Hello and welcome to the NET Power Inc. First Quarter 2024 Earnings Call. It's now my pleasure to turn the call over to Bryce Mendes. Please go ahead. 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. 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 filings. Please note that we assume no obligation to update any forward-looking statements. With that, I'll now pass it over to Danny Rice, NET Power's Chief Executive Officer.

Thanks all for joining us. We're going to reference several slides in the investor presentation we posted to our website, and I'd encourage you to have those handy. To summarize where we are to date, development remains on track for our utility scale product, 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. 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. Its low growth, primarily from data centers and the electrification of everything, is outrunning supply growth, which we think will move power prices significantly higher. In a 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 B&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. While existing gas plants will be addressed down the line as the EPA gathers more input. 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 Oxy combustion-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 output. 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 CO2 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: if you build the perfect mousetrap, the world will build a beaten path to your door. 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. 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, CISO in the Alberta system. We continue to have active dialogue with a cross-section of companies across the oil and gas, power, 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. NET Power has approximately 60 full-time employees, plus another approximately 200 full-time resources across our various investor and supply chain partners who 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.

Thanks, Danny. Turning to Slide 10 in the presentation. The team continues to make steady progress on site upgrades to our La Porte demonstration facility in preparation for our floor 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 derisk the utility scale deployments. The La Porte 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 turboexpander. The upcoming testing of La Porte will focus on validating and derisking 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. The first phase of testing will focus on the Turbo standard burner, which is where the combustion of natural gas and oxygen takes place in a CO2 environment. We will test multiple oxyfuel burn configurations, and Baker will select the best burner heading into the next phase. We expect to begin Phase I testing in Q4 of this year. The second phase of testing will take the selected oxy-fuel burner from Phase I and test it along with a combustion liner and other hardware to form a single demonstrator size combustion car. This testing will allow us to optimize combustion and full performance demonstration conditions. The third phase will involve scaling the demonstrator size in the combustor from Phase II to a utility scale combustor, 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 for Project Permian and beyond. The fourth and final phase will test the full demonstrator turbo standard, including the validation of materials and design architecture used in the Turbo Expander for Project Permian. Baker Hughes and NET Power will use this testing to analyze our models with the acquired test data. 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 the first of a kind prior to Project Permian initial operations. Turning to Slide 11, I will explain how the validation campaign before derisks our utility scale deployments. The key new enabling technology being validated is the Baker Hughes turboexpander integrated into the NET Power cycle. As part of our joint development program with Baker Hughes, the former turboexpander and utility scale turboexpander are both being designed by the same engineering team and manufactured in a nearly parallel fashion. The La Porte demonstrator turboexpander is a reduced scale version of the utility-scale turboexpander with a flow path sharing the same design philosophy. It has similar design architecture, materials, and maximum operating pressure and temperature. Both the La Porte and utility-scale turboexpander will share the same combustion structures, although with a different quantity of burners and combusting gas to accommodate an 11x difference in thermal energy input. Both will also share similar operational characteristics in terms of how the machines are started, ramp up in power, synchronize with the grid, follow load and dispatch commands from the plant operators, and then shut down. In short, the similarity in design and operation helps us gain the most benefit from our existing demonstration facility. So what does all of this do for the utility scale plants? 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. It allows Baker Hughes to gain significant lessons that 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 derisk Project Permian. Next, I will turn to Slide 4 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 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 Zachry. Year-to-date, we have completed our initial sets of heat and mass balances, process flow diagrams, and our piping and instrumentation diagrams. 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. Zachry has been advancing the overall planned 3D layout in parallel and can now proceed towards finalizing the FEED stage plant design. They will then firm up their equipment quotes and their quantification of total pipe, electrical cable and wiring, structural steel, concrete, etc., and the cost to construct them. Utilizing all of this information, Zachry will finalize their 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 switchyard 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. 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 four locations on the Gulf Coast in Texas to the Midland Odessa region. With that, I'll pass it off to Akash for the financial updates.

