Q1 2024 Net Power LLC Earnings Call

Operator: Hello and welcome to the Net Power, Inc. first quarter 2024 earnings call. If anyone should require operator assistance, please press star zero on your telephone keypad. Our question and answer session will follow the formal presentation. You may be placed into question 2 at any time by pressing star 1 on your telephone. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Bryce Mendes. Please go ahead.

Hello, and welcome to the net power, Inc. First quarter 'twenty 'twenty four earnings call. If anyone should require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation.

You may be placed into question two at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded it's now my pleasure to turn the call over to Bryce Mendes. Please go ahead. Good morning, everyone and welcome to net powers first quarter 'twenty 'twenty four earnings conference call.

Bryce Mendes: Good morning, everyone, and welcome to Net Power's first quarter 2024 earnings conference call. With me on the call today, we have our Chief Executive Officer, Danny Rice, our President and Chief Operating Officer, Brian Allen, and our Chief Financial Officer, Akash Patel.

Bryce Mendes: With me on the call today, we have our Chief Executive Officer, Danny Rice, our President and Chief operating Officer Bryan Allen.

Bryce Mendes: <unk> financial Officer arc hospitality.

Today, we issued our earnings release for the first quarter of 'twenty 'twenty, four which can be found on our Investor Relations website, along with this presentation at IR Dot power Dot com.

Bryce Mendes: During this call our remarks and responses to questions may include forward looking statements.

Bryce Mendes: Actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with our business.

Bryce Mendes: These risks and uncertainties are discussed in our SEC filings.

Please note that we assume no obligation to update any forward looking statements.

Bryce Mendes: Today, we issued our earnings release for the first quarter of 2024, which can be found on our investor relations website, along with this presentation, at ir.netpower.com. During this call, our remarks and responses to questions may include forward-looking statements. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business. These risks and uncertainties are discussed in our SEC filing. Please note that we assume no obligation to update any forward-looking statements. With that said, I'll now pass this over to Danny Rice, Net Power's Chief Executive Officer. Thanks.

Bryce Mendes: With that I'll now pass it over to Dani Reiss net Power's Chief Executive Officer.

Daniel Joseph Rice: Thank you all for joining us. We're going to reference several slides in the investment presentation we posted on our website, and I'd encourage you to have those handy, to summarize where we are today, development remains on track for our utility scale product, and development remains on track for our first project. Our total addressable market is expanding faster than we expected, and government policy is evolving in our favor. Brian will provide an update on product and project development, but first, let me share some thoughts on the macro.

Thanks, all for joining us.

Daniel Joseph Rice: We're going to reference several slides in the Investor presentation, we posted to our website and I encourage you to have those handy.

Daniel Joseph Rice: To summarize wherever you are today.

Daniel Joseph Rice: Development remains on track for our utility scale product development remains on track for our fresh project.

Daniel Joseph Rice: Our total addressable market is expanding faster than we expected and government policy is evolving in our favor.

Speaker Change: Ryan will provide an update on product and project development, but first let me share some thoughts on the macro.

Daniel Joseph Rice: Society's paramount need for the next century is to implement scalable energy solutions that can provide clean, affordable, and reliable power, a trifecta that remains elusive in current offerings. Despite the enormity of the prize at hand, only a handful of emerging solutions hold the promise of delivering on these fronts, and Net Power really stands out among them. Diving into the U.S. in particular, the expected deficit between future power supply and future power demand continues to widen as load growth, primarily from data centers and the electrification of everything, is outrunning supply growth, which we think will move forward power prices significantly higher. In a free market, higher prices would induce new supply, primarily from coal and gas power plants.

Speaker Change: Societies Paramount need for the next century is to implement scalable energy solutions that can provide clean affordable and reliable power a trifecta that remains elusive and current offerings.

Speaker Change: The enormity of the prize at hand.

Ryan: A handful of emerging solutions hold the promise on delivering on these fronts.

Ryan: Net power really stands out among them.

Ryan: Diving into the U S. In particular, they expected deficit between future power supply and future power demand continues to widen as load growth primarily from data centers and the electrification of everything is out running supply growth, which we think will move forward power prices significantly higher.

Ryan: And our free market higher prices would induce new supply primarily from coal and gas power plants, but what makes this situation really interesting is that the EPA recently finalized its section 111, <unk> emission rules for colon gas power plants.

Daniel Joseph Rice: But what makes this situation really interesting is that the EPA recently finalized its Section 111 B and D emission rules for coal and gas power plants. To summarize the rules, all coal plants must capture the equivalent of 95% of their CO2 emissions by 2032, and all new baseload gas plants operating more than 40% of the time must begin capturing 90% of their emissions by 2032. Existing gas plants will be addressed down the line as EPA gathers more input.

Ryan: To summarize the rules.

Ryan: All coal plants must capture the equivalent of 95% of its C. O two emissions by 2032.

Ryan: The all new Baseload gas plants operating more than 40% of the time.

Ryan: Begin capturing 90% of its emissions by 2032.

Ryan: While existing gas plants will be addressed down the line if E. P. A guy that's more important.

Daniel Joseph Rice: These emissions rules raise the bar for the industry. We think it's one that our power plants will handily meet. As we think about positioning versus post-combustion carbon capture solutions, our oxycombustion-based plant will be likely the best way to comply in load following mode. That is, we're capturing over 97% of CO2, whether we're at partial or full capacity.

Ryan: Emissions rules raised the bar for the industry, we think it's one that our power plants, we'll handily meet.

Ryan: As we think about positioning versus post combustion carbon capture solutions.

Ryan: Our oxy combustion based plant will.

Ryan: It will be likely the best way to comply and load following mode.

Ryan: That is we're capturing over 97% of C O two whether we're at partial or full output.

Daniel Joseph Rice: When we pair the EPA rules with the IRA incentives, it positions net power to become the lowest cost form of marginal baseload power in markets with access to CS2 storage. And as a reminder, approximately 80% of U.S. thermal power generation today is above or near world-class carbon sinks. And I think Ralph Waldo Emerson said it best.

Ryan: When we pair the EPA rules with the I R a incentives.

Ryan: It doesn't net power to become the lowest cost form of marginal baseload power in markets, where that she has to storage and that's it.

Ryan: As a reminder, approximately 80% of U S thermal power generation today is above or near World class carbon sinks.

Ryan: And I think Ralph Waldo Emerson said it best if you build the perfect mouse trap the world will build a beaten path to your door.

Daniel Joseph Rice: If you build the perfect mousetrap, the world will build a beaten path to your door. And for that reason, we need to be ready for future demand, and that's why we're preparing our supply chain for significant manufacturing scale-up by the early 2030s. Turning to the origination side of the business, we submitted our MISO interconnection application for OP1, our first Net Power Originated project. This marks a critical first step in improving reliability in the grid system, and we look forward to working through the interconnect process with MISO.

Ryan: And for that reason, we need to be ready for future demand and that's why we're preparing our supply chain for significant manufacturing scale up but the early twenties thirties.

Ryan: Turning to the origination side of the business, we submitted our MISO interconnection application for O P. One our first net power originated project. This marks a critical first step in improving reliability and the grid system and we look forward to working through the interconnect process with myself.

Daniel Joseph Rice: So while OP1 continues to advance as we intended, we're in active dialogue with prospective partners on additional origination opportunities across other competitive power markets, including PJM, ERCOT, CAISO, and the Alberta system. We continue to have active dialogue with a cross-section of companies across the oil and gas, data center, and industrial sectors, along with infrastructure capital providers that are interested in financing our regional origination hub programs. And last but not least, I'd like to thank our team for their hard work.

Ryan: So while O P. One continues to advance as we intended we're in active dialogue with prospective partners on additional origination opportunities across other competitive power markets.

Ryan: Including P J M.

Ryan: Okay. So in the Alberta system.

Ryan: We continue to have active dialogue with a cross section of companies across the oil and gas.

Ryan: Power data center and industrial sectors.

Ryan: Along with infrastructure capital providers that are interested in financing our regional origination hub programs.

Ryan: And last but not least I'd like to thank our team for their hard work net powers approximately 60 full time employees.

Daniel Joseph Rice: Net Power has approximately 60 full-time employees, plus another approximately 200 full-time resources across our various investor and supply chain partners are doing everything they can to make Net Power a commercial success. I'd like to commend this team and our partners for a great job maintaining an aggressive schedule to develop and deploy our technology. It's not easy, but they're finding ways to get it done, and I think it's important for our shareholders to see this. I'll now hand it over to Brian to give an operational update.

Ryan: Another approximately 200 full time resources across our various investor and supply chain partners.

Ryan: Doing everything they can to make net power a commercial success I'd like to commend this team and our partners for a great job, maintaining an aggressive schedule to develop and deploy our technology, it's not easy, but they're finding ways to get it done and I think it's important for our shareholders to see this I'll now hand, it over to Brian to give an operational update.

Brian: Thanks, Dan.

Brian Allen: Thanks Andy. Turning to slide 10 in the presentation, the team continues to make steady progress on site upgrades to our before demonstration facility in preparation for our four-phase validation campaign with Baker Hughes. It is an exciting time at the site, as our team is busy making control system modifications and installing new equipment, structural steel, electrical cable, and piping, all in preparation for near-term testing. On our last call, I presented this slide, and I will revisit key points before going into more depth on how this campaign will de-risk the utility-scale deployment.

Brian: Going to slide 10 in the presentation. The team continues to make steady progress on site upgrades to our core demonstration facility in preparation for a floor.

Brian: Elevation campaign with Baker Hughes.

An exciting part of the site as our team is busy and control system modifications and installing new equipment structural steel electrical cables and piping all in preparation for near term testing.

Brian: On our last call I presented this slide and I will revisit key points before going into more depth on how this campaign will derisk the utility scale deployments.

Brian Allen: The LaPorte Demonstration Facility was developed to prove the concept of the net power cycle, which we did when we synchronized to the grid in 2021, and to test key equipment, such as the turbo extender. The upcoming testing report will focus on validating and de-risking the Baker Hughes utility scale turbo standard and how to optimize its operation within our cycle. The campaign will follow four primary phases and will continue through 2026.

Brian: Look for demonstration facility was developed to prove the concept within the hour cycle, which we did when we synchronized to the grid in 2020 one.

Brian: Key equipment, such as this are hoops banner.

Brian: The upcoming testing before it will focus on validated and Derisking the Baker Hughes utility scale with Turbo Sander.

Brian: To optimize its operation within our cycle.

Brian: The campaigns will follow a four primary phases and will continue through 2026.

Brian Allen: The first phase of testing of a port focuses on the turbo standard burner, which is where combustion of natural gas and oxygen takes place in a CO2 environment. We will test multiple oxy-fueled burner configurations, and Baker will select the best burner heading into the next phase. We expect to begin Phase 1 testing in Q4 of this year.

Brian: The first phase of testing before it focuses on it.

Brian: <unk>, which is where combustion of natural gas and oxygen takes place.

Brian: The environment.

Brian: You also have multiple oxy fuel burn configurations, and Baker will select the best burner heading into the next phase <unk>.

Brian: We expect to begin phase one testing in Q4 of this year.

Brian Allen: The second phase of testing will take the selected oxy-fuel burner from Phase 1 and test it along with a combustion liner and other hardware to form a single demonstrator-sized combustion cam. This testing will allow us to optimize combustion under full abort demonstration conditions. The third phase of testing will involve scaling the demonstrator size and buster can from phase two to a utility scale can with clusters of burners, and then testing it with the goal of learning and optimizing the design of the utility scale combustor that will operate at Project Permian and beyond.

Brian: The second phase of testing will take the selected oxy fuel burner from phase, one and pass it along with the combustion liner and other hardware to form a single demonstrator size from Buckingham.

Brian: This testing will allow us to optimize combustion and full of work demonstration conditions.

Brian: The third phase of the passengers one involves scaling the demonstrator saw some buster for phase II. So utility scale clusters of burners, and then testing with the goal of learning and optimizing the design of the utility scale combustor that will operate project Permian MBR.

Brian Allen: The fourth and final phase will test the full demonstrator turbo expander, including the validation of materials and design architecture used on the turbo expander for Project Permian. Baker Hughes and Net Power will use this testing to tune our analytic and performance simulation models with the acquired test data.

Brian: The fourth and final phase, we will test a full demonstrator turbos theater <unk>.

Brian: Moving the validation on materials and design architecture used on the turbo expander for project Permian.

Brian: Baker Hughes net power will use this test sooner of analytics and performance simulation models with the acquired test there.

Brian Allen: We will confirm the demonstrator turbo standard and overall cycle operability and dynamic capability. All of this will allow us to confirm the overall demonstration plant cycle design and plant control system integrated with the Baker Hughes equipment, ensuring that we minimize residual risk of a first-of-a-kind prior to Project Permian's initial operation. Turning to slide 11, I will explain how the validation campaign before de-risks our utility scale deployment.

Brian: We will confirm the demonstrator turbo Sandra overall cycle Operability and capability.

Brian: All of this will allow us to confirm the overall demonstration plant cycle design plant control systems integrated with the Baker Hughes equipment, ensuring that we minimize the residual risk.

Brian: Firstly Mackay prior to the project Permian initial operations.

Brian: Turning to slide 11, I will explain how the validation campaign before de risks our utility scale deployments.

Brian Allen: The key new enabling technology being validated at Laporte is the Baker Hughes Turbo Expander integrated into the Net Power Cycle. As part of our joint development program with Baker Hughes, the Laporte Demonstrator Turbo Stander and Utility Scale Turbo Stander are both being designed by the same engineering team and manufactured in a nearly parallel fashion. The Laporte Demonstrator Turbo Spanner is a reduced-scale version of the utility-scale Turbo Spanner with a flow path sharing the same design philosophy.

Brian: Key new enabling technologies being validated that before is the Baker Hughes Turbo Sandor integrated into the net power cycle.

Brian: As part of our joint development program with Baker Hughes Little work demonstrator Turbo standard and utility scale.

Brian: There are both being designed by the same engineering team.

Brian: Factoring in a nearly parallel fashion.

Brian: So look work demonstrated turbo scanner is a reduced scale version of the utility scale service better with a slow path sharing the same design philosophy and has similar design architecture materials and maximum operating pressure and temperature.

Brian Allen: It has a similar design architecture, materials, and maximum operating pressure and temperature. Both the Laporte and Utility Scale Turbo standards will share the same combustion burners, although with a different quantity of burners and combustion cans to accommodate an 11-time difference in thermal energy input.

Brian: Most of the work and utility scale service centers will share the same combustion partners, although with a different quantity of burners in combustible gas silicon accommodate an 11 time difference and thermal energy.

Brian Allen: Both will also share similar operating characteristics in terms of the way the machines are started, ramped up in power, synchronized to the grid, follow load and dispatch commands from the plant operators, and then shut down. In short, its similarity in design and operation allows Baker to use the game to get the most benefit from our existing demonstration facility. So what does all of this do for the utility scale plan? It allows Net Power to begin initial operation of the first plant, Project Permian, having already gained real data to optimize the plant design, tune our cycle performance models, and update the plant control system.

Brian: Both will also share a similar operating characteristics in terms of the Mylan machines or started ramp up in power synchronized to the grid follow load and dispatch commands in the plant operators and then shut down.

Brian: In short its similarity and design and operation I will ask Baker used to gain the most benefit from our existing demonstration facility.

Brian: So what does all of this do for the utility scale plants.

Brian: Allows enough power to begin initial operation of the first class project Permian, having already gained real data to optimize the plant design soon our cycle performance models and update the plant control system.

Brian Allen: And it allows Baker Hughes to gain significant lessons learned, improve their turbine controls and operability, and make any other final modifications, if necessary, based on the validation campaign results. Overall, it's an incredible opportunity to de-risk project permits.

Brian: And it allows baker Hughes to gain significant lessons learn improve their turbine controls in operability and make any other final modifications if necessary based on the validation campaign results.

Brian: <unk> is an incredible opportunity to Derisk project Permian.

Brian Allen: Next, I will turn the slides over for an update on Project Permian. The project remains on schedule with initial power generation expected to occur between the second half of 2027 and the first half of 2028. Our key upcoming 2024 milestones are highlighted on the slide. We are advancing our front-end engineering design, or FEED, with Zachary. Year-to-date, we have completed our initial sets of heat and mass balances, process flow diagrams, and piping and instrumentation diagrams.

Brian: Next I will turn to slide four for an update on project Permian.

Brian: The project remains on schedule with initial power generation expected to occur between the second half of 2027 and first half of 'twenty.

Brian: Our key upcoming milestones.

Brian: More milestones are highlighted on the slide.

Brian: We are advancing our front end engineering design or feed what exactly.

Brian: Year to date, we have completed our initial sets of heat maps balances process flow diagrams, and our piping and instrumentation diagrams.

Brian Allen: Together, these deliverables complete a pivotal step that defines, at this stage of the project, the primary equipment and materials required, including compressors, pumps, heat exchangers, measurement instruments, valves, piping, and so forth. Zachary has been advancing the overall plant 3D layout in parallel and can now proceed towards finalizing the finished stage plant design. They will then firm up their equipment quotes and their quantification of total pipe, electrical cable, and wiring, structural steel, concrete, et cetera, and the cost of construction.

Brian: Together these deliverables complete a pivotal step that defines at this stage of the process.

Brian: Primary equipment and materials required, including compressors pumps heat exchangers measurement instruments valves piping and so forth.

Brian: Zachary has been advancing the overall plan <unk> laid out in parallel.

Brian: Now proceed towards finalizing the feed stage plant design.

Brian: Dan will then firm up their equipment quotes and their quantification of total pie electrical cable and wiring structural steel concrete et cetera, and the cost to construct them.

Brian Allen: Utilizing all of this information, Zachary will finalize its open book estimate by the end of the year. To maintain the project schedule, we will continue to order long-lead components throughout 2024. We are currently out to bid on the major plant generator step-up transformer and switch yard circuit breakers and expect that their manufacturing lead times will support our project schedule. We have also progressed our generation interconnect to the final interconnection study phase.

Brian: Utilizing all of this information Zachary will finalize their open book estimate by the end of the year.

Brian: So maintaining the project schedule, we will continue to order long lead components throughout 2024.

Brian: We are currently up a bit on the major plant generator step up transformer and switch our circuit breakers and expect that their manufacturing lead times will support our project schedule.

Brian: We've also progressed our generation interconnect.

Brian: Final interconnection study phase.

Brian Allen: Regarding the Air Separation Unit, or ASU, we have made great progress on early engineering. Together with our ASU provider, we have made process and equipment selections and are entering a feed phase with them shortly. We have done a lot of work on logistics analysis to ensure we have the ability to transport components from port locations on the Gulf Coast in Texas to the Midland-Odessa region. With that, I'll pass it off to Akash for the financial update.

Regarding the air separation unit or ASU, we have made great progress on early engineering.

Brian: Together with our <unk> provider, we have made process and equipment selections and are entering a feed based with them shortly.

Brian: We've done a lot of work on logistics analysis to ensure we have the ability to transport components from port locations on the Gulf Coast in Texas to the Midland Odessa region.

Speaker Change: With that ill pass it off to our costs for the financial updates.

Brian: Thanks, Brian.

Akash Patel: Net Power continues to prudently deploy our capital, ending the first quarter of 2024 with a strong balance sheet including approximately $625 million of cash and investment. Consistent with the past several quarters, the current interest rate environment has allowed us to put our balance sheet cash-to-work to materially offset our corporate spending. In the first quarter, our cash flow used in operations was approximately $3 million, which included a cash payment of more than $3 million under the Baker Use Shady Act.

Speaker Change: Power continues to prudently deploy our capital and in the first quarter of 2024, with a strong balance sheet, including approximately $625 million of cash and investments.

Speaker Change: Consistent with the past several quarters. The current interest rate environment has allowed us to put our balance sheet cash to work to materially offset our corporate staff.

Speaker Change: In the first quarter, our cash flow used in operations was approximately $3 million, which included a cash payment of more than 3 million under the Baker.

Speaker Change: Yeah.

Akash Patel: However, this high interest rate environment won't last forever, and we expect cash flow use in operations to continue increasing as we build out the organization, progress the joint development program with Baker Hughes, and ramp up activity at LaPorte. For the quarter, our total capital expenditures were approximately $10 million, comprised of approximately $6 million of capitalized costs associated with the ongoing project permeant development activities and approximately $4 million spent on report modifications and upgrades ahead of testing that is expected to begin in the fourth quarter of this year.

Speaker Change: However, this high interest rate environment wont last forever, and we expect cash flow used in operations to continue increasing as we build out the organization progressed, the joint development program with Baker Hughes and ramp up activity at La Porte.

Speaker Change: For the quarter, our total capital expenditures were approximately $10 million comprised of approximately $6 million of capitalized costs associated with the ongoing project Permian development activities and approximately 4 million spent on laporte modifications and upgrades ahead of testing that is expected to begin in the fourth quarter of this year.

Akash Patel: Net Power's fully diluted share count was approximately 248 million shares as of March 31, 2024. This was comprised of approximately 214 million Class A and Class B vested shares currently outstanding. $19.5 million shares issuable upon the exercise of outstanding public and private warrants, which if exercised, would give Net Power an additional $225 million in cash. 1.7 million shares subject to earnouts or vesting requirements, and approximately 13 million authorized shares issuable pursuant to the Baker Hughes Joint Development Agreement.

Speaker Change: Net Paris fully diluted share count was approximately 248 million shares as of March 31 2024.

Speaker Change: This was comprised of approximately 214 million class, a and class B vested shares currently outstanding nine.

Speaker Change: 19, and a half million shares issuable upon the exercise of outstanding public and private warrants, which is cash exercise, we're getting that power and additional $225 million of cash $1 7 million shares subject to earn outs are vesting requirements and approximately 13 million authorized shares issuable pursuant to the Baker.

Speaker Change: I'm just trying to calm agreement.

Akash Patel: For a detailed breakdown of our share count, please refer to our annual and quarterly financials on file with the SEC. That concludes our prepared remarks. I'll now pass it back to the operator to open up the line for Q&A.

Speaker Change: For a detailed breakdown of our share count please refer to our annual and quarterly financials on file with the SEC.

Speaker Change: That concludes our prepared remarks, I'll now pass it back to the operator to open up the line for Q&A.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question Q, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in question Q. You may press star 2 if you'd like to remove your question from the queue. Once again, that's star one to be placed in the question queue. Our first question is coming from Martin Malloy from Johnson and Rice. Your line is now live.

Speaker Change: Thank you well now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he'd like to remove your question from the queue. Once again Thats star one to be placed in the <unk>.

<unk>. Our first question is coming from Martin Malloy from Johnson Rice. Your line is now live.

Martin Whittier Malloy: Good morning. Thank you for taking my question. The first question was about the interconnection filing. Can you give us any more information about the geographic location or if there's a filing associated with that for carbon sequestration or maybe the timing of that filing?

Martin Whittier Malloy: Good morning, Thank you for taking my question.

Martin Whittier Malloy: The first question was around.

Martin Whittier Malloy: Around the the interconnection filing can you give us any more information about the.

Martin Whittier Malloy: The location or the.

Martin Whittier Malloy: The if there was a filing associated with that for carbon sequestration and maybe the timing of that filing.

Daniel Joseph Rice: Hey Marty, it's Danny. Good to hear from you. In terms of like specific location, we're not disclosing any just for competitive reasons, but you know, like we've said in the past, it's in the northern MISO region. MISO goes all the way from Michigan all the way down to Louisiana and everything in between, and it'll be in the northern section of MISO. It'll ultimately get out there publicly once the filing is accepted by MISO and we proceed into the next phase of the interconnect.

Martin Whittier Malloy: Hey, Marty it's Danny good to hear from you.

Daniel Joseph Rice: And in terms of like specific location, where we're not disclosing just for competitive reasons, but you know like we've said in the past it's in the northern MISO region.

Speaker Change: So it goes all the way from Michigan, all the way down until Louisiana and everything in between.

Speaker Change: It'll be in the northern section of myself.

Speaker Change: They will ultimately get out there publicly once that once the filing is accepted by myself and we're proceeding into the next phase of the interconnect.

Daniel Joseph Rice: And then on the subsurface side of things, our partners and I will be looking at filing class 6, sequestration permits in 2024. So I think when we fast-forward three or four years, we'll have class 6 permits, and we'll have the interconnection into the northern MISO system. So everything's kind of going according to plan up there, and we couldn't get that power plant on soon enough. You know that the northern MISO system really, really needs clean base load power probably as much as any other system in the country.

Speaker Change: And then on the subsurface side of things.

Our partners and I won't be looking at filing classics.

Speaker Change: Sequestration impairments in 2020 so.

Speaker Change: I think when we fast forward three or four years, we'll have class fixed permits and we will have the interconnect into the northern myself system. So everything's kind of going according to plan up there and.

Speaker Change: We couldn't get that power plant on soon enough.

Speaker Change: Northern myself system really really needs clean baseload power, probably as much as any other system in the country.

Martin Whittier Malloy: And for my second question, I just wanted to maybe see if you could provide a little more information about recent customer conversations. And you started off the prepared remarks talking about the total addressable market increasing faster than expected, and with press reports about the need for additional power for data centers and reshoring manufacturing, et cetera. Can you maybe talk about the nature and the types of customers that you're having these conversations with?

Speaker Change: Okay.

Speaker Change: Thank you and for my second question just wanted to maybe see if you could provide a little more information about recent customer conversations and you started off the prepared remarks talking about the total addressable market increasing faster than expected and with the the press reports about the knee.

Need for additional power for data centers, and Richard and manufacturing et cetera can you maybe talk about the the nature and the types of customers that youre, having these conversations with.

Daniel Joseph Rice: Yeah, you know what? It's been the same type of companies over the last few years. You know, we've been talking to the tech companies for a while. You know, they have a growing need for baseload power for their data centers. So those conversations, I wouldn't say are necessarily new, they're just now picking up because they're really starting to look at almost needing to start to procure power, like going to the source of generation rather than just being an active participant in the open market and in the grid systems.

Speaker Change: Yeah. It's a you know it's been the same type of companies over the last few years.

Speaker Change: You know we've been talking to the to the tech companies for a while.

Speaker Change: You know they they have a growing need for baseload power for data centers. So those conversations I wouldn't say necessarily new theyre, just not picking up as they're really starting to look at them.

Speaker Change: Almost needing to start to procure power like going to the source of generation rather than just being an.

Speaker Change: An active participant in the open market and the grid systems I think everybody is now starting to realize.

Daniel Joseph Rice: I think everybody is now starting to realize baseload reliable power has gone from being an abundant, low-cost commodity to now becoming a pretty sacred resource. And that's really only kind of happened over the course of the last few years.

Speaker Change: Baseload reliable power has gone from being an abundant.

Speaker Change: Low cost commodity to now be coming pretty sacred resource.

Speaker Change: And that's really only kind of transpired over the course of the last few years and then I think when everybody looks ahead with just the clean ambitions that you know we have it at the EPA and and that crashed most states, there's really no such thing as clean affordable Baseload today.

Daniel Joseph Rice: And then I think when everybody looks ahead with just the clean ambitions that, you know, we have at the EPA and across most states, there's really no such thing as clean, affordable baseload today. And so, you know, folks are starting to pay a lot more attention to those potential solutions that are being developed that give you that energy trifecta. So we're seeing a bunch from the tech folks, but we're also seeing it from the utility industry, just the power industry in general, who have obviously been the primary customers and custodians of these types of generating assets.

Speaker Change: And so folks are starting to pay a lot more attention to those potential solutions that are being developed that gave you those that energy trifecta. So we're seeing a bunch of them from the tech folks.

Speaker Change: But we're also seeing that the utility industry and just the power industry in general you know whoever who have obviously been like the primary customers and custodians of these type of generating assets.

Daniel Joseph Rice: And, you know, the shortage of power that we're seeing on the tech side for data centers is even greater on just the broader grid system where you see these system operators across MISO and PJM. Heck, even ERCOT is now saying that by 2030, we're seeing a 30 gigawatt shortfall in peak summer power demand, which is a little bit amazing since Texas is, I think all of us would say, probably the most abundant place for power generation. They're also seeing a significant shortfall, too.

Speaker Change: You know the shortage of power that we're seeing on the tech side for data centers.

Speaker Change: Is is even greater on just the broader grid system, where you see these system operators across MISO PJM heck, even even arcata is not saying by 2034.

Speaker Change: King of 30 gigawatt shortfall and in peak summer power demand.

Speaker Change: Which is a little bit amazing since Texas is what we what I think all of US would say, it's probably the most abundant place for power generation, they're seeing significant shortfall too so.

Speaker Change: Seeing an across the board in terms of.

Speaker Change: Interest and net power.

Daniel Joseph Rice: So we're kind of seeing it across the board in terms of folks' interest in net power. And so I think with all of these inbounds, I think where it's really pointing us to is once our first plant is online, I think that's when we have an entirely new pathway to generate low-carbon power that's baseload, that's affordable. And so I think one of the things that Brian and his team on the operational side, particularly on the supply chain side, are focused on is, after the first plant comes online, how quickly can we scale up into full-scale manufacturing mode where we're able to produce dozens of these plants per year.

Speaker Change: And so I think with with all of these inbounds.

Speaker Change: Think what where its really pointing to is once our first plant is online I think that's when we have an entirely new pathway to generate low carbon power. That's baseload, that's affordable and so I think one of the things that Brian and his team on the operational side, particularly on the supply chain side is focused on theirs.

Speaker Change: After the first plant comes online how quickly can we scale up into full scale manufacturing mode, where we're able to produce dozens of these plants per year. So it's it's a pretty ambitious but quite realistic opportunity for us just because the demand that we're kind of seeing knocking at our door serial number one is it's unlike anything.

Daniel Joseph Rice: So it's a pretty ambitious but quite realistic opportunity for us, just because the demand that we're kind of seeing knocking at our door post-serial number one is unlike anything that I think the power industry has seen before. But it's certainly, you know, one of the underlying reasons why we said it was really, really important we get Net Power public. We extend the public profile of the business, but we also capitalize the business and align it with long-term shareholders that see the vision and see the potential and can help us capitalize on this to capture that market that's coming our way.

Speaker Change: But I think the power industry has seen before but it's it's certainly you know one of the underlying reasons why we said, it's really really important we get that power public we extend the public profile of the business, but we also capitalize the business.

Speaker Change: With long term shareholders that either vision and see the potential and can help us capitalize this to capture that market that's coming our way.

Martin Whittier Malloy: Great. Thank you very much. I'll turn it back.

Speaker Change: Great. Thank you very much I'll turn it back.

Speaker Change: Thanks Marty.

Leo Mariani: Thanks. The next question is coming from Leo Mariani from Rolls-Royce Camry Line, but it's not live.

Speaker Change: Thanks next question is coming from Leo Mariani from Roskam camera line, there's not a lot.

Daniel Joseph Rice: I was hoping to expand a bit on the customer discussion here, just specifically with respect to OP1. Have you guys actually kind of engaged a counterparty that's committed there, or is this still something that Net Power is kind of funding in the early stages and sort of progressing, and maybe there's some conversations about, you know, getting somebody to step into that actual role. So maybe just kind of talk about that kind of OP1, I guess, project number two.

Leo Mariani: Hey, I was hoping to expand a bit on the customer discussion here.

Leo Mariani: Specifically with respect to <unk> one have.

Leo Mariani: Have you guys actually kind of engaged.

Leo Mariani: Counterparty that's committed there or is this still something that that power is kind of funding in the early stages and in toward are progressing and maybe theres. Some some conversations about.

Leo Mariani: Getting somebody to step into that that actual roles. So maybe just kind of talk about that kind of O T. One I guess project number two.

Daniel Joseph Rice: Yeah, sure, Leo. And it's still to be determined if it'll ultimately be serial number two or serial number three. I think that's one of the flexibilities we have around the originating projects is it gives us total creative control over not just the timing of the project but also what critical strategic stakeholders do we want to bring into this project? Because I think the way we're really envisioning this project is it's not just a one-off plant, right?

Leo Mariani: Yeah, shortly and it's still to be determined if or if it will ultimately be serial number two we're serial number three I think that's one of the Flexibilities we have around the originated projects as it gives us total creative control over not just the timing of the project, but also what critical.

Leo Mariani: Strategic stakeholders do we wanted to bring into this project because I think the way we're really envisioning. This project is it's not just a one off plant right I think the area that we're targeting in the market that we're targeting is much larger than just one plant I mean, we're talking about a market that could accommodate 20 to fortinet power plants.

Daniel Joseph Rice: I think the area that we're targeting in the market that we're targeting is much larger than just one plant. I mean, we're talking about a market that could accommodate 20 to 40 net power plants. And so, as we look at just partners and strategic partners, we had a slide in one of our earnings decks a few quarters ago where we kind of listed out all of the various stakeholders that we would want to bring into these consortiums. And it ranges from the utilities that are in the area.

Leo Mariani: So as we look at just partners and strategic partners.

Leo Mariani: We had a slide in one of our earnings deck, a few quarters ago, where we kind of listed out all the various stakeholders that we would want to bring into these consortium.

Daniel Joseph Rice: It is not just like the local government and the local landowners and the stakeholders at the community level, but it's the infrastructure capital providers. There are going to be really cool opportunities to be able to start looking at co-location of data centers for some of these plants, whether it's OP1 or OP2 or OP3. And so, I think one of the real neat benefits of just this origination strategy is that it gives us a lot of creative latitude over what other strategic partners we want to bring into these hubs.

Leo Mariani: And it ranges from the utilities that are in the area. It is not just like the local government and the local landowners and the stakeholders at the community level, but it's the infrastructure capital providers, there's going to be really cool opportunities to be able to start looking at co location of data centers are for some of these plants, whether it's O P Y R O P to our own.

Leo Mariani: <unk> three <unk>.

Leo Mariani: And so I think one of the real neat benefits of just the origination strategy is it gives us a lot of just creative latitude over what are the strategic partners do we want to bring into these hubs because while I think it's at the center of that hub net tower is powering it but there's a whole lot of stakeholders that really benefit from having that clean affordable.

Daniel Joseph Rice: Because while I think at the center of that hub, net power is powering it, there's a whole lot of stakeholders that really benefit from having that clean, affordable, reliable power, either for the grid or for their behind-the-meter solution. So, we're in the early days of really assessing out what are the strategic stakeholders we want to have in this northern MISO hub. But I would imagine it'll be different and really catered to each market where we start to establish these origination hubs.

Leo Mariani: Reliable power either for the grid or for their behind the meter solution. So we're in the early days of really really you know assessing out where does the strategic stakeholders. We want to have in this northern MISO hub.

Leo Mariani: But I would imagine it'll be it'll be different and really catered for each market, where we start to establish these origination hubs.

Speaker Change: Okay. I appreciate that and then just wanted to follow up quickly on the cash burn that you all were talking about I think a cost you kind of referenced that might be accelerating a bit here. In 2024 can you maybe just kind of speak to any of the components of that you talked about kind of.

Leo Mariani: Okay, I appreciate that. And then I just wanted to follow up quickly on the cash burn that y'all were talking about. I think Akash, you kind of referenced it, might be accelerating a bit here in 2024. Can you maybe just kind of speak to any of the components of that? You talked about kind of 10 million in CapEx in the first quarter, like some of that was 6 million capitalized, 4 million actually spent, but how do you see that kind of progressing for the rest of the year?

Speaker Change: $10 million in Capex in the first quarter like some of that was.

Speaker Change: Million capitalized 4 million actually spent but.

How do you see that kind of progressing for the rest of the year what type of Capex that we see is that there's going to be the primary component of the cash burn do you expect I know interest rates could fall, but assuming they stay steady you think kind of the interest on the cash balance kind of handle the internal sort of G&A.

Leo Mariani: What type of CapEx should we see? And is that gonna be the primary component of the cash burn? Do you expect, yeah, I know interest rates could fall, but assuming they stay steady, do you think kind of the interest on the cash balance kind of handles the internal sort of GNA? Yeah, thanks, Leo. Yeah, you're spot on there. So, you know, two components.

Yeah. Thanks Leo.

Speaker Change: Yes.

Speaker Change: We are spot on there. So you know to two components on the cash burn from operations. This quarter we were at.

