Overview of Net Power’s Financial Performance

Net Power Inc. is a clean energy technology company that has developed a unique power generation system called the Net Power Cycle. The company went public in June 2023 through a business combination with RONI.

For the year ended December 31, 2024, Net Power reported revenue of $250,000, up 43% from the combined prior year periods. This revenue came from contracts with potential future license customers and syngas testing at the company’s Demonstration Plant. However, Net Power is still in the development stage and has not yet commenced commercial operations.

The company’s net loss for 2024 was $164.6 million, compared to a net loss of $141.8 million in the prior year period. This increase in net loss was driven by higher operating expenses, particularly in research and development (R&D) and depreciation/amortization, partially offset by an increase in the income tax benefit.

Key Trends in Revenue and Profit

Net Power’s revenue has remained relatively small as the company continues to focus on developing and testing its technology rather than generating significant commercial sales. The 43% year-over-year increase in revenue was due to more contracts for access to testing results and data.

On the profitability side, Net Power has incurred significant net losses as it invests heavily in R&D, project development, and other operating expenses to advance its technology. R&D expenses increased 60% in 2024 as the company ramped up testing and development activities. Depreciation and amortization also rose 61% due to the increased value of assets from the business combination.

These losses have been partially offset by an increase in the income tax benefit, which grew to $10.6 million in 2024 from $5.7 million in the prior year period. This was due to a higher net loss, a larger R&D tax credit, and finalizing deferred taxes from the business combination.

Analysis of Strengths and Weaknesses

One of Net Power’s key strengths is its unique technology, the Net Power Cycle, which is designed to produce clean, reliable electricity from natural gas while capturing virtually all atmospheric emissions. This technology has significant potential to disrupt the power generation industry if it can be successfully commercialized.

However, the company faces several challenges and weaknesses:

• Cost overruns and technical problems: Net Power has experienced higher-than-expected costs in testing and operating its Demonstration Plant, and there is a risk of further technical issues that could impact the performance of the Net Power Cycle.
• Supply chain issues: Potential supply chain problems related to manufacturing and transportation of key equipment could delay the company’s commercialization efforts.
• Significant capital requirements: Constructing the first utility-scale Net Power plant will require substantial capital, and the company will likely need to raise additional funding through debt, equity, or other means.
• Competition from other clean energy technologies: Net Power faces the risk that competing clean energy technologies could be developed and commercialized sooner or at a lower cost than the Net Power Cycle.

Outlook and Future Prospects

Over the next several years, Net Power plans to conduct additional research and testing at its Demonstration Plant. The company also began purchasing initial long-lead materials for its first utility-scale plant, Project Permian, in 2024. However, after completing the FEED process, the initial cost estimates were higher than originally anticipated, leading Net Power to suspend further long-lead equipment releases and commence a post-FEED optimization and value engineering process.

Provided Net Power is successful in its value engineering efforts, the company expects Project Permian to come online no earlier than 2029. The company is focused on delivering a project that will catalyze future adoption by utility-scale customers.

Key remaining development activities for the first utility-scale plant include finalizing all permitting, supply and off-take contracts, obtaining financing, initiating the EPC process, and constructing and commissioning the facility. These activities are similar to what the company previously undertook for the Demonstration Plant.

Net Power’s future success will depend on its ability to manage costs, overcome technical challenges, secure necessary financing, and navigate a competitive clean energy landscape. While the company has made progress in developing its innovative technology, significant hurdles remain before it can achieve commercial-scale operations and profitability.