NET Power's Q2 2025: Navigating Contradictions on Supply Chains, Revenue Growth, and Regulatory Impacts

Supply chain constraints and turbine availability, revenue growth drivers, Inflation Reduction Act impact, Project Permian and 45Q impact, and modularization and cost optimization are the key contradictions discussed in NET Power's latest 2025Q2 earnings call.



Energy Market Demand and Grid Load Growth:
- The energy market is experiencing unprecedented demand, driven largely by the surge in artificial intelligence and data center growth. Grid load growth from AI is outpacing the ability to add generation, with cleared prices rising from $329 per megawatt per day in 2025 PJM capacity auctions, an 11x increase over two years.
- This growth is putting pressure on prices and grid reliability, with corporate sustainability goals competing against reliability and affordability concerns.

Project Permian LCOE Improvement:
- The LCOE of Project Permian has significantly improved, falling from over $150 per megawatt hour to under $100 per megawatt hour in just a few short months.
- This improvement is attributed to value engineering efforts at SN1, reducing pipe quantities and diameters, and favorable pricing updates on ASU equipment, among other factors.

NET Power Cycle Integration and Synergies:
- The integration of gas turbines into the NET Power cycle allows for the use of lower-cost power to service auxiliary load, boosting core cycle efficiency and enabling better turndown and load following flexibility.
- This integration results in a higher efficiency combined cycle configuration, doubling power output and slashing carbon intensity by half compared to a stand-alone NET Power configuration.

Regulatory and Tax Policy Impact:
- The enactment of the one Big Beautiful Bill Act tax legislation, including bonus depreciation and 45Q parity, has significantly impacted the cost effectiveness of NET Power's plants.
- These policy changes allow for a nearly $10 per megawatt hour reduction in power price and enable more economical deployment of the technology, particularly in the Permian region.