Akash Patel: On the cash burn from operations, this quarter, we were at roughly $2.7 million of cash burn, but that includes our cash payment under the Baker Hughes JBA, which was approximately $3.7 million. So, if you back that out and you back out the cash interest received, and just multiply by four for a run rate annualized figure, the cash burn from operations is roughly $40 million right now. And that's, you know, being covered pretty materially by the cash interest received. Now, as interest rates come down and we actually start spending money on the CapEx side, you'll start seeing that accelerate a little bit. But, you know, it is very fortunate that we overcapitalized the balance sheet.

Speaker Change: Roughly $2 $7 million of cash burn, but that includes our Caspian and under the Baker Hughes J D. A.

Speaker Change: It was approximately one 7 million. So if you if you back that out and you back out the cash interest received.

Speaker Change: Just multiply it by four for a run rate annualized figure I think that the cash burn from operations is roughly $40 million right now and that's being covered pretty materially by the the cash interest received now as interest rates come down and we actually start spending money on the capex side, you'll start seeing that accelerate a little bit but.

Speaker Change: Very fortunate that we have a capitalized balance sheet, we continue to be pretty prudent on how we build our business to ensure that we right size our capital plan.

Akash Patel: We continue to be pretty prudent in how we, you know, build out the business to ensure that, you know, we right-size our capital plan. On the CapEx side of the house, you know, when we overcapitalized the balance sheet on the GoPublic transaction, we said that roughly $200 million was our first dollars into the project to ensure that, you know, we continue releasing long leads, et cetera. Now, we're in active negotiation with several of the long lead providers.

Speaker Change: The capex side of the house.

When we overcapitalized the balance sheet.

Speaker Change: On the go public transaction.

Speaker Change: He said that roughly $200 million is our $1st into the to the project to ensure that.

Speaker Change: We continue releasing Walgreens et cetera, now we're in active negotiation with several of the long lead providers.

Akash Patel: And so we haven't really said when that cash will go out the door. Obviously, payment terms are incredibly important, and we'd like to keep that cash as long as we can. But you can expect that to come through over the next, call it, year, the pace of which, you know, it'll be back up later this year and then hopefully, we can get some pushed out. But it's still a little early for us to say when exactly on a quarterly basis that will accelerate.

Speaker Change: Providers and so we haven't really said when that cash will go out the door. Obviously good in terms of are incredibly important and we'd like to keep that cash once again.

Speaker Change: But you can expect that to come through over the next call it year.

Speaker Change: The pace of which I will get back backup waiting for this year and then hopefully we can get some pushed out so it's a little early for us to say when exactly on a quarterly basis that that works alright.

Speaker Change: Okay. Thank you.

Thomas Sellers Meric: OK, thank you. Thank you. The next question today is coming from Thomas Meric from Jana, Montgomery. Your line is not live.

Speaker Change: Thank you. Your next question today is coming from Thomas merits of Janney Montgomery. Your line is now live.

Thomas Sellers Meric: Good morning. Thanks for the time and thanks for the questions.

Thomas Sellers Meric: Good morning, Thanks for the time and thanks, so much.

Thomas Sellers Meric: Question.

Thomas Sellers Meric: On supply and demand, I'm curious about your thoughts about the next couple of years. And I want to dive into ERCOT, but Yeah, I think this is related to all the RTOs, specifically just kind of thinking about load growth, the need for dispatchable generators, the EPA rule, and just the general underwriting of risk to build a new dispatchable resource. So the question is really just how do you see the supply and demand of generators in the next few years, specifically, you know, dispatchable assets.

Thomas Sellers Meric: On the supply and demand I'm curious your thoughts.

Thomas Sellers Meric: The next couple of years, and I want to dive into ERCOT, but yes.

Thomas Sellers Meric: I think this is related to all the archaeas.

Thomas Sellers Meric: But specifically just kind of thinking about load growth the need purchase basketball generators. The EPA rule and just the general underwriting of risks to build a new dispatch able resource for the question.

Thomas Sellers Meric: It's really just how do you see the supply and demand.

Thomas Sellers Meric: Generators in the next few years, specifically dispatch of coal assets.

Daniel Joseph Rice: Yeah, no, I think, Thomas, I think that's like the billion dollar question. It may even be a trillion dollar question at this point.

Yeah, No I think Thomas I think that's that's like the billion dollar question. It may even be trillions of dollar question at this point I think.

Thomas Sellers Meric: And when you kind of heard us talking over the course of the last few quarters about just the underlying thesis for net power. It was really like through the lens of this we have a grid system, where we really underinvested in baseload assets over the course of the last decade really since the shale revolution in natural gas, replacing coal power Gen and the <unk>.

Daniel Joseph Rice: I think, you know, when you kind of heard us talking over the course of the last few quarters about just the underlying thesis for net power, it was really through the lens of this. We have a grid system where we've really underinvested in baseload assets over the course of the last decade, you know, really since the shale revolution and natural gas replacing coal power generation in the country. You know, we've really seen this underinvestment in baseload dispatchable assets and more of an overinvestment in renewable assets.

Thomas Sellers Meric: Country, you know, we've really seen this underinvestment in base load dispatched the last I'd say more of an over investment into the renewable assets.

Daniel Joseph Rice: And so, we're in this real predicament now where we have the system operators saying, hey, by the end of 2030, we're seeing all these decommissioning notices of baseload plants that are just aging, that are underutilized, that are uneconomic, looking to come off the grid. And we have a real problem because nobody's backfilling with new baseload power generation. And so, this is all like – all of this stuff kind of predated the new load forecasts for data centers and what data centers aspire to do.

Thomas Sellers Meric: And so we're in this real predict commit now where we have the system, operator, saying hey by the end of 'twenty 30, whereas we're seeing all these decommissioning notices of Baseload plants that are just aging that are underutilized better uneconomic looking to come off the grid system and we have a real problem because nobody's back filling with new Baseload power generation.

Thomas Sellers Meric: And so this is this is all like all of this stuff kind of predated the new load forecasts for data centers and what the data vendors aspire to do and so when you kind of start to add that on top you start to see problems start to just shortfalls really start to emerge quite quickly.

Daniel Joseph Rice: And so, when you kind of start to add that on top, you start to see problems start to – just shortfalls really start to emerge quite quickly. And so, then, you know, we have the EPA rules which are saying, hey, look, if we want to actually decarbonize, we really need to find ways to reduce emissions from coal and gas power generation. So, we totally agree with that sentiment.

Thomas Sellers Meric: And so then you know we have we have the EPA rules, which we're saying hey look if we want to actually Decarbonize, we really need to find ways to reduce emissions from coal and gas power generation. So we totally agree with that sentiment that really is like the other basis of net power was if you really want to decarbonize. The grid, you really need to find a way to capture C O two from colon.

Daniel Joseph Rice: That really is, like, the other basis of net power was that if you really want to decarbonize the grid, you really need to find a way to capture CO2 from coal and gas power generation, not to make coal and gas power generation go away, but just make the emissions go away. And so, that was really the mission that NetPower was on, to find ways to decarbonize the grid. So, that's happening, and that will happen before, you know, before too long.

Thomas Sellers Meric: Power generation not to make coal and gas power generation go away, but just make the admissions go away and so that was really the mission that net power is on us to find ways to decarbonize. The grid, so that that's happening and that will happen before.

Daniel Joseph Rice: I think the real question is, is dispatchable power going to be able to ramp up to meet just the load growth that we're going to be seeing on these grid systems, knowing that that load growth needs to be met with dispatchable baseload power generation that's affordable. Otherwise, that load's just not going to get met by the supply.

Thomas Sellers Meric: For too long.

Thomas Sellers Meric: I think the real question is is dispatch of a power are going to be able to ramp up to meet just the load growth that we're gonna be seeing on these grid system, knowing that that load growth needs to be met with dispatch of coal Baseload power generation, that's affordable otherwise that that.

Thomas Sellers Meric: It's just not gonna get met by by the supply.

Daniel Joseph Rice: And so, that's going to be, like, the billion-dollar question is, are we going to see new baseload plants, which, you know, at this point are just, you know, natural gas, combined cycle, simple cycle facilities, built in the face of the EPA regulations that are coming down the pike that the EPA has finalized? I'm sure it's going to be highly litigated, but I wonder if that can have a chilling effect on folks wanting to build to meet the load growth that we're going to be seeing. I don't know.

Thomas Sellers Meric: And so that's going to be like the the billion. Dollar question is how are we going to see new Baseload, which you know at this point or just you know natural gas combined cycle simple cycle facilities.

Thomas Sellers Meric: Built in the face of the you know the EPA regulations that are coming down the pike that the EPA is finalized.

Thomas Sellers Meric: I'm sure, it's gonna be highly litigated, but I wonder is that can adult throat.

Thomas Sellers Meric: Have a chilling effect on folks wanting to build to meet that load.

Thomas Sellers Meric: Load growth that we're gonna be think I don't know I think it's anybody's question, but I think that the EPA has made it clear that they want to see lower carbon solutions, making its way onto the grid system. So like I think if anything this should send a signal to the market to the investment community that we need to continue to accelerate the.

Daniel Joseph Rice: I think it's anybody's question, but I think that the EPA has made it clear that they want to see lower carbon solutions making their way onto the grid system. I think, if anything, this should send a signal to the market, to the investment community that we need to continue to accelerate the investment in low carbon solutions.

Thomas Sellers Meric: In low carbon solutions and guess what what the EPA is really trying to say through this ruling is we need you to find ways to accelerate the deployment of Baseload dispatch of a power generation that's focused on natural gas because I think everybody unequivocally agrees the only way we're going to be able to scale to meet this load growth is going to be from.

Daniel Joseph Rice: What the EPA is really trying to say through this ruling is we need you to find ways to accelerate the deployment of baseload dispatchable power generation that's focused on natural gas. I think everybody unequivocally agrees the only way we're going to be able to scale to meet this load growth is going to be from natural gas. It could come from coal, but coal is kind of really working its way out of the system completely, and it's really just being replaced by gas.

Thomas Sellers Meric: Natural gas it could come from coal, but cold kind of really working its way out of the system completely and it's really just being replaced by gas and so I think the only way that we're going to be able to see us meet this load growth is going to be from natural gas and it's really going to become a question of is the EPA going to relax the rules a little bit more or are we going to see the industry step up.

Daniel Joseph Rice: I think the only way that we're going to be able to meet this load growth is going to be through natural gas. It's really going to become a question of whether the EPA is going to relax its rules a little bit more, or are we going to see the industry step up and put a lot more capital into really cool solutions like Net Power that have demonstrated that we can generate clean power from natural gas.

Thomas Sellers Meric: And put a lot more capital into really cool solutions like net power that have demonstrated we can generate clean power from natural gas, what we really need the industry to do is step up and put that capital to work to start deploying this stuff at scale now it really starts happening after our first plant comes online in 27, 28, but really to be able to start to hit the <unk>.

Daniel Joseph Rice: What we really need the industry to do is step up and put that capital to work to start deploying this stuff at scale. Now it really starts happening after our first plant comes online in 27-28, but really to be able to start to hit the EPA's targeted goals, the US's targeted goals by the middle part of next decade, we have to be ready on the supply chain to be able to scale from one plant a year back to 30 plants per year by the beginning of next decade to have any shot of being able to really just save the grid from what's coming down the pike.

E P H targeted goals the U S. Do you target it goes by the middle part of the next decade, we have to be ready on the supply chain to be able to scale from one plant a year to buy 30 plants per year, but at the beginning of next decade to have any shot of being able to really just stayed with the grid from from from what's coming down the pike and if not if natural gas doesn't show.

Daniel Joseph Rice: And if not, if natural gas doesn't show up, I think what you end up having is you have power prices really start to spike because you're going to start to see more load growth that's looking for 24-7 power than exists on the grid system. And will that be enough, those high, major prices be enough to induce somebody to build a combined cycle plant that right now would be out of compliance if those EPA rules get finalized and are put into law for good? So it's such an interesting macro setup.

Thomas Sellers Meric: I think where you ended up happening is you have power prices really start to spike because youre going to start to see more load growth. That's looking for a 24 seven power than exists on the grid system and will that be enough. Those major major prices be enough to induce somebody to build a combined cycle plant that right now.

Thomas Sellers Meric: Would be out of compliance if those EPA rules get finalized and are putting into law for good.

Thomas Sellers Meric: So it's it's such an interesting macro setup.

