Last week was Stampede, “The Greatest Outdoor Show on Earth” in Calgary. For 10 days the city trades suits for boots and gets country festive throughout Canada’s energy capital. While the cowboys were getting bucked off, bigger news was being made outside the corral. The oil folks got good news on pipelines, and in power Meta broke ground on a US$9 billion gigawatt data center, its largest anywhere outside the US.
Meta’s power arrangement is by now commonplace. The load gets matched with renewables on paper, annually, while the firming comes from the Greenlight Electricity Centre, a 932MW gas plant Pembina (with partners Morgan Stanley Infrastructure Partners and Kineticor Asset Management) is building against a long-term Meta tolling agreement, online by 2030. Clean on the surface, gas underneath.
Looking to the US data center build, the fuel cell is an interesting variation on the theme. Our work has Bloom’s solid oxide stacks penciling around $91/MWh behind the meter, within 1% of a combined-cycle plant, and Oracle stood one up in 55 days. The technology is attractive for the use case, and the stock has run roughly 1,000% in a year on that promise.
The real bet is the order book. Bloom looks reasonable as long as it executes on its backlog, and that is where the whole thesis sits. Some of it is signed and binding. Some is announced, optioned or aspirational. