Solaris Energy (SEI): A High-Conviction Growth Play in Modular Power Solutions for Data Centers and Industrials

The global demand for modular power solutions is surging, driven by the insatiable energy needs of data centers and industrial operations. Solaris Energy Infrastructure (SEI) has positioned itself as a critical player in this space, leveraging strategic contract expansion, robust EBITDA growth, and disciplined capital reinvestment to fuel a compelling growth trajectory. As the company accelerates its mission to provide scalable, reliable power infrastructure, investors are presented with a rare opportunity to back a business that is not only capitalizing on structural tailwinds but also reinventing the economics of energy delivery.

Strategic Contract Expansion: Powering the Data Center Revolution

Solaris Energy's recent strategic partnerships underscore its ability to secure long-term, high-margin contracts in the data center and industrial sectors. In 2025, the company finalized a joint venture with a major data center client-Stateline Power, LLC-that upsized its power service agreement from 500 MW to 900 MW, with a seven-year contract term. This joint venture was fully financed by a $550 million senior secured term loan, reflecting the client's confidence in Solaris's ability to deliver reliable, modular power solutions.

The significance of this expansion extends beyond scale. Solaris also secured 330 MW of new generation capacity, with deliveries expected to begin in the second half of 2026. By 2027, the company anticipates a pro forma operated capacity of approximately 1,700 MW, driven by these strategic contracts and its expanding fleet. These developments highlight Solaris's unique value proposition: modular power infrastructure that aligns with the rapid deployment timelines of data center operators and industrial clients, who increasingly prioritize flexibility over traditional grid-dependent solutions.

EBITDA Growth: A Catalyst for Shareholder Value

Solaris's financial performance in Q3 2025 further validates its growth narrative. The company reported record quarterly revenue of $167 million and Adjusted EBITDA of $68 million, representing a 12% sequential increase and over three times the year-over-year growth. The Power Solutions segment, which accounts for more than 60% of total revenue and over 75% of segment-level Adjusted EBITDA, was the primary driver of this momentum. Segment Adjusted EBITDA surged 27% quarter-over-quarter to $58 million, reflecting the scale and efficiency of Solaris's modular power model.

The company has also raised its full-year guidance, with Q4 Adjusted EBITDA now projected at $65–70 million and first-quarter 2026 guidance set at $70–75 million. This upward revision underscores Solaris's ability to convert contract wins into consistent cash flow generation. Notably, the acquisition of HVMVLV in Q3 2025 further enhanced the company's capabilities in voltage distribution and regulation equipment, positioning it to capture higher-margin opportunities in the industrial sector.

Free Cash Flow Reinvestment: Fueling a 2,200 MW Future

Solaris's capital allocation strategy is equally compelling. In Q3 2025, the company secured $748 million through convertible notes, which were used to repay a $325 million term loan and fund the purchase of 500 MW of generation capacity. This expansion is part of a broader plan to reach 2,200 MW of pro forma generation capacity by early 2028. By leveraging debt financing to accelerate growth while maintaining a strong balance sheet, Solaris is demonstrating a disciplined approach to capital deployment.

The company's financial flexibility is further bolstered by its operating cash flow. With cash from operations contributing to expansion funding, Solaris is well-positioned to reinvest in its core business without overleveraging. This combination of strategic debt and operational cash flow creates a virtuous cycle: higher capacity leads to more contracts, which in turn drive EBITDA growth and free cash flow reinvestment.

Conclusion: A High-Conviction Play in a High-Growth Sector

Solaris Energy's strategic contract expansion, accelerating EBITDA growth, and disciplined reinvestment of free cash flow collectively paint a compelling case for long-term investors. The company is not only capitalizing on the structural demand for modular power solutions but also building a durable business model that prioritizes scalability and financial prudence. As data centers and industrial operations continue to demand reliable, on-site energy infrastructure, Solaris is uniquely positioned to dominate this market-and deliver outsized returns to shareholders.