Daniel Joseph Rice: But I think the thing with Net Power that makes us a little bit unique is we're sort of hedged because I think our approach before was, look, just with the 45Q program, that care is enough for us to say these are economical plants to be able to deploy in just about every grid system across the US, especially once we're into manufacturing mode and we get our CapEx down from that first plant to $700 million by the 30th plant. That's just an estimate, but that's ultimately where we want to trend down to.

Thomas Sellers Meric: But I think the thing with net power that makes us a little bit unique because we're sort of hedged.

Thomas Sellers Meric: I think our our approach before was look just went to 45 key program like that carrier is enough for us to say these are economic planes to be to be able to deploy in just about every grid system across the U S, especially once we're into manufacturing mode, and we get our capex down from that first plants to $700 million by the third.

Thomas Sellers Meric: The plant that's just an estimate but that's ultimately where we want it trend down too.

Thomas Sellers Meric: So we're sitting here in a place where we're good with just a 45 Q just that Karen we didn't and we don't necessarily need a stick on the backend because I think at the end of the day, the economics should prevail, especially where the commodity like power.

Daniel Joseph Rice: And so we're sitting here in a place where we're good with just the 45Q, just that care. And we don't necessarily need a stick on the back end because I think, at the end of the day, economics should prevail, especially with a commodity like power. And so we've designed this thing so that we can compete by being able to leverage the 45Q to accelerate our development into manufacturing mode, so we don't necessarily need that stick. But certainly, if we get that stick in the form of the EPA rules, it really will just accelerate us even farther. And then guess what?

Thomas Sellers Meric: So we've designed this thing so that we can compete being able to leverage the 45 Q to accelerate our development into manufacturing mode that we don't necessarily need that stick, but certainly after we get that stick in the form of the EPA rules. It really will just accelerate us even further and then guess what for the folks that are just proactively deploying that power just on the economics.

Daniel Joseph Rice: For the folks that are just proactively deploying Net Power just because of the economics, their CapEx is going to come down because that means we're going to be deploying even more plants because of that EPA mandate. So I think that the long and the short of it is that the EPA rules are great for us. The 45Q was already amazing for us to set us up for growth in the United States, and so I think when you kind of put the two together, whether or not we have the EPA, I think Net Power is going to be in a really, really good place to be able to comply with whatever the EPA throws our way.

Thomas Sellers Meric: Their capex is going to come down because that means we're gonna be deploying even more plants because of that EPA mandates. So.

Thomas Sellers Meric: I think that the long and the short of it is the EPA rules are great for us. The 45 Q was already amazing for us to set us up for for growth in the United States.

Thomas Sellers Meric: And so I think when you kind of put the two together whether or not we have the the EPA I think that power is going to be in a really really good place to be able to comply with whatever the EPA throws our way.

Daniel Joseph Rice: Thanks, that was a great response on the EPA. Just curious, Net Power was one of just a handful of private sector companies mentioned in the final document. I'm curious just how you reacted to that, or what your conversations have been like since the rule was published. Maybe just any kind of anecdotes or commentary about the inclusion of Net Power's technology in that final rule would be helpful. Yeah, I mean, I think some of just the...

Speaker Change: Thanks, So there's a great response on that you can just.

Speaker Change: Net power was one of just a handful of private sector companies mentioned in the final document I'm curious just how you reacted to that or what if conversations been like since.

Speaker Change: The rule was published maybe just any kind of anecdotes or commentary about the inclusion of <unk>.

Speaker Change: Net power's technology in that final rule would be helpful.

Daniel Joseph Rice: Yeah, I mean, just some color for our investors that haven't been following it too closely. You know, the EPA proposed the rules last fall, and they then opened it up for a comment period.

Speaker Change: Yeah, I mean, I think some of just.

Speaker Change: The color for the for our investors that that hasn't been following it too too closely the EPA proposed the rules last fall you then open it up for a comment period.

Daniel Joseph Rice: You know, we didn't know that we were going to get called up by name specifically as an example of promising technologies coming down the pike on the carbon capture side. And so when they had their proposed ruling, and then they opened it up for comment, we saw that as an opportunity just to let everybody know, not just the EPA, but all of the other readers of that comment period, just the facts and circumstances of Net Power.

Speaker Change: We didn't know that we were going to get called out by name specifically as an example of promising technologies coming down the pike on the carbon capture side and so when they had their proposed ruling and then they open it up for comment we saw that as an opportunity just to let everybody know not just the E. P. A but all of the other readers of that comment period.

Speaker Change: The facts and circumstances of net power and so we were just matter of fact about just the the state of that Park technology development.

Daniel Joseph Rice: And so we were just matter of fact about just the state of Net Power technology development, the state of the company, we had just taken the company public, and we had properly capitalized the business to be able to scale up to meet this future demand resulting from the EPA rules. But that's really been it.

Speaker Change: The state of the company, we have just taken the company public we had properly capitalize the business to be able to scale up to meet this future demand.

Speaker Change: Resulting from the EPA rules.

Speaker Change: But that's that's really been it.

I think certainly the industry as you know the the broader power industry is a little bit split on it theres some folks.

Daniel Joseph Rice: I think certainly the industry is, you know, the broader power industry is a little bit split on it. There are some folks that staunchly believe we need to get to a cleaner grid system faster. And there are others that believe that we need to ensure that this transition to a lower carbon future proceeds uninterrupted. So uninterrupted, affordable, reliable power. And I think in either case, we want to be there as that clean, affordable, reliable power source that really cuts right down the middle and really, like, unites both sides that want that reliable, affordable power, and they want it to be clean.

Speaker Change: That staunchly believed we needed to get a cleaner grid system faster and there's other ones that believe that we need to to ensure that this transition to a lower carbon future.

Speaker Change: Proceeds uninterrupted so uninterrupted affordable reliable power.

Speaker Change: I think in either case, we want to be there is that clean affordable reliable reliable power source that really cuts you're right down the middle and really like unites both sides that that won't that reliable affordable power and they want it to be cleaned. So you know.

Daniel Joseph Rice: So, you know, back to my intro comments today, there's not a whole lot of energy solutions being developed that can do all three. And certainly, we see Net Power is probably one of the better ones. And a lot of that is because we're using one of the cheapest energy feedstocks we have on planet Earth, natural gas, especially here in the United States. And we've kind of always said, man, if we can find a way to decarbonize this really, really low-cost feedstock, we really can deliver the energy trifecta.

Speaker Change: Back to like by my intro comments today, there's not a whole lot of just energy solution being developed that can do all three and and certainly we see net power is probably one of the better ones in and a lot of it is because we're using one of the cheapest energy feedstocks, we have on planet Earth natural gas, especially here in the United States.

And we've kind of always said man if if we can find a way to decarbonize. This really really low cost feedstock, we really can't deliver the energy truck back there. So I think it's something that we'll be able to get everybody to support but I think right now it is a bit partisan in terms of people, taking one side or the other but we're gonna be that Io that goes right down the middle.

Daniel Joseph Rice: So I think it's something that we'll be able to get everybody to support. But I think right now it is a bit partisan in terms of people taking one side or the other, but we're going to be that aisle that goes right down the middle that I think everybody can rally around. And so being a public company with the shareholders that we have on this call, you know, there really is a much greater purpose to what we're trying to do beyond just creating significant shareholder value.

Speaker Change: I think everybody can rally around instead of being a public company with with the shareholders that we have on this call.

Speaker Change: There really is a much greater purpose to what we're trying to do beyond just creating significant shareholder value.

Speaker Change: Thanks, that's it for me.

Speaker Change: Thanks Thomas.

Wade Anthony Suki: Thank you. The next question is coming from Wade Suki from Capital One. Your line is now live.

Speaker Change: Your next question is coming from wage Suki from capital one your line is now live.

Wade Anthony Suki: Good morning, everyone. Thank you for taking my questions. Just to kind of dovetail, I think it was maybe Marty or Leo asking about OP1. It sounds like there might be some shifting priorities or timelines here, whether you could kind of give us maybe the event path timeline for what you see as OP1 today. And I can't remember. It might be an old man memory or something.

Suki: Good morning, everyone. Thank you for taking my questions I'm, just just to kind of dovetail I think it was maybe a margin Leo.

Suki: I'm asking about Q1.

Suki: There might be some shifting priorities or the timelines here, whether it's kind of a.

Suki: Give us maybe a bit perhaps.

Suki: Perhaps timeline for what you see is O P. One today.

Suki: And I can't remember it might be memory or or something but did you all disclose the size of this project.

Wade Anthony Suki: But did you all disclose the size of this project?

Speaker Change: Yeah. So so the thing is yeah. So the hope he wants the same size as serial number one so I think as everybody knows we have a standard plant design right and so that's really the important thing is coming out of serial number one is it really establishes that standardized design that we're going to deploy in.

Daniel Joseph Rice: Yeah, so the OP1 is the same size as serial number one. So, I think, as everybody knows, we have a standard plant design, right? And so that's really like the important thing coming out of serial number one is it really establishes that standardized design that we're going to deploy in manufacturing mode across the U.S. and the world. And so I think one of the just flexibilities we have, and this is really unique to Net Power versus all other real, you know, thermal power generation solutions, is every single plant really inside that battery limit is going to be identical to every other one.

Speaker Change: Actually mode across the U S and the world.

Speaker Change: So I think one of the flexibility we have and this is really unique to net power versus all the other real.

Speaker Change: Thermal power generation solutions.

Is every single plant really inside that battery limit is going to be identical to every other one.

Speaker Change: You know absent changes or just ambient temperatures are fearing a cold environment versus a hunter environment, but absent that everything else about this plant the size the design the way its operability it'll be the same.

Daniel Joseph Rice: You know, absent changes in just ambient temperatures if you're in a cold environment versus a hot environment, but absent that, everything else about this plant, the size, the design, the weight, its operability, it'll be the same.

Daniel Joseph Rice: And so what that allows us to do is a couple things. One is the manufacturing mode approach, where we can just start to mass produce all of the components of the plant. We can modularize the components of the plant. But the other really neat thing it enables us to do is it gives us flexibility over when the plant's essentially coming off of that proverbial assembly line. Which location do we want to send it to first? And it can be for both economic reasons. You know, a given market has crazy power prices that have spiked.

Speaker Change: And so what that allows us to do is is a couple of things. One is the manufacturing mode approach, where we can just start to just mass manufacture all of the components of the plant we can modularize the components of the plant, but the other really neat thing it enables us to it gives us flexibility over when the plant's essentially coming off of that proverbial Assembly line, which law.

Speaker Change: Occasion, do we want to send it to first.

Speaker Change: And it can be for both economic reason.

Daniel Joseph Rice: Let's accelerate the deployment of this location over another one where power prices haven't gone haywire. But it also allows us tremendous flexibility if we run into any permitting delays in one location versus the next. We always have other projects in the pipeline that we can then send those components to to get those plants online sooner. So it's almost like a little bit of an insurance product to be able to have the standardized approach. Now, right now, we're sitting here saying OP1. Right now, it's kind of in line to be serial number two.

Speaker Change: Given market has crazy power prices that have spiked, let's accelerate deployment of dislocation over another one where power prices Havent gone haywire, but it also allows us tremendous flexibility if we run into any permitting delays in one location versus the next we always have other projects in the hopper that we can then send those.

Speaker Change: Component two to get those plants online sooner. So it's almost like a little bit of an insurance product to being able to have the standardized approach now right now we're sitting here, saying O P. One right now it's kind of in line to be serial number two.

Daniel Joseph Rice: But as we're developing other origination projects, as we're starting to have serious dialogue with prospective customers that are in dire need of being able to meet their own power demand on just the traditional licensing commercial side, there will be opportunities for us to accelerate other projects. And it's really part of it through the lens of what's in the best interest of the shareholders to accelerate one project versus another. But also, part of it is just like the social responsibility of this area really, really needs baseload reliable power much sooner than this other area.

Speaker Change: But as we're developing other origination projects is we're starting to have serious dialogue with prospective customers that are in dire need of being able to meet their own power demand on just the traditional licensing commercial side, there's going to be opportunities for us to accelerate other projects and it's really part of it is through the lens of what's in the best interest of the shareholder.

Speaker Change: To accelerate one project versus another but also part of it is just like the social responsibility of this area really really needs baseload reliable power much sooner than the.

Speaker Change: Other area. So I think at the end of the day you know when we think about 20 or 30 years, we're going to do what's in the best interest of the shareholders long term.