Thanks, Brian. NET Power continues to deploy our capital prudently, ending the first quarter of 2024 with a strong balance sheet, including approximately $625 million of cash and investments. 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 spend. 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 Hughes ADA. However, this high interest rate environment won't last forever, and we expect cash flow used in operations to continue increasing as we build out the organization, progress the joint development program with Baker Hughes, and ramp up activity at La Porte. 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 La Porte modifications and upgrades ahead of testing that is expected to begin in the fourth quarter of this year. 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 cash exercised, will give NET Power an additional $225 million of cash, 1.7 million shares subject to earnouts or vesting requirements, and approximately 13 million authorized shares issued pursuant to the Baker Hughes joint development agreement. 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.

Thank you. Our first question is coming from Martin Malloy from Johnson Rice.

The first question was around 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 and maybe the timing of that filing?

Marty, it's Danny. Good to hear from you. In terms of like specific location, we're not disclosing that just for competitive reasons. But like we've said in the past, it's in the Northern MISO region. MISO goes all the way from Michigan down to Louisiana, and everything has been trained, and it will be in the northern section of MISO. It will ultimately get out there publicly once the filing is accepted by MISO, and we're proceeding into the next phase of the interconnect. 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 interconnect into the Northern MISO system. So everything is kind of going according to plan up there, and we couldn't get that power plant on soon enough. That Northern MISO system really, really needs clean baseload power, probably as much as any other system in the country.

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 press reports about the need for additional power for data centers and reshoring manufacturing, etc., can you maybe talk about the nature and the types of customers that you're having these conversations with?

Yes. It's been the same type of companies over the last few years. We've been talking to tech companies for a while. They have a growing need for baseload power for the data centers. So those conversations, I wouldn't say are necessarily new. They're just more picking up as they're really starting to look at almost needing to start to procure power from the source of generation rather than just being an active participant in the open market in the grid systems. 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 transpired over the course of the last few years. And then I think when everybody looks ahead with just the clean ambitions that we have at the EPA across most states, there's really no such thing as clean, affordable baseload today. And so folks are starting to pay a lot more attention to those potential solutions that are being developed that provide that energy trifecta. So we're seeing a bunch from the tech folks, but we're also seeing it from the utility industry and just the power industry in general, who have obviously been the primary customers and custodians of these types of generating assets, and 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, PJM, even ERCOT is now saying, by 2030, we're seeing a 30-gigawatt shortfall in peak summer power demand, which is a little bit amazing since Texas is what I think all of us would say is probably the most abundant place for power generation. They're seeing a significant shortfall too. So we're seeing interest across the board in terms of folks' interest in NET Power. And so I think with all of these inquiries, it really points 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 and affordable. One of the things that Brian and his team on the operational side, particularly on the supply chain side, is 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? It's a pretty ambitious but quite realistic opportunity for us just because the demands that we're seeing knocking on our door, plus number one is it's unlike anything that I think the power industry has seen before, but it's certainly 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 and align it with long-term shareholders that see the vision and the potential and can help us capitalize this to capture that market that's coming our way.

Next question is coming from Leo Mariani from ROTH MKM.

I was hoping to expand a bit on the customer discussion here. Just specifically with respect to OP1, have you guys actually 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 getting somebody to step into that actual role. So maybe just kind of talk about that kind of OP1, I guess, project #2.

Yes, sure, Leo. And it's still to be determined if it will ultimately be serial #2 or serial #3. 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 strategic stakeholders 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? I think the area that we're targeting in the market 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. It ranges from the utilities that are in the area to the local government, landowners, and stakeholders at the community level. But the infrastructure capital providers, there are going to be exciting 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. One of the real benefits of this origination strategy is it gives us a lot of creative latitude over which strategic partners we want to bring into these hubs because while 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 solutions. So we're in the early days of really setting out what are the strategic stakeholders we want to have in this Northern MISO hub. But I would imagine it will be different and catered for each market where we start to establish these origination hubs.

Okay. I appreciate that. And then just wanted to follow up quickly on the cash burn that you all were talking about. I think the cost, 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? What type of CapEx do we see? And is that going to be the primary component of the cash burn? Do you expect, 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 G&A?

