NET Power Chases AI Data Center Deal With $180M Cost Cover

NET Power (NYSE:NPWR) is negotiating an energy services agreement with a prospective artificial intelligence customer, backed by a cost reimbursement agreement covering up to approximately $180 million in approved nonrefundable expenses. Executives laid out the plan on the company's third-quarter 2026 earnings call.

The initial on-site power project would sit at a Texas site the company has not yet secured and would run separately from Project Permian, which NET Power continues to develop in parallel, President and Chief Operating Officer Marc Horstman said. The prospective customer is a leading developer of frontier AI models, he added, without naming the company.

The negotiations aren't binding. Neither party is obligated to enter into a definitive energy services agreement, Horstman said, and the reimbursement cover applies only to approved expense items, subject to conditions — unless NET Power elects to keep the related equipment.

Why is on-site power suddenly the priority?

Chief Executive Officer Danny Rice framed the strategy around data center demand. Large customers connected to the grid can still be cut off when the grid is under stress, he said, while regulatory processes can affect project timing.

"We are prioritizing speed to power," Rice said. "That means evaluating every powered land opportunity in front of us, both in Texas and in other markets, and deploying our capital where we can get power online fastest."

Permitting and execution remain the bottlenecks for firm on-site power, Rice said. Islanded power (generation that operates off the grid, with no interconnection queue) is paid for by the customer it serves — a model the company wants to scale.

Horstman said NET Power is developing islanded solutions that combine reciprocating engines, gas turbines and battery storage to serve co-located data centers. The systems are designed to scale with customers and carry redundancy to meet reliability requirements. Crucially, the company intends to standardize the design rather than treat each installation as a one-off. Management expects that approach to make projects easier and faster to replicate across different generation technologies and sizes.

Takeaway: NET Power is betting that standardized, off-grid gas plants beat the grid queue for AI customers that need power fast.

What does the balance sheet look like?

Chief Financial Officer Lee Shuman reported approximately $183 million in cash equivalents and investments at quarter-end, with no debt. Property, plant and equipment jumped to about $141 million from roughly $33 million at year-end.

Nearly all of that balance is construction in progress. It breaks down into two pieces:

• Approximately $118 million for 10 Wärtsilä reciprocating engines (combustion engines that generate power from natural gas) plus a related engineering, procurement and construction contract
• About $23 million in deposits on two gas turbine generator packages

Recovering those costs depends on three paths, Shuman said: whether the initial project proceeds, recovery under the cost reimbursement agreement, and resale or redeployment of the equipment.

Can the company fund the build-out?

General and administrative expense runs at roughly $30 million to $35 million a year, Shuman said. Management believes existing cash and available-for-sale securities will cover obligations for at least the next 12 months — on one assumption: the company doesn't issue a full notice to proceed under its construction agreement or make additional significant equipment or construction commitments without committed financing or other capital.

The projects will need project-level financing, partner capital, additional equity, or a combination, Shuman said. None of that capital has been committed, and he flagged securing the commercial arrangements needed to make the projects financeable as a priority.

Takeaway: NET Power has runway for a year, but the big build needs money it hasn't raised yet.

What is NET Power's underlying technology?

NET Power develops power-generation technology that produces electricity from natural gas while capturing carbon dioxide. Its system, the NET Power Cycle, burns natural gas with oxygen in a high-pressure carbon dioxide working fluid, generating electricity plus a concentrated stream of CO2 for capture and potential transport, storage or use. Rather than operating as a conventional utility, the company focuses on enabling power plants that use its system.

For now, everything hinges on one deal: a signed agreement with an unnamed AI developer turns $141 million of equipment into a project — and a financing case.