Daniel Joseph Rice: So I think at the end of the day, when we think out 20 or 30 years, we're going to do what's in the best interest of the shareholders long term. And I think certainly the standardized design really enables us to have total flexibility to ensure that happens.

Speaker Change: And I think certainly the standardized design really enables us to have total flexibility to ensure that happens.

Wade Anthony Suki: Makes total sense. Thank you so much.

Speaker Change: It makes total sense. Thank you so much.

Wade Anthony Suki: Let's take the next step, I guess, here. You know, I was asking about the commercial pipeline, things like that. You mentioned Alberta, but I'm just curious, where in line do international opportunities kind of reside in the pecking order or in the priority list as you see it today? And again, any hints you could give us on geography?

Speaker Change: Well, let's take the next step I guess here.

Speaker Change: But the commercial pipeline things like that you mentioned, Alberta, but I'm, just curious where in line to international opportunities kind of reside in the pecking order or in the priority list as you see it today.

Speaker Change: Any sense, you could give us some geography.

Speaker Change: So.

Daniel Joseph Rice: Yeah, I think we've been pretty transparent about what international markets are really interesting to us. The Canadian market's a little bit unique, specifically Western Canada, just because it's a competitive power market, just like most of the U.S. markets. So the ASOS system is a competitive power market, just like a MISO or a PJM or an ERCOT, where anybody can go build power generation out there if they want to supply power to Alberta.

Yeah, I think we've been pretty we've been pretty transparent about where the international markets are really interesting to us the Canadian market is a little bit unique.

Speaker Change: Specifically western Canada, just because it's a competitive power market just like most of the U S markets. So the ACO system.

Speaker Change: <unk> is a competitive power market, just like them might sit where PJM or in ERCOT, where anybody can go build power generation up there if they wanted to supply power into Alberta, and so that's an area, where we could do origination in and where we're working on things right now and so that's an interesting area I think when we look at other international markets. Those are those are you know usually.

Daniel Joseph Rice: And so that's an area where we could do origination and where we're working on things right now. And so that's an interesting area. I think when we look at other international markets, those are usually state-controlled when we look at places like the Middle East. But again, that's a really, really interesting market because they have the key features of what makes Net Power really unique, which is access to low-cost natural gas and great places to store the CO2, whether it's permanent geologic storage, deep saline aquifers, or for utilization in the form of enhanced oil recovery And so the Middle East has always been interesting to us, and it's one that we're working on right now. And then we'll look at other parts of the world. Australia is another one.

Speaker Change: <unk> controlled them when we look at places like the Middle East.

Speaker Change: But again, that's a really really interesting market because they have the key features of of of what makes net power really unique which is access to low cost natural gas in great places to store. The C. O two whether it's to permanent geologic storage you know deep scanland aqua pairs or for utilization in the form of enhanced oil recovery, where they can actually.

Speaker Change: Ascribe value to the C O two.

Speaker Change: And so the middle East has always been interesting to us and it's one that we're working on right now.

Speaker Change: And then when we look at other parts of the World Australia is another one access to low cost natural gas places to sequester the seer to southeast Asia I think in the nascent stage of figuring out what to do with the C. O two and where are they going to be able to procure low cost natural gas.

Daniel Joseph Rice: Access to low-cost natural gas, places to sequester CO2. Southeast Asia is, I think, in the nascent stage of figuring out what to do with the CO2 and where they're going to be able to procure low-cost natural gas, which is a little bit different than Europe, which has access to natural gas. They've chosen not to develop the natural gas, but they have fantastic places where they've proven they can geologically store the CO2 in the North Sea.

Speaker Change: Is little bit different than than Europe, which has access to natural gas they've chosen not to develop the natural gas, but they have fantastic places where they've proven they can geologically stores. The C O two in the North Sea.

Daniel Joseph Rice: So I would say, the largest power markets in the world really have the key components necessary for these plants to make really good economic sense. I think the reality of where we're going to be is that we're going to be in a place where I think the market demand for net power is going to be much greater than we're going to be able to supply with new plants for the first part of the next decade.

Speaker Change: So I would say the largest power markets in the world.

Speaker Change: Really haven't the key components necessary for these plants to make really good economic sense.

Speaker Change: I think the reality of where we're going to be if we're going to be in a place where I think the market demand for power is going to be much greater than we're going to be able to supply with new plants for the first part of next decade and so.

Daniel Joseph Rice: And so I think that's going to create, unfortunately, a little bit of scarcity value, which is a good thing for us because I think what it's really going to do is it's really going to manifest the most pressing, most economically viable markets for us to deploy our plants. And sitting here today, looking at the intrinsic value of a net power plant in any given market, you know, it's not just the value of natural gas-based power.

So I think that's going to create unfortunately, a little bit of scarcity value, which is a good thing for us because I think what it's really going to do is really going to manifest.

To the surface the most pressing most economic markets for us to deploy our plants.

Speaker Change: Any kind of sitting here today looking at the intrinsic value of our net power plant in any given market. You know, it's not just the value of natural gas based power. It's not just looking at spark spreads, but it's also looking at the value of the environment and in the value of the environment comes in the form of <unk> in the United States 45, Q and I would say.

Daniel Joseph Rice: It's not just looking at sparks, but it's also looking at the value of the environment. And that value of the environment comes in the form of, in the United States, the 45Q. And I would say, you know, the United States has done a really, really good job of creating an incentive program that starts to ascribe value to decarbonization. And I think now other countries are starting to look at the United States to say, if we're going to be competitive, and really looking at it through the lens of net power.

Speaker Change: You know the United States has done a really really good job of creating an incentive program that starts to ascribe value to decarbonization and I think now other countries are starting to look at the United States to say, if we're gonna be competitive.

Speaker Change: And really looking at it seems like the lens of net power. If we really wanted to get a net power plant sooner.

Daniel Joseph Rice: If we really want to get a net power plant sooner than plant number 100, we really need to step it up and ascribe a value to decarbonization, because if they don't, we're probably just going to sit here and deploy net power plants for the next 10 years in the United States, which is an amazing place to be because we're sitting here looking at the U.S. grid system and saying, shoot, just to replace the So we could just sit here in the United States for the next decade and fully decarbonize most of the U.S. grid system, and that's awesome, but that really doesn't do anything to decarbonize the rest of the world.

Then Pat number 100, we really need to step it up and ascribe value to decarbonization.

Speaker Change: Because if they don't we're probably just going to sit here and deploying that power plants for the next 10 years in the United States, which is an amazing place to be because we're sitting here looking at the U S grid system and think she just to just to replace the aging coal gas and nuclear plants that we have on our system today.

Speaker Change: Close to 800 net power plants in.

Speaker Change: Those markets, where we have access to C. O two things. So we can just stay here in the United States for the next decade and fully Decarbonize most of the U S grid system, and that's awesome, but that really doesn't do anything to decarbonize. The rest of the world. So I think where we are today is we really want to see the rest of the world step up and placed a value on decarbonising their grid systems.

Daniel Joseph Rice: So I think where we are today is that we really want to see the rest of the world step up and place a value on decarbonizing their grid systems through a program similar to what the 45Q is here in the United States and similar to the carbon tax that Alberta has really pioneered in Canada.

Speaker Change: A program similar to what the 45 he was here in the United States and similar to the carbon tax that Alberta is.

Speaker Change: Really pioneered up in Canada.

Speaker Change: One last one for me if you don't mind.

Wade Anthony Suki: One last one for me, Dan, if you don't mind. As you look down the road, when the company is in sort of the manufacturing mode, what kind of timeline do you see, you know, let's just say from the Customer Signing Agreement through the permitting and everything to plant startup. I guess we're in the 30s at this point, but what kind of timeline would you think about all in all?

Speaker Change: As you look down the road of them.

Speaker Change: When the company is in sort of the manufacturing mode, what kind of timeline do you see you know lets just say from it.

Speaker Change: Customer signing the agreement to go through the permitting and everything to plant startups.

Speaker Change: I guess at where the <unk> at this point, but.

Speaker Change: What kind of timeline.

Speaker Change: Would you think about all in.

Wade Anthony Suki: Yeah, that's a great question, Wade. I'll turn that one over to Brian to walk you guys through the timeline a little bit.

Speaker Change: Yeah. That's a great question with all all turned out went over to Brian to walk you guys through the timeline a little bit.

Brian Allen: Yeah, hey, so for the initial projects, you know, I'd say more of a traditional power project approach, like Project Permian, maybe think of it as four years end-to-end. Certainly, that's something we want to compress over time, and as Danny said, with manufacturing mode and standardization, we can, you know, absolutely reduce that. So, what that will require is, you know, standard modular design, and standard equipment, which we're setting up the company to do, such that when someone has the idea they want to start a development, there's not re-engineering work required, which is typical in the power industry.

Brian: Yeah, Hey, so.

Brian: So for the initial projects you know I'd say more of a traditional power project approach like project Permian, maybe think of it as four years end to end.

Brian: Certainly that's something we want to compress over time in that.

Brian: Danny said with manufacturing mode, and standardization, we can absolutely produce that so what that will requires.

Brian: Standard modular design standard equipment, which we're setting up the company to do such that when someone has the idea they want to start development. There's there's not reengineering work required which is typical in the power industry.

Brian Allen: There's not re-engineering work on the equipment, the overall plant design, and we get to a point where, eventually, even there's potentially inventory being held, and long leads are being ordered. You know, if you just go back to the early part of the supply chain, the longest lead stuff is usually components and turbo machinery, for instance. So, you know, the equipment OEMs are very knowledgeable about how to get out ahead of customer orders if they see the demand coming, and they have a good line of sight and forecasting into that. And so we're working with them as we ramp up to have, you know, insight into the upcoming commercial opportunities. They're are participating.

Brian: Theres not reengineering work on the equipment. The overall plant design and we got to a point, where eventually even there's potentially.

Brian: Inventory being held long leads being ordered if you just go back to the early part of the supply chain. The longest lead stuff is usually components and turbo machinery for instance, so you know the equipment Oems are very very knowledgeable on how to get out ahead of customer orders if they see the demand.

Brian: And they have a good line of sight and forecasting into that and so.

Brian: We're working with that must be ramp up to have.

Brian: Insight into the upcoming commercial.

Brian: <unk>, they're participating in the case of Baker Hughes participating with us on commercial committee.

Brian Allen: In the case of Baker, he was participating with us on the commercial committee, where we look at all originated and non-originated opportunities and basically get out ahead of early engineering inventory. But really, our intent is not to carry inventory; we just reduce the overall cycle. So, what a net power plant should look like in the future is, you know, three years or even shorter is our target from someone having the idea to when it's operational. And the only way you get their standard design and a modular manufacturing approach.

When we look at all originated non originated opportunities and basically get out ahead of us.

Early engineering.

Brian: Inventory.

Brian: But really our intent is.

Brian: Not enough to carry them toward just reduce the overall cycle so what.

Brian: Net power plant should look like in the futures.

Brian: Three years or even shorter.

Brian: As our target.

Brian: From someone has the idea it's always it's operational and the only way you got there standard design.

Brian: You know our modular.

Brian: Manufacturing approach.

Wade Anthony Suki: Fantastic. Thanks again. Y'all have a great day.

Speaker Change: Fantastic. Thanks, again, you'll have a great day.

Betty Jiang: Thank you. The next question today is coming from Betty Jiang from Barclays; your line is now live.

Speaker Change: Thank you. Your next question today is coming from Betty Jang from Barclays. Your line is now live.

Speaker Change: Yeah.

Betty Jiang: Great. Good morning.

Speaker Change: Alright.

Betty Jiang: Good morning.

Betty Jiang: I want to go back and asked about the data center demand I'm, just wondering what how big is the opportunity to do behind the meter power solution for specific data center like you'd have to size down from the 300 megawatt utility scale chipset for a typical size of a datacenter.

Betty Jiang: I want to go back and ask about data center demand. Just wondering, how big is the opportunity to do behind the meter power solutions for a specific data center? Like, do you have to size down from the 300 megawatt utility scale to fit the typical size of a data center?

Daniel Joseph Rice: That's a great question, Betty. I think, you know, if we went back five or ten years, we would say, yeah, maybe a net power plant is maybe too big. And in those cases, you know, they'll be doing part, they'll take, they'll be a partial load, going to the data center, and the rest would just go into the grid system. Because the data center is going to need redundancy, whether it's through backup onsite diesel generation or just connectivity to the grid. You know, if they're truly a behind the meter solution versus an off-grid solution.

