Net Power Reports Fourth Quarter 2024 Results and Provides Business Update

Rhea-AI Summary

Net Power (NYSE: NPWR) announced Q4 and full-year 2024 results, reporting significant challenges in its Project Permian development. The company completed Front-End Engineering and Design (FEED) but found costs substantially higher than expected, leading to a pause in long-lead releases and initiating a post-FEED optimization process.

The total installed cost for Project Permian is estimated between $1.7 billion and $2.0 billion, with project completion now projected no earlier than 2029. The company has launched a feasibility study for a modular multi-unit plant design targeting up to one gigawatt of power generation for 2030-2033 deployments.

Key operational highlights include:

• 140 fired hours achieved at La Porte demonstration facility
• Partnership with Baker Hughes and Woodside Energy for industrial-scale power solutions
• Strong liquidity position with $533 million in cash and investments at year-end 2024, down from $580 million last quarter
• Quarterly cash reduction primarily due to $13 million in operating outflows and $29 million in capital expenditures

Positive

• Strong liquidity position with $533 million in cash and investments
• Successful technical progress at La Porte facility with 140 fired hours achieved
• New partnership with Baker Hughes and Woodside Energy for industrial-scale solutions
• Development of scalable modular design for future cost reduction

Negative

• Project Permian costs significantly higher than expected ($1.7-2.0 billion)
• Project timeline delayed to 2029 at earliest
• Quarterly cash position decreased by $47 million
• Suspension of long-lead equipment releases for Project Permian

Insights

Financial Analyst

Net Power's Q4 2024 results reveal significant challenges in their commercialization roadmap. The completion of Front-End Engineering and Design (FEED) for Project Permian exposed substantially higher costs than anticipated, with total installed cost now estimated between $1.7 billion and $2.0 billion. This has forced a pause on long-lead equipment orders and triggered a value engineering exercise.

The company maintains a strong liquidity position with $533 million in cash and investments, down from $580 million in the previous quarter. Cash burn included $13 million in operating outflows and $29 million in capital expenditures. At current burn rates, Net Power has several years of runway to optimize their technology.

Most concerning is the revised timeline, with Project Permian now expected online no earlier than 2029, representing a significant delay. This pushes meaningful revenue generation further into the future, extending the pre-commercial phase.

The pivot to a modular multi-unit design targeting coastal locations shows strategic flexibility but confirms initial approach challenges. Technical validation at the La Porte facility continues, with 140 fired hours achieved in the testing campaign.

The agreement between Baker Hughes and Woodside Energy to develop an industrial-scale solution could potentially expand Net Power's addressable market while requiring minimal capital, but does not address the fundamental commercialization timeline challenges.

Net Power's Q4 2024 results reveal serious roadblocks in their commercialization journey. The completed FEED study for Project Permian uncovered costs vastly exceeding expectations, with total installed cost now estimated between $1.7-2.0 billion. This fundamental challenge has forced management to halt equipment procurement and launch a comprehensive redesign effort.

The most alarming revelation is the revised timeline - Project Permian is now projected to come online no earlier than 2029, pushing revenue generation 4+ years into the future. For a pre-revenue company, this timeline extension significantly impacts valuation models and return horizons.

While Net Power maintains $533 million in cash and investments (down $47 million from last quarter), the current $42 million quarterly burn rate suggests approximately 3 years of runway without additional funding. This creates a potentially troubling gap between cash reserves and commercial operations.

The pivot to a modular multi-unit design targeting coastal sites reflects adaptability but also acknowledges fundamental issues with the original approach. Technical validation progress at La Porte (140 fired hours with higher operating parameters) provides some confidence, but doesn't address the economic viability hurdles.

The Baker Hughes/Woodside agreement to develop industrial-scale applications represents potential diversification but requires minimal capital from Net Power, suggesting near-term financial impact.

In a market desperate for clean firm power, these delays and cost challenges may create openings for competing technologies to gain market share while Net Power optimizes its approach.

DURHAM, N.C.--(BUSINESS WIRE)-- Net Power Inc. (NYSE: NPWR) (“Net Power” or the “Company”) today announced its financial and operational results for the fourth quarter and full-year 2024, highlighting progress in its technology development and path to commercialization.

