmed timeline for latter half of 2027 to early 2028, positioning the first utility-scale plant as crucial for scalability. | Timeline remains steady; consistently emphasized as core to revenue generation starting in 2027-2028. |
Capital cost inflation and high CAPEX constraints | Discussed in Q2 2024 , with increased costs narrowing gap between carbon-emitting and NET Power plants. Limited mention in Q1 2024 , focused on managing CapEx. No direct mention in Q4 2023. | Highlighted inflation in large engineered equipment and potential increases beyond prior CAPEX guidance, offset by higher clean power pricing. | More prominent in Q2 and Q3 due to rising equipment costs and strategic mitigation efforts. |
Small footprint advantage and fleet deployment cost savings | Mentioned in Q1 2024 (60-75 acres for a gigawatt) and Q2 2024 (avoiding extensive transmission lines). No mention in Q4 2023. | Emphasized 15 acres per plant, with shared infrastructure reducing costs in fleet deployments. | Recurring from Q1 onward, highlighting efficiency and modular fleet builds. |
CO2 capture infrastructure development (catalyzing partnerships) | Present in Q4 2023 , Q1 2024 , and Q2 2024 , stressing local partnerships and permanent CO2 sequestration. | Further detailed large CO2 pipelines (200-500 miles) and work with midstream experts on CO2 transport, capturing nearly 900,000 tons of CO2 per plant annually. | Consistent topic across all periods with growing detail on pipeline scale and midstream collaborations. |
EPA recognition no longer mentioned after Q1 2024 | Cited explicitly in Q1 2024 as an example of promising carbon capture technology. | No mention in Q3 2024. | Not repeated since Q1; was highlighted once, then dropped. |
Shift from optimism to caution on 45Q tax credit sentiment | No indication of caution in Q1 2024 or Q2 2024. Not mentioned in Q4 2023. | Maintains confidence, emphasizing bipartisan support for carbon capture incentives. | No actual shift; optimism remains, contrary to any caution suggestion. |
Emergence of strategic partnerships with gas infrastructure players | Not specifically discussed in Q1 2024 or Q2 2024. | Highlighted midstream companies’ dual skill set in natural gas and CO2 transport, fostering joint projects. | Newly emphasized in Q3 2024, signaling collaborative opportunities with midstream operators. |
Potentially large impact from AI-driven data center power needs | Seen in Q4 2023 , Q1 2024 , and Q2 2024 as AI training demands uninterruptible, affordable power. | Reiterated strong demand for 24/7 baseload power, with oxy-combustion enabling both data center and peaking services. | Recurring topic with ongoing bullish outlook on AI-driven load growth. |
-
45Q Tax Credit Concerns
Q: Any worries about 45Q being cut from the IRA?
A: Management isn't concerned about potential changes to the 45Q tax credit. They believe carbon capture is bipartisan and expect it to remain unscathed even if other parts of the Inflation Reduction Act are altered. Carbon capture aligns with decarbonization goals and supports the fossil fuel industry by leveraging natural gas, making it likely to continue being supported. -
Capital Equipment Inflation
Q: Are you seeing capital equipment inflation, and where?
A: They're experiencing inflation in large engineered equipment like heat exchangers, turbomachinery, and electrical equipment. Increases in bulk materials like pipes, valves, and fittings are also anticipated, though exact numbers aren't specified yet. They have a playbook for negotiations and expect to find savings through that process. -
Integrating Multiple Plants
Q: What are the cost savings and challenges of integrating multiple plants on one site?
A: Deploying multiple plants together offers significant cost savings through economies of scale, shared facilities like control rooms and water treatment, and spreading overhead costs across a larger facility. While there are operational nuances, constructing duplicate powertrains leads to construction savings and is more economic. -
Oxygen Storage Opportunity
Q: How does oxygen storage integrate into the plant design?
A: Oxygen storage is inherent to their cycle and can be customized per application. By oversizing liquid oxygen tanks, they can provide energy storage capacity of 1.2 gigawatt hours for one day of extra storage. The amount of storage and capacity to generate excess oxygen depends on specific needs and can be adjusted from the base design. -
Monetizing Oxygen Storage
Q: Will you monetize baseload and peak power separately?
A: The oxygen storage capability adds significant value. They can provide baseload power to customers like data centers while offering peaking power to the grid from the same asset. This dual capability meets both customer and grid needs, potentially capturing higher prices for peaking power and adding substantial economic value. -
International Opportunities
Q: What are your plans outside North America?
A: While focused on North America due to favorable economics, they see potential in markets like Australia, Southeast Asia, and the Middle East. Challenges include access to low-cost natural gas and CO₂ sequestration sites. They believe scaling in the U.S. and Canada will benefit future global deployments. -
Partnerships with Gas Infrastructure
Q: Any value in partnering with gas pipeline companies?
A: Yes, there's strategic value in collaborating with gas infrastructure players. These companies can provide gas supply and have the skill set for CO₂ transportation and sequestration. This symbiotic relationship can catalyze new infrastructure investments, increasing natural gas demand and providing CO₂ transport and sequestration services. ,