Yes. Thanks, Leo. Yes, we are spot-on there. So two components. 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 JDA, which was approximately $3.7 million. So if you back that out and factor in the cash interest received, annualizing gives us a cash burn from operations of roughly $40 million right now, and that's being covered pretty materially by the cash interest received. Now as interest rates come down and we start spending more on the CapEx side, you'll start seeing that accelerate a little bit. But we are fortunate that we over-capitalized the balance sheet, and we continue to be prudent on how we build out the business to ensure we rightsize our capital plan. On the CapEx side, when we over-capitalized the balance sheet on the go-public transaction, we mentioned that roughly $200 million is our first dollars into the project to ensure that we continue releasing long-term components, etc. We're in active negotiations with several of the long lead providers. So we haven't said when that cash will go out the door. Obviously, timing is incredibly important, and we'd like to keep the cash as long as possible. But you can expect that to come through over the next couple of years. The pace of which it will be back later this year, but still a little early for us to say when exactly on a quarterly basis that will accelerate.

Next question today is coming from Thomas Maric from Janney Montgomery.

On supply-demand, I'm curious about your thoughts for the next couple of years, and I want to dive into ERCOT, but I think this is related to all the RTOs. But 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 dispatchable assets?

Yes. No, I think, Thomas, that's like the billion-dollar question. It may even be a trillion-dollar question at this point. I think when you heard us talking over the last few quarters about the underlying thesis for NET Power, it's really through the lens of this: we have a grid system where we've really underinvested in baseload assets over the last decade. Really, since the shale revolution in natural gas replacing coal powered in the country, we've really seen this underinvestment in baseload dispatchable assets and more over-investment into renewable assets. We're in this real predicament now where we have the system operator saying, by the end of 2030, we're seeing all these decommissioning notices of baseload plants that are just aging, underutilized, and uneconomic looking to come off the grid system, and we have a real problem because nobody is backfilling with new baseload power generation. This all predates the new load forecasts for data centers and what they aspire to do. When you start to add that on top, you start to see problems start to emerge quickly. The EPA rules are saying if we want to decarbonize, we need to find ways to reduce emissions from coal and gas power generation. We totally agree with that sentiment, and that really is the basis for NET Power was if you really want to decarbonize the grid, you need to find a way to capture CO2 from coal and gas power generation, not to make it go away but just make the emissions go away. This is the mission that NET Power is on, to find ways to decarbonize the grid. The real question is whether dispatchable power can ramp up to meet the load growth that we're seeing on these grid systems, knowing that this load growth needs to be met with dispatchable baseload power generation that's affordable. Otherwise, that load will not be met by supply. That's going to be the billion-dollar question: are we going to see new baseload facilities built in the face of the EPA regulations that are coming down? I don't know, and I think that the EPA has made it clear that they want to see lower carbon solutions. If anything, this signals to the market and the investment community that we need to accelerate investment in low-carbon solutions. The EPA is saying we need to accelerate deployment of baseload dispatchable power generation that is focused on natural gas. We all agree the only way we're going to be able to scale to meet this load growth is with natural gas. It could come from coal, but coal is working its way out completely, and it's really just being replaced by gas. The only way we can see to meet this load growth is going to be from natural gas. It's a question of whether the EPA is going to relax its rules or whether the industry will step up and put more capital into the solutions that we have developed, like NET Power, that can generate clean power from natural gas. We really have an opportunity to scale to meet demand after our first plant comes online in '27 or '28. We're in a unique position because of our IP portfolio, and it's imperative that we're ready to scale as needed. We have to be prepared on the supply chain to scale from one plant a year to 30 plants per year by the beginning of the next decade to have any shot of saving the grid. If not, we may see power prices spike as the load grows and demand for 24/7 power on the grid system increases. Will that be enough for someone to build a combined cycle plant that's out of compliance with EPA rules? It's an interesting macro setup, but NET Power is positioned uniquely to respond to this demand.

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 have conversations been like since the rule was published? Maybe just any kind of anecdotes or commentary about the inclusion of NET Power technology in that final rule would be helpful.