• Completed FEED for Project Permian (SN1) and Shifted to Design Optimization: Net Power finalized the Front-End Engineering and Design (FEED) for Project Permian, its first utility-scale project in West Texas. The cost estimate was significantly higher than expected and, as a result, the Company has paused long-lead releases for the project and commenced a post-FEED optimization and value engineering exercise to deliver a financeable commercial product launch.
• Launched Modular Multi-Unit Feasibility Study: To drive further cost reductions and take advantage of the market’s demand for larger generation capacity, the Company initiated an advanced design and engineering study for a standardized, modular multi-unit plant designed to deliver up to one gigawatt of power generation.
• Commenced First Phase of Baker Hughes Equipment Validation Program: Net Power and its technology partner Baker Hughes commenced Phase 1 combustion testing at the Company’s La Porte demonstration facility. The facility has achieved 140 fired hours of operation and has exceeded cycle pressures achieved in the prior testing campaign, representing important milestones in its roadmap to commercialization.
• Initiated Development of Industrial-Scale Net Power Solution: Baker Hughes and Woodside Energy announced a Technology Development Agreement to explore commercialization of an industrial-scale sized power plant using Net Power’s clean energy technology, potentially expanding the Company’s product offering and licensing revenue.
• Preserved Strong Liquidity: Net Power ended 2024 with over $530 million in cash, cash equivalents, and investments, providing significant financial resources to optimize its technology and establish strategic partnerships to fund its first utility-scale project and future multi-unit deployments.

“2024 was a year of significant achievement amidst challenging market conditions for commercializing new technologies,” said Danny Rice, Chief Executive Officer of Net Power. “We recently completed the FEED for Project Permian, the first-of-its-kind large-scale, fully integrated clean gas power plant. Due, in large part, to today’s inflationary environment and the first-of-a-kind nature of this facility, the initial cost estimates reveal areas where we can meaningfully and efficiently reduce costs to achieve successful final investment decision (FID). We believe our shift in focus to remove or reduce these costs from SN1 as well as from our standard plant design will better position Net Power to achieve the lowest costing clean, firm power available in the market. With over $500 million in liquidity, we believe we’re in a strong position to advance the technology and optimize our plant design while simultaneously attracting the right strategic partners to help commercialize and fully unlock this technology’s potential.”

Business Update

A decade of underinvestment in power infrastructure combined with unprecedented load growth on the horizon has triggered a significant response to add firm generation capacity in the U.S., with unabated natural gas emerging as the only deployable source today. This surge in demand has caused broader inflationary and supply chain pressures across the generation sector, affecting SN1 cost estimates that exceed viable economic thresholds. In response, Net Power has commenced a post-FEED optimization and value engineering process. Net Power now estimates Project Permian’s total installed cost to be between $1.7 billion and $2.0 billion, which is inclusive of non-recurring first-of-a-kind, Project Permian site-specific and owner costs. While Project Permian benefits from existing CO₂ pipeline infrastructure, there are a number of site- and region-specific challenges which impact cost. Long lead equipment releases have been suspended but value engineering and certain development work remain in progress. Provided the successful value engineering process, the project would come online no earlier than 2029.

Recognizing the need for a scalable and lower cost solution, Net Power launched a feasibility study for a modular multi-unit plant with a standardized design. The Company expects this scalable configuration, comprised of two to four power train modules per plant, will significantly reduce equipment and construction costs through greater economies of scale, more equipment pre-fabrication, less in-field labor and lower transportation costs. Net Power has begun identifying coastal-based locations for deployments in 2030-2033 that would provide a market fit for its customers. These coastal-based projects are being scoped to support up to one gigawatt per site with the optionality to co-locate with large-load data centers and industrial power users.

In parallel, the validation efforts at our La Porte, Texas demonstration facility are ongoing. The first phase of equipment testing with Baker Hughes began in Q4, focusing on oxy-fuel burner configuration selection. The facility is approaching full target temperatures and pressures and has already achieved higher operating conditions than achieved during the prior testing campaign in 2021. The facility has operated for over 140 fired hours during Phase 1, including a 30-hour continuous run. Phase 1 and Phase 2 testing are on track to be completed in 2025.

Baker Hughes and Woodside Energy recently announced a Technology Development Agreement to develop an industrial-scale Net Power solution that is specifically designed for smaller scale applications including oil and gas, LNG, heavy industries and small-scale data centers. The industrial-scale program will benefit from the ongoing equipment validation program at our La Porte demonstration facility as well as from the development of Net Power’s initial utility-scale power plant. This industrial-scale program has the potential to bring the Net Power technology platform to a broader array of end markets and applications, complementing the Company’s utility-scale program and providing additional licensing opportunities to Net Power and its shareholders, while requiring minimal capital from the Company.