Speaker Change: That's a that's a great question Betty I think.

Betty: If we went back five or 10 years, we would say yeah, maybe in that power plant is is maybe too big.

Betty: And in those cases, you know.

Betty: There'll be doing park, they'll take there'll be partial load you know going to the data center and the rest would just go into the grid system because the data center is going to need redundancy, whether it's through backup unsafe diesel generation or just connectivity to the grid.

Betty: If if they're truly a behind the meter solution versus an off grid solution and I think if you look at just the data centers of today and tomorrow and in the size of these hyperscale data centers. These are these are really massive facilities. You know we're talking on the magnitude of 250 megawatts going up too.

Daniel Joseph Rice: I think if you look at just the data centers of today and tomorrow in terms of the size of these hyperscale data centers, these are really massive facilities. You know, we're talking on the magnitude of 250 megawatts going up to a gigawatt. And so, if you look at just the net power, you know, product market fit, we really are almost like the ideal product market fit for these data centers, which are, like I said, going to be really, really large. Now, if you look at a data center that's a gigawatt, and you say, okay, that data center's a gigawatt, you guys are only 250, 300 megawatts. That's not a good market fit.

A gigawatt and so if you look at just the net power.

Betty: The market fit.

Betty: We really are almost like the ideal product market fit for these data centers, which are.

Betty: Like I said going to be really really large now if you look at the data center, that's a gigawatt and you say, okay. Datacenters that gigawatt you guys are only 250 300 megawatts, that's not a good market fit what we are because really what we're doing with the standardization. It really is conducive to fleet deployments. So you almost need to think of these like blocks or.

Daniel Joseph Rice: Well, we are because really what we're doing with the standardization is really conducive to fleet deployment. So you almost need to think of these like blocks or modules, sort of like the way the SMR guys, the small modular reactor folks, are doing with nuclear, except instead of starting with like a 50 or a 60 megawatt block like they are, we're starting with a 250 to 300 megawatt block. And so to give them a gigawatt, we're really just putting a fleet of four net power plants together in a fleet configuration.

Betty: Modules sort of like the way the semi guys. Just the small modular reactor folks are doing with nuclear except instead of starting with like a 50 or 60 megawatt block like they are we're starting with a 250 to 300 megawatt block and so to give them a gigawatt, we're really just putting a fleet of four net par.

Betty: Plants together in our fleet configuration.

Daniel Joseph Rice: And in terms of just the amount of acreage that takes up, you know, a gigawatt of net power will take up all of 60 to 75 acres. And you contrast that to the 3,000 acres that a solar farm would require just for its intermittent power, or 30,000 acres that a wind farm would require to generate a gigawatt. So we're talking about not just the scalability of it in terms of power output, but we're also talking about just the importance of power density and what you can actually co-locate someone next to these hyper, hyper-scale data centers that are increasingly looking to build really, really large gigawatt, multi-gigawatt sort of facilities.

Betty: And in terms of just the amount of acreage that picks up you know a gigawatt of power will take up all of 60 to 75 acres and you contrast that to the 3000 acres that a solar farm would require just for their intermittent power or 30000 acres that are wind farm or to acquire to generate a gigawatt.

So what we're talking about not just the scalability of it in terms of power output, but we're also talking about just the importance of power density and what you can actually co locate next.

Next to these hyper hyper scale data centers that are increasingly looking to build really really large gigawatt multi gigawatt sort of facilities. They really do need a multi gigawatt sort of energy dense power dense solution and so it really needs to come from either large scale nuclear or combined cycles or if you really look.

Daniel Joseph Rice: They really do need a multi-gigawatt sort of energy-dense, power-dense solution. And so it really needs to come from either large-scale nuclear or combined cycles or really looking for that energy trifecta from Net Power. So that's, I think, one of the big focuses for us as we look at just these energy hubs, these origination hubs that we're looking to set up. We're really trying to set them up in areas where we're deploying, call it, 10 to 40 Net Power plants, both to meet the grid need but also to meet the behind-the-meter need that these data center folks are going to need over the coming decades.

Betty: For the energy sector from that power. So that's a I think one of the big focuses for us as we look at just.

Betty: These energy hubs. These origination hubs that we're looking to set up we're really trying to set up even in areas, where we're deploying call. It 10 to 40 net power plants, both to meet the grid need but also to meet the behind the meter need that these data center folks, they're going to need over the coming decades.

Betty Jiang: That's really great color. Thanks for that. If I, if I have a follow up just on that, in your conversation with tech companies, are they looking for behind the meter solutions, or is it tied to the grid?

Speaker Change: That's really great color thanks for that.

Speaker Change: If I have a follow up just on that your conversation with tech companies are they looking for behind the meter solutions or is it tied to the grid.

Daniel Joseph Rice: I think just the reality of the way data centers need to operate is they need, like their most important thing, especially for these language learning model data centers, the LLMs, is they can't have any interruptibility in power. And so reliability is paramount. Because if you think about going through these language training programs, which can take a couple weeks, and at the end of the first week, if there's an interruption, they have to start all over again.

Speaker Change: I think just the reality of the way Denison Datacenters need operated they need.

Speaker Change: Their most important thing, especially for these language learning model data centers.

Speaker Change: If they can't have any interrupt ability empower and so reliability is paramount because if you think about going through these language training programs and they can take a couple of weeks and at the end of the first week, if theres an interruption they have to start all over again and so just that redundancy and reliability is absolutely critical.

Daniel Joseph Rice: And so just redundancy and reliability are absolutely critical to their ability to perform the way they need to. Latency isn't as critical as reliability. But again, because, you know, the largest source of expense for these data centers is power consumption, affordability of that power is right up there with the reliability piece. And so there's probably no greater industry that's really in pressing need of just the energy trifecta, clean, affordable, and reliable.

Speaker Change: Due to their ability to perform the way they needs to the latency isn't isn't as critical as reliability is.

Speaker Change: But again, because you know the largest source of expense for these data centers is power consumption.

Speaker Change: Affordability of that power is right up there with the reliability piece and so there's probably no greater industry, that's really impressing need of just the energy trifecta clean affordable reliable.

Daniel Joseph Rice: I think that the challenge that we're all facing is that when we look across the spectrum of all potential solutions out there, there's nothing that does all three. You kind of have to create a portfolio where you're having to compromise a bit on affordability, you're having to compromise a bit on reliability, and you're having to compromise a little bit on the carbon intensity in order to be able to meet your power needs. And so I think what we're really designing is something where there really is no compromise.

Speaker Change: Then then then the textbooks.

Speaker Change: The challenge that we're all facing as when we look across the spectrum of all potential solutions out there theres nothing that does all three you kind of have to create a portfolio, where you're having to compromise a bit on affordability you havent compromised a bit on reliability, you having to compromise a little bit on the carbon intensity in order to be able to meet your power needs.

Speaker Change: So I think what we're really designing as that thing where there really is no compromise.

Speaker Change: Think where you really have to see the adjustment with net power is it's a paradigm shift in how are we going to get clean power because I think for the last couple of decades people haven't looked at Pos appeals as being clean and so this is really where we're changing the paradigm for people is getting them to stop looking at labels stopped looking at the source of the power start look.

Daniel Joseph Rice: I think where you're really having to see the adjustment with net power is its paradigm shift, and how are we going to get clean power? Because I think for the last couple decades, people haven't looked at fossil fuels as being clean. And so this is really where we're changing the paradigm for people, getting them to stop looking at labels and start looking at the source of the power. Start looking at the output.

At the output start looking at start measuring carbon intensity as the end all be all because at the end of the day. That's all the mother nature cares about is what's the carbon intensity of giving my planet I don't care about the incoming fuel sources that Powerpoint I care about the outgoing emissions and so this is an education process for everybody because I think all of us have been conditioned over the last decade.

Daniel Joseph Rice: Start measuring carbon intensity as the end all be all, because at the end of the day, that's all that Mother Nature cares about, is what's the carbon intensity you're giving my planet? I don't care about the incoming fuel source to that power plant. I care about the outgoing emissions. And so this is an education process for everybody, because I think all of us have been conditioned over the last decade to think of decarbonization as moving away from fossil fuels.

We think of de Carbonization, we think of moving away from fossil fuels, but I think when you introduce a paradigm shifting technology like net power all of a sudden you transform natural gas into clean Baseload dispatch a bowl for empower that's affordable it really starts to make you question what is important.

Daniel Joseph Rice: But I think when you introduce a paradigm-shifting technology like Net Power, all of a sudden, you've transformed natural gas into clean, baseload dispatchable, firm power that's affordable. It really starts to make you question what is important.

Betty Jiang: And I think everybody at the end of the day agrees that clean, affordable, reliable power is really, really important. And now we're really starting to change that paradigm of moving away from looking at the sources of the power, the feedstock, to really looking at the outputs of it. So I know I went on a little bit of a tangent there from the original question, but I think that is really where a lot of the conversation is going on.

Speaker Change: And I think everybody at the end of the day agrees that clean affordable reliable power is really really important and now we're really starting to just change that paradigm of moving away from looking at the sources of that power the feedstock to really looking at the outputs of it. So I know it went down a little bit of a tangent there from from the original question, but I think that is really where a lot of the <unk>.

Speaker Change: Station is not so much about the technology, but just more about is.

Betty Jiang: It's not so much about the technology but just more about, is it okay to use natural gas as the solution to the world's energy and environmental problems? And I think so. You know, one of the big reasons why we took Net Power public was that we needed a platform to be able to communicate to the world that, all of a sudden, we now have that silver bullet solution for both energy and the environment in one package.

Speaker Change: Is it okay to use natural gas as that.

Speaker Change: The solution to the world's energy and environmental problems and I think you know that.

Speaker Change: That's one of the Big reasons, why we took net power public was we needed a platform to be able to communicate to the world that all of a sudden we now have that silver bullet solution for both energy and the environment in one package.

Betty Jiang: And it's coming from something that's a fossil fuel. And I think we're very proud to say we're able to deliver clean, affordable, viable power, and we all need to be a little bit more agnostic about the source of the energy and more focused on the output of that energy. And I think as people can start to embrace that, guess what?

Speaker Change: And it's coming from something that's a fossil fuel and I think we're very proud to say, we're able to deliver clean affordable reliable power and we all need to be a little bit more agnostic about the source of the energy and more focused on the outside to that energy and I think as people can start to embrace that guess, what you opened up an entirely new pathway to both reenergize the grid and Decarbonize the planet.

Betty Jiang: Thank you. I mean, I can't agree with that more.

Speaker Change: Oh, Thank you I mean, I cant agree with that or just carbon intensity should be the aetna deal and I think the EPA regulation naturally helps a lot to drive that forward by measuring everything on covering penalty. So thank you very much for that I have a follow up just on the project.

Betty Jiang: Just carbon intensity should be the end all and be all. And I think the EPA regulation actually helps a lot to drive that forward by measuring everything on carbon intensity. So thank you very much for that. I have a follow-up question just on the next steps of Project Permian. But. What needs to be tested with the?

Speaker Change: And and next steps.

Speaker Change: But.

Speaker Change: What needs to be tested with D.

Betty Jiang: air separation unit provider before you can finalize that long-term partnership. Just wondering if that's a financial negotiation or is it more technical integration, whether it fits well with the rest of the plan? And then separately, can you just talk about what is an open book estimate? Thanks.

Speaker Change: Our air separation unit.

Speaker Change: Provide or before you can finalize that long term partnership just wondering if that's a financial negotiation or is it more technical integration, whether it fits well with the rest of the plant and then separately can you just talk about what what is an open book estimate thanks.

Brian Allen: Sure, this is Brian. I'll take that.

Speaker Change: Sure. This is Brian I'll take that yeah, it's more of a technical integration at this point I mean, these are large air separation units so theyre not.

Brian: Let's say directly off the shelf, but we're very focused on not stacking technology risks. So we are integrating.

Brian Allen: Yeah, it's more of a technical integration at this point. I mean, these are large air separation units, so they're not, let's say, directly off the shelf, but we're very focused on not stacking technological risks. So, we are integrating design aspects that have been proven before in ASU providers' past experience. So, it's really more about getting the right technical integration. You know, the commercial model for this and many Net Power plants will be an integrated sale of equipment approach, where flowing through the EPC or through the owner will be the purchase of the ASU equipment integrated into the plant. So, in other words, there's not a separate ASU distinguishable from the Net Power plant.