Yes. I think for our investors who haven't been following it too closely, the EPA proposed the rules last fall, and they then opened it up for a comment period. We didn't know that we would be called out by name specifically as an example of promising technologies coming down on carbon capture. When they had their proposed ruling and opened it up for comment, we seized that opportunity to let everybody know, not just the EPA but all of the readers of that comment period, just the facts and circumstances of NET Power. We were forthright about the state of the NET Power technology development and the company. We've properly capitalized the business to scale up to meet future demand resulting from the EPA rules. The broader power industry is a bit split on it. Some believe we need to create a cleaner grid faster, while others think the transition needs to remain uninterrupted. In either case, we want to provide that clean, affordable, reliable power source that cuts right down the middle and unites both sides. As mentioned earlier, not many energy solutions are being developed that can do all three. We believe NET Power is one of the better options for achieving that, as we're utilizing one of the cheapest energy resources worldwide—natural gas. We've always maintained that if we can find a way to decarbonize this low-cost feedstock, we can deliver the energy trifecta. We need to shift the focus from the energy source to its output, and that paradigm change is critical. It's a journey for all of us, as we show that we can deliver clean, affordable, reliable power.

Your next question comes from Wade Suki from Capital One.

Just to dovetail on Marty and Leo asking about OP1—I wonder if you could give us maybe a detailed timeline for what you see as OP1 today. I can't remember; did you disclose the size of this project?

Yes, so OP1 is the same size as serial #1. I think as everybody knows, we have a standard plant design, right? The important thing coming out of serial #1 is that it establishes a standardized design that we're going to deploy in manufacturing mode across the U.S. and the world. One of our flexibilities is that it gives us total creative control over not just the timing of the project, but also the strategic stakeholders that we want to bring into this project. The area that we're targeting in the market is much larger than just one plant. We're talking about a market that could accommodate 20 to 40 NET Power plants. We had a slide in one of our earnings decks a few quarters ago listing the various stakeholders that we would want to bring into these consortiums. This ranges from utilities in the area to local government, landowners, and community stakeholders. There are exciting opportunities to start looking at co-location of data centers for some of these plants, whether it's OP1, OP2, or OP3. We're in the early days of setting out the strategic stakeholders we want to have in this Northern MISO hub, and I imagine it will be different and catered for each market where we start establishing these origination hubs.

Makes total sense. Let's take the next step, I guess, here. I was asked about the commercial pipeline, but I'm curious about international opportunities. Where do those kind of reside in the pecking order or in the priority list as you see it today? Any hints you can give us on geography?

Yes, we've been pretty transparent about the international markets that interest us. The Canadian market, specifically Western Canada, is a little unique as it's a competitive power market, just like most U.S. markets. So the ASO system is a competitive power market, allowing anyone to build power generation to supply Alberta. That's an area for origination, and we are working on things there. Other international markets are usually state-controlled, such as in the Middle East, which is interesting due to access to low-cost natural gas and excellent CO2 storage options, whether it's permanent geologic storage or for enhanced oil recovery. Australia is another region with access to low-cost natural gas and established CO2 storage solutions. Southeast Asia is in the nascent stages of figuring out CO2 handling and natural gas procurement. Europe has natural gas access but has chosen not to develop it, although they've proven CO2 geological storage in the North Sea. The largest power markets worldwide have the key components for our plants to be economically viable. We believe the market demand for NET Power will exceed our ability to supply in the early part of the next decade, creating scarcity value, which is beneficial for us. The intrinsic value of a NET Power plant in any market isn't just about natural gas-based power; it's also about environmental value. The U.S. has done an impressive job creating incentive programs that ascribe value to decarbonization.

One last one for me, Dan, if you don't mind. As you look down the road, when the company is in manufacturing mode, what kind of timeline do you see from customer signing agreement through the permitting and everything to plant start-ups?

Yes. For initial projects, consider a traditional power project approach like Project Permian—a timeline of about four years from start to finish. That's something we want to compress over time. As Danny mentioned, with manufacturing mode and standardization, we can achieve that. That will require standardized modular design and equipment, which we're establishing. When someone has the idea to start development, we want to minimize reengineering work, which is typical in the power industry. Our goal is to reduce the overall cycle to potentially three years or even shorter as our target. The key here is standard design and modular manufacturing.