Net Power closed 2024 with $533 million in cash, cash equivalents, and investments, down from $580 million last quarter, primarily due to $13 million in operating cash outflows and $29 million in capital expenditures for La Porte upgrades and SN1 development. For the remainder of 2025, Net Power will focus internal efforts on progressing the technology development program, utility-scale plant cost reductions and a modular multi-unit design in order to enable the Company to maximize the value of its proprietary Net Power Cycle as it navigates a challenging yet opportunity-rich market.

Conference Call

Net Power will host a conference call to discuss fourth quarter 2024 results and related matters beginning at 8:30 AM ET on Monday, March 10. To access the live audio webcast of the conference call, please visit Net Power’s investor relations website at ir.netpower.com. To participate by phone, dial 877-407-8014 (domestic) or +1 201-689-8053 (international).

An archived webcast will be available following the call.

About Net Power

Net Power (NYSE: NPWR) is an energy technology company developing its proprietary Net Power Cycle, which transforms natural gas into clean, reliable and affordable power. The Company is on a mission to deploy its utility-scale plants across the world by partnering with electricity generators, energy producers, technology providers, local communities, and other stakeholders. Net Power was founded in 2010 and has offices in Durham, North Carolina (HQ) and Houston, Texas.

Cautionary Note Regarding Forward-Looking Statements and Projections

Certain statements in this release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, each as amended. Forward-looking statements provide current expectations of future events and include any statement that does not directly relate to any historical or current fact. Words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “projects,” or other similar expressions may identify such forward-looking statements. Forward-looking statements may relate to the development of Net Power’s technology, the anticipated demand for Net Power’s technology and the markets in which Net Power operates, the timing of the deployment of plant deliveries, and Net Power’s business strategies, capital requirements, potential growth opportunities and expectations for future performance (financial or otherwise). Forward-looking statements are based on current expectations, estimates, projections, targets, opinions and/or beliefs of the Company, and such statements involve known and unknown risks, uncertainties and other factors. Actual results may differ materially from those discussed in forward-looking statements as a result of factors, risks and uncertainties over which Net Power has no control. These factors, risks and uncertainties include, but are not limited to, the capital-intensive nature of Net Power’s business model, which will likely require Net Power to raise additional capital in the future; Net Power’s ability to adequately control or accurately predict the costs associated with its projects and the development and deployment of its technology; barriers that Net Power may face in its attempts to deploy and commercialize its technology; the complexity of the machinery Net Power relies on for its operations and development; potential changes and/or delays in site selection and construction that result from regulatory, logistical, and financing challenges; Net Power’s ability to establish and maintain supply relationships; risks related to Net Power’s arrangements with third parties for the development, commercialization and deployment of its technology ; risks related to strategic investors and partners; Net Power’s ability to successfully commercialize its operations; the availability and cost of raw materials; the impact of potential delays in discovering manufacturing and construction issues; the possibility of damage to Net Power’s facilities as a result of natural disasters; the ability of commercial plants using Net Power’s technology to efficiently provide net power output; Net Power’s ability to obtain and retain licenses; Net Power’s ability to establish an initial commercial scale plant; potential litigation that may be instituted against Net Power; and other risks and uncertainties described under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Net Power’s Annual Report on Form 10-K for the year ended December 31, 2024, its subsequent annual reports on Form 10-K and quarterly reports on Form 10-Q, and in its other filings made with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Net Power assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Net Power does not give any assurance that it will achieve its expectations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250310676744/en/

Investor Relations Contact:

investors@netpower.com

Net Power Media Contact:

netpower.media@netpower.com

Source: Net Power Inc.

FAQ

What caused Net Power (NPWR) to pause Project Permian development in Q4 2024?

Higher than expected FEED cost estimates led Net Power to pause long-lead releases and start post-FEED optimization to achieve a financeable commercial product launch.

What is the new estimated cost and timeline for Net Power's Project Permian?

Project Permian's total cost is estimated at $1.7-2.0 billion, with completion projected no earlier than 2029.

How much cash does Net Power (NPWR) have at the end of 2024?

Net Power ended 2024 with $533 million in cash, cash equivalents, and investments.

What progress has Net Power made at its La Porte demonstration facility?

The facility achieved 140 fired hours of operation, including a 30-hour continuous run, with higher operating conditions than the 2021 testing campaign.

What is Net Power's new strategy for future power plant deployments?

Net Power is developing a standardized, modular multi-unit plant design for coastal-based locations, targeting up to one gigawatt capacity per site for 2030-2033 deployments.