Red Flags in Green Energy Investments: Why NET Power's Project Permian is a Cautionary Tale

Victor HaleSaturday, May 31, 2025 9:36 am ET
5min read

The global rush to decarbonize has created a gold rush for green energy technologies, but beneath the hype lies a harsh reality: not all promises of clean power will deliver. Nowhere is this clearer than in the case of NET Power's Project Permian, a flagship carbon capture project that has become a symbol of mismanagement, inflated costs, and broken timelines. For investors, this story is a stark warning: in the race to net-zero, transparency and realism are non-negotiable.

The Project Permian Disaster: A Timeline of Broken Promises

NET Power's utility-scale clean energy plant in West Texas was once hailed as a breakthrough. Initially projected to cost $950 million and begin operations by 2026, the project's timeline has been pushed back three times since 2022. By March 2025, the company admitted it would not be operational until no earlier than 2029, with costs soaring to $1.7–2.0 billion—nearly double the original estimate.

This collapse of expectations triggered a 31.5% stock plunge in March 2025, dropping NPWR shares to a historic low of $4.75. By April 2025, the stock had fallen further to $2.13 after the abrupt exits of the COO and CFO, signaling internal chaos.

Three Red Flags That Doomed the Project

  1. Supply Chain & Cost Mismanagement
    The project's spiraling costs stem from poor planning. Inflation, supply chain bottlenecks, and site-specific hurdles in the Permian Basin (e.g., existing CO₂ pipeline infrastructure) were downplayed in early disclosures. By 2025, these issues had pushed costs to $2 billion, forcing the company to pause equipment orders and scramble for cost-cutting measures like modular design studies.

  2. Opaque Financial Reporting
    NET Power's disclosures were alarmingly vague. Investors were assured of “on-track progress” until the March 2025 bombshell, which revealed years of underestimating risks. Lawsuits now accuse the company of misleading investors between June 2023 and March 2025, with shareholders seeking compensation for losses exceeding $1.6 billion.

  3. Leadership Instability
    The departure of key executives in April 2025—amid SEC investigations into its financial reporting—exposed governance flaws. A company unable to retain top talent struggles to execute complex projects, as demonstrated by Project Permian's repeated delays.

What This Means for Investors

The NET Power saga underscores a critical truth: green energy investments require rigorous scrutiny of execution risks.

NPWR Trend
loading

  • Cost Transparency is Non-Negotiable: Projects with vague cost estimates or frequent revisions should raise red flags.
  • Timelines Matter: A project delayed three times since 2022 is not a “near-term” opportunity—it's a financial time bomb.
  • Follow the Money: NET Power's $164.6 million net loss in 2024 and dwindling cash reserves ($533 million by late 2024) show how operational missteps drain liquidity.

Why This is a Wake-Up Call for the Sector

Project Permian is not an isolated case. The clean energy sector is littered with overhyped technologies and underfunded projects. Investors must ask:

  • Is the cost estimate realistic, or is it a best-case scenario?
  • What are the contingency plans for supply chain disruptions or regulatory hurdles?
  • Does the company have a track record of meeting timelines and budgets?

The Bottom Line: Proceed with Extreme Caution

NET Power's collapse is a cautionary tale for green energy investors. While the promise of carbon-free power is compelling, the rush to back unproven technologies without due diligence can end in disaster.

Action Items for Investors:
1. Prioritize firms with transparent cost structures and third-party validated timelines.
2. Avoid projects dependent on “first-of-a-kind” technology unless they have proven scalability and funding.
3. Run from companies with frequent leadership turnover or legal disputes over disclosures.

The road to net-zero is littered with pitfalls. Investors who ignore the red flags of Project Permian risk joining the ranks of shareholders left holding the bag.

This article is for informational purposes only and should not be construed as investment advice. Always conduct your own research or consult a financial advisor.