Our next question today is coming from Betty Jang from Barclays.

Great. I want to go back and ask about the data center demand. Just wondering how big is the opportunity to provide behind-the-meter power solutions for specific data centers? Do you have to size down from the 300-megawatt utility scale to fit for a typical size of a data center?

That's a great question, Betty. If we look back five or ten years, we might have said yes; maybe a NET Power plant is too big. In those cases, there'd be partial load going to the data center and the rest would go to the grid since a data center needs redundancy. Today, with the size of hyperscale data centers, we're talking about facilities on the magnitude of 250 megawatts to a gigawatt. For NET Power's product, we're almost the ideal fit for these data centers, which are scaling such large operations. If you look at a data center that needs a gigawatt and we provide 250 to 300 megawatts, it’s not adequate on its own. What we do is deploy a fleet of NET Power plants in modular configurations. Additionally, we must consider power density; to generate a gigawatt from solar requires 3,000 acres, while a gigawatt from NET Power requires only 60 to 75 acres. This makes it not only scalable for power output but also crucial for co-location next to these hyperscale data centers. The focus as we establish energy hubs—10 to 40 NET Power plants—will meet grid needs and address behind-the-meter solutions increasingly required over the coming decades.

That's really great color. 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?

The reality is that data centers need to operate without interruptions—especially for large-scale operations like language learning models—reliability is crucial. Interruptions can cause them to restart training programs, costing significant time. So redundancy and reliability are critical for their operations. Affordability is also an important factor due to the substantial energy expenses for these facilities. The tech industry desires a clean, affordable, reliable energy trifecta. Unfortunately, achieving all three often causes people to compromise on one aspect. NET Power aims to eliminate these compromises by shifting the perception of energy sourcing. We need to focus on measuring carbon intensity as a key metric as opposed to the energy source itself. As we transition to utilizing natural gas, people need to be more agnostic about energy sources and prioritize cleaner outputs.

I can't agree more. Carbon intensity should be the priority, and I believe EPA regulation definitely helps move that forward by measuring everything through that lens. I have a follow-up regarding Project Permian next steps. What needs to be tested with the air separation unit provider before you can finalize that long-term partnership?

Sure. This is Brian. It's primarily about technical integration at this point. These are large air separation units, so they're not exactly off-the-shelf solutions. We're very focused on minimizing technology risks, integrating design aspects from proven past experiences with the ASU provider. Additionally, the commercial model will involve integrated sales of equipment in conjunction with the overall power plant design. We're working through those technical integrations and also moving into commercial discussions. However, the development aspect is pretty much resolved. An open book estimate means we work directly with Zachry to see all of the costs. This differs from a quoted lump sum price; we want insight into value engineering and where costs are driven by our cycle design.

In the interest of time, we have one final question from Noel Parks from Tuohy Brothers.

Just had a couple questions. I wonder if you've covered a variety of interesting topics touching on gas macros and various power approaches for decarbonization. I'm wondering if you think some more expensive, smaller scale solutions, like fuel cells running on natural gas, might have a role in this dynamic. Will those solutions either help you out as your operations scale, or will they present speed bumps as investments in larger projects struggle?

Yes. It's interesting, Noel. Many are seeking ways to address peak pricing by adding battery storage, fuel cells, or natural gas peakers. The challenge is the sheer load growth demand that we're facing, which I think the industry has been caught flat-footed on. With the new EPA rules potentially having a chilling effect on deploying dispatchable sources of power generation, that could limit growth opportunities for things like fuel cells or batteries. While those innovations will support the edges, they cannot meet the full scale for the load growth that’s required. For effective power generation, we need robust solutions like nuclear and natural gas. Ultimately, to achieve the large base load generation capacity needed, we need to focus on natural gas generation-based solutions. Solutions from NET Power or post-combustion carbon capture are at the forefront of these strategies. Our unique design simplifies CO2 capture, making it much more viable for large-scale implementation at affordable costs.

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

Thank you, everybody, for joining us today. This was really informative, and hopefully, we'll catch you on the next call in three months. Have a good afternoon.

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.