NET Power's Legal Headwinds: A Critical Turning Point for Clean Energy Investors

The energy transition’s promise of sustainable growth has drawn both excitement and skepticism, but for investors in NET Power Inc. (NPWR), recent developments have shifted the narrative toward risk and uncertainty. The Pomerantz Law Firm’s ongoing investigation into potential securities fraud has thrown the company’s financial transparency and operational viability into sharp relief. This article examines the implications of the probe, the company’s financial struggles, and the broader risks for stakeholders in this high-stakes clean energy play.

The Investigation: A Deepening Crisis

On April 12, 2025, Pomerantz announced its investigation into NPWR, focusing on alleged misstatements and omissions tied to the company’s flagship Project Permian, a utility-scale carbon-capture power plant. The probe centers on claims that NPWR misled investors about the project’s timeline and cost estimates, artificially inflating its stock price.

Key allegations include:
- False Timeline Claims: NPWR initially projected completing Project Permian by 2026, but delays due to supply chain issues pushed the timeline to late 2027–early 2028 by late 2023. By March 2025, the company admitted further delays, pushing completion to no earlier than 2029.
- Cost Overruns: The project’s estimated cost ballooned from $1.1 billion in 2024 to $1.7–2.0 billion in 2025, driven by “non-recurring first-of-a-kind, site-specific, and owner costs.”
- Financial Transparency Issues: NPWR’s cash reserves fell to $533 million by year-end 2024, down from $580 million in the previous quarter, with $29 million allocated to capital expenditures for Project Permian.

These revelations triggered a 31.46% stock plunge to $4.75 on March 10, 2025, and further declines as leadership changes (including the departure of its CFO and COO in April) fueled investor anxiety.

Financial Struggles and Market Impact

NPWR’s financials underscore its precarious position. Despite its groundbreaking technology—the Allam Cycle, which captures carbon emissions during power generation—the company has yet to translate innovation into profit.

• Revenue (TTM): A paltry $250,000, reflecting its reliance on licensing and project development rather than operational revenue.
• Net Loss (TTM): $49.19 million, with an EPS of -0.64 and a negative P/E ratio of -2.7x.
• Liquidity Risks: Its cash reserves, now at $533 million, face pressure from escalating project costs and operational outflows.

The stock’s 12-month decline of 84.1% to $1.73 (near its 52-week low of $1.62) reflects investor skepticism about NPWR’s ability to deliver on its ambitious goals. The volatility—16.5% weekly price swings—highlights the fragility of its market valuation.

Legal and Operational Crossroads

The Pomerantz lawsuit, filed on April 25, 2025, seeks to hold NPWR accountable under Sections 10(b) and 20(a) of the Securities Exchange Act for its alleged misstatements. Investors who bought shares between June 2023 and March 2025 may join the class action, with a June 17, 2025, deadline to request Lead Plaintiff status.

The case hinges on whether NPWR disclosed critical risks, such as supply chain disruptions, geographic-specific project challenges, and escalating costs, in a timely manner. If found liable, the company could face class-action damages, regulatory penalties, and reputational damage, further straining its already tenuous financial position.

Leadership and Strategic Challenges

NPWR’s recent leadership shakeup—CFO and COO departures by May 1, 2025—adds to operational uncertainty. The replacement of its COO immediately suggests internal instability, which could deter partnerships and investments crucial for scaling Project Permian.

The company’s partnerships, such as with Baker Hughes and Woodside Energy, remain vital, but their value depends on NPWR’s ability to execute its plans. Without a clear path to profitability or a stabilized leadership team, investors may lose faith in its long-term prospects.

Conclusion: A High-Risk Bet on Innovation

NPWR’s story is emblematic of the clean energy sector’s dual promise and peril: groundbreaking technology meets execution risk. While its carbon-capture technology holds strategic value, the company’s financial and operational missteps have exposed vulnerabilities that even its revolutionary vision cannot offset.

The Pomerantz investigation is a pivotal moment. If the allegations are substantiated, NPWR could face multimillion-dollar liabilities, sustained stock declines, and reputational harm that undermines its ability to secure future funding. Even if cleared, the scrutiny has already eroded investor confidence.

Stakeholders should closely monitor:
- May 12, 2025 Earnings Report: Will NPWR provide a credible path to profitability or further disappointments?
- Project Permian Milestones: Can the company demonstrate progress in overcoming delays and cost overruns?
- Legal Outcomes: The June 17 Lead Plaintiff deadline and subsequent court rulings will shape NPWR’s legal liabilities.

For now, the risks far outweigh the rewards. Investors must weigh NPWR’s potential against its mounting challenges—and recognize that in the energy transition, innovation alone cannot sustain a company without financial rigor and transparency.