netpower(NPWR) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NET Power ended Q2 2024 with approximately $609 million in cash investments, with cash flow used in operations around$8 million, including over $3 million paid under the Baker Hughes joint development agreement [24][25]. - Total capital expenditures for the quarter were approximately$8 million, split evenly between Project Permian development and La Porte modifications [24]. Business Line Data and Key Metrics Changes - The company is focused on three strategic pillars: commercializing clean power technology, building project backlog, and establishing supply chain partnerships [3][4]. - The first utility-scale plant is on schedule for startup between late 2027 and early 2028, with ongoing testing and validation of equipment at the La Porte facility [3][18]. Market Data and Key Metrics Changes - The U.S. is experiencing significant load growth, particularly from data centers, creating a demand for clean, firm power solutions [5][8]. - The average U.S. power prices are approaching $60 per megawatt hour, with expectations that power prices will rise due to insufficient generation capacity [7][8]. Company Strategy and Development Direction - NET Power aims to capture market demand for clean power by deploying dozens of plants annually by the early part of the next decade [4][6]. - The company is targeting a levelized cost of energy (LCOE) of$60 per megawatt hour, which includes benefits from the 45Q tax credit, and aims for an unsubsidized LCOE of $80 or less [7][10]. Management's Comments on Operating Environment and Future Outlook - Management believes that the current energy landscape presents a unique opportunity for NET Power due to the underinvestment in firm capacity and rising power prices [8][10]. - The company sees itself as a leader in providing economical clean power solutions, with a significant head start in technology development [6][9]. Other Important Information - NET Power is actively pursuing project origination in competitive power markets across North America, focusing on regions with access to natural gas, power markets, and CO2 storage [12][13]. - The company has opened a new office in Houston to enhance its operational capabilities and attract talent [14]. Q&A Session Summary Question: Any change in timeline for Project Permian due to Zachry's financial issues? - Management confirmed no impact on the FEED timeline or staffing, with progress continuing as scheduled [28]. Question: Details on the sequestration partner for OP1? - Management indicated that the partner is a traditional energy company familiar with local geology and regulatory processes [29]. Question: Changes in strategy for monetizing originated projects? - Management stated that they do not need to internalize operational skills and will focus on origination to catalyze manufacturing [43][46]. Question: Update on financing for Project Permian? - The first plant is expected to be fully equity funded, with potential for federal or state capital evaluated for future projects [64]. Question: Are there opportunities in brownfield sites? - Management sees brownfield sites as interesting due to existing interconnects, but they are focusing on optimizing for the lowest cost power sources [66][70]. Question: How is permitting progressing? - Management believes NET Power's smaller land footprint will mitigate permitting delays compared to larger renewable projects [72].