Brian: Design aspects that have been proven before.

Brian: And I guess your providers.

Brian: Past experience, so it's really more about getting the right technical integration.

You know the commercial model for this and many power plants will be an integrated sale of equipment approach, where a slowing in through the E. P C where through owner will be the purchase of the equipment integrated into the plant. So in other words, there's there's not a separate ASU distinguishable from buttoned up power.

Brian Allen: It's a standard design that comes together. So, we're really working through those technical integrations that are also integrating into the overall feed. And then, yeah, it's a commercial discussion. You know, we've had a lot of interest from industrial gas suppliers in this project because they all know that this, you know, first entry sets them up for deployment on future standard plant designs. So, first get the technical right, get the technical fully embedded into the feed, and we're working through some commercials, but there's really no development aspect of it.

Brian: It's a standard design that comes together so we're really working through those technical integrations. That's also integrating into the overall seed.

Brian: And then it's a commercial discussion.

Brian: We've had a lot of interest from industrial gas suppliers in this ah projects because they all know that this you know first first entry sets them up for a.

Brian: Deployment on future standard plant designs. So so first get the technical right get the technical fully embedded into the feed in and we're working through some commercial.

But there's really no development aspect of this as.

Brian Allen: As far as the other question, an open book estimate means that when we work with Zachary, we see all of the costs. So there is a different approach where you could just have a quoted lump sum price, which is not what we're pursuing. We want to work directly with them on value engineering and understanding where we're driving costs with our cycle design. So we see all of the costs. Thank you.

Speaker Change: As far as the other question.

Speaker Change:

Speaker Change: Oh open book estimate means when you when they work with Zachary we see all of the costs. So.

There is a different approach where you could just have a quoted lump sum price, which is not what we're pursuing a we want to work directly with them on value engineering of understanding where we're driving cost with with our cycle design.

Speaker Change: So we see all we see all of the costs.

Speaker Change: Got it thanks.

Brian Allen: In the interest of time, we have one final question from Noel Parks from Tui Brothers. Your line is now live.

Speaker Change: Thank you and the interest of time, we have one final question from Noel Parks from Tuohy Brothers. Your line is now live.

Noel Augustus Parks: Hi, good morning. Just had a couple, you know; I wonder if you've covered a lot of really interesting touches on sort of gas macro and various power approaches for decarbonization. I'm just wondering, do you have any thoughts around whether some of the maybe more expensive, smaller scale, fast solutions, I think, for instance, about fuel cells running on natural gas, try to have this attention to kind of, I guess maybe shut down, whatever price sensitivity there is out there, and whether that could either be a benefit to you as your plans get closer to going online, or whether it is just gonna place speed so much as the paramount concern that Do you have any thoughts on a scenario like that?

Noel Augustus Parks: Hi, good morning.

Noel Augustus Parks: Just had a couple I wonder if you've covered a lot of really interesting kind of touches on sort of gas macro and of course, there is power approaches for decarbonization I'm. Just wondering do you have any thoughts around whether some of the maybe more expensive a smaller scale.

Noel Augustus Parks: Fast literally solution I think for instance, about fuel cells running on natural gas try to have a potential to kind of.

Noel Augustus Parks: I guess, maybe shut down.

Noel Augustus Parks: Price sensitivity, there is out there and and whether that could.

Noel Augustus Parks: He will be a benefit to do it.

Noel Augustus Parks: Closer to going online or whether it.

It's just kind of place speed. So much is the paramount concern that.

Noel Augustus Parks: Desperate and longer but larger projects struggles a little bit you have any thoughts on a scenario like that.

Daniel Joseph Rice: Yeah, you know, it's an interesting one, Noel. I think a lot of folks are trying to find ways to be able to just launch peak pricing by adding battery storage wherever the heck they can, by doing fuel cells, by having more just natural gas peakers on the system. I think just the challenge is the sheer volume of, just load growth demand that we're seeing coming our way is something that I think the power industry was, frankly, just caught flat-footed for.

Speaker Change: Yeah, no. It's an interesting one no I think a lot of folks are trying to find ways to be able to just lunch peak pricing.

Speaker Change: By adding battery storage wherever the heck they can by doing fuel cells by having more just natural gas <unk> on the system I think just the challenge is just the sheer volume just load growth demand that we're seeing coming our way.

Speaker Change: Something that I think the power industry was frankly, just caught flat footed port.

Daniel Joseph Rice: And I think that the problem just gets compounded a little bit with these new EPA rules. You know, if it really has a chilling effect on people deploying those dispatchable sources of power generation, which is demonstrably proven that they can scale really, really quickly, like the natural gas generation industry has over the course of the last couple decades. I just don't think, you know, whether it's fuel cells or batteries are going to be able to really do much in the way of really being able to meet the load growth that's kind of coming because this load growth isn't intermittent. This load growth is 24-7, 365.

Speaker Change: And I think there was a problem just gets compounded a little bit with these new EPA rules you know.

Speaker Change: If it if it really has a chilling effect on people deploying both dispatch of both sources of power generation.

Demonstrably proven that they can scale really really quick like the natural gas generation industry has over the course of the last couple of decades.

Speaker Change: Don I, just don't think you know, whether it's fuel cells or batteries are going to be able to really do much in the way of really being able to meet the load growth that's kind of coming because this load growth is an intermittent this load growth is 24 seven 365, So you really need to look at energy sources.

Daniel Joseph Rice: So, you really need to look at energy sources for power generation that can really just mirror that and just match that. And so then you're really looking at things like nuclear and natural gas. And so...

Speaker Change: For power generation that can really just mirror that and just match that and so then you're really looking at things like nuclear and natural gas.

Speaker Change: And so.

Daniel Joseph Rice: I think all of these other things will really help around the edges, but I think in terms of actually being able to scale up to deliver 50 to 100 to 500 gigawatts of new baseload generation capacity, you're really going to be looking at natural gas generation-based solutions. And so, if it's going to have to be lower carbon intensity natural gas, you're going to be looking at either something like net power, or you're going to be looking at post-combustion carbon capture.

I think all of the things all these other things will really help around the edges, but I think in terms of actually being able to scale up to deliver you know 50.

Speaker Change: <unk> 50 to 100 to 500 Gigawatts of new Baseload generation capacity.

Speaker Change: Really going to be looking at natural gas generation.

Speaker Change: Generation based solutions and so if it's if it's going to have to be lower carbon intensity natural gas you are going to be looking at either something like net power or are you going to be looking at post combustion carbon capture.

Daniel Joseph Rice: And I think that gets back to, like, the whole thesis of net power technology in the first place when it was invented back in 2010. And it was just a simple statement of, if we really want to eliminate emissions from natural gas power generation, you really need to redesign the power generation cycle. Because I think the beauty and the power of net power is really the simplicity of it, which is the challenge and the cost and the energy that goes into trying to separate the CO2 on the backside of a combined cycle or simple cycle plant that is very, very expensive because of the nitrogen that you're actually having to process out.

Speaker Change: And I think that gets back to like the whole like the whole thesis of the net power technology in the first place when it was invented back in 2010 and it was just a simple statement of if we really wanted to eliminate emissions from natural gas power generation, you really need to redesign the empower generation cycle, because I think the beauty of <unk>.

Speaker Change: The power of net power is really the simplicity of it which is.

Speaker Change: The challenge in the cost and the energy that goes into trying to separate the C. O. Two on the back side of it of a combined cycle or simple cycle plant that is very very expensive because of the nitrogen that you're actually having to process out because nitrogen is 90% to 95% of that flu gas.

Daniel Joseph Rice: Because nitrogen is 90 to 95 percent of that flue gas, only up to 10% of it is actual CO2. So the problem is the CO2, right? I'm sorry, the problem is the CO2, but the root of the problem in being able to capture it is all of that nitrogen. And so the Net Power cycle, the simplicity of it is to do oxy-combustion on the front end. It's much easier and simpler and cost-effective to separate the nitrogen from the atmosphere from the oxygen. So the only thing going into that combustion chamber is pure oxygen.

Speaker Change: Up to 10% of it is actual C. O. Two so the problem is the C. O two right I'm sorry, the problem is the C O two but at the root of the problem on being able to capture it is all of that nitrogen and so the net power cycle. The simplicity of visit is due oxy combustion on the on the front end, it's much easier and simpler and cost effective to separate the nitrogen.

Speaker Change: From the atmosphere from the oxygen so the only thing going to the combustion chamber is pure oxygen.

Daniel Joseph Rice: And so sitting where we are today, with where the world wants to go on reducing emissions, where the EPA wants us to go on eliminating emissions from natural gas power generation, a solution like Net Power is exactly what I think people would be focusing on today, knowing what we know now. But the thing with Net Power is that we went back 15 years in time, and we patented this process. And so, we're in this really, really unique position, which is that we're really the only ones that can do this at scale.

Speaker Change: So I think sitting where we are today with where the world wants to go on reducing emissions, where the EPA wants us to go on eliminating emissions from natural gas power generation.

Speaker Change: Our solution like net powers is exactly what I think people would be focusing on today, knowing what we know now.

Speaker Change: But the thing with net power is we went back 15 years in time.

Speaker Change: And we patented this process.

Daniel Joseph Rice: And I think that's why, as much as we are hyper-focused on proving this utility scale with Project Permian in 2027, we're really the only ones out there that can do this at this sort of size because of the IP portfolio we've put around this business. And so, it's so imperative that we're there to be able to scale up when that first plant comes online in 2028 and beyond. And so, yeah, it's a really good situation to be in.

Speaker Change: So we're in this really really unique position, which is where really the only ones that can do this at scale and I think that's why as much as we are hyper focused on proving this utility scale with project Permian in 2020 seven we're really the only ones out there that can do this at this sort of size because of the IP portfolio, we've put around.

Speaker Change: This business and so it's so imperative that we're there to be able to scale up to that French plant comes online in 2028 and beyond.

Speaker Change: So yeah, it's it's a it's a it's a really good situation to be in it. It's also a scary one just because we're going to be one of the only solutions that can comply and both both with what the government wants but also comply in terms of being able to meet.

Daniel Joseph Rice: It's also a scary one, just because we're going to be one of the only solutions that can comply with both what the government wants and also comply in terms of being able to meet customer demand for just their growing need for baseload reliable clean power. And so we're going to be ready, and it's great that we have a very supportive shareholder group. Both the public shareholders who have been super supportive of the company but also the strategic shareholders that we brought into this public company, Oxy, Baker Hughes, SK, and Constellation.

Speaker Change: Customer demand, but just there they're growing need for baseload reliable clean power and so we're gonna be ready.

Speaker Change: And it's great that we have a very supportive.

Speaker Change: Shareholder group both of the public shareholders, who have been super supportive of the company, but also the strategic shareholders that we brought into this public company Oxy Baker Hughes SK constellation I mean, we have four of the largest and most well capitalized most forward looking energy companies that really comprise our strategic shareholder groups.

Daniel Joseph Rice: I mean, we have four of the largest, most well-capitalized, most forward-looking energy companies that really comprise our strategic shareholder group. So I think the foundation that we've established to be able to scale this company is the foundation that I think our public shareholders want us to have. And so at this point, we're really just an execution to improve the cycle at utility scale, prove this technology creates an entirely new pathway to decarbonize the grid system, and really scale this to meet the world's growing need for baseload clean affordable power.

Speaker Change: I think that's the foundation that we've established to be able to scale. This company is the foundation that I think our public shareholders would want us to have and so at this point, we're really just in execution to prove this cycle that utility scale proven this technology creates an entirely new pathway to decarbonize the grid system and really scale. This to meet the world's growing need for Baseload cleaner.

Speaker Change: Portable power.

Operator: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to you for any further closing comments.

Speaker Change: Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.

Daniel Joseph Rice: Hey, thank you, everybody, for joining us today. This was really fun. Hopefully, it was informative, and hopefully, we'll catch you on the next call in three months. Have a good afternoon.

Speaker Change: Hey, Thank you everybody for joining US today. This is this is really fun hopefully it was informative and and hopefully we'll catch you on the next call.

Speaker Change: In three months have a good afternoon.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Speaker Change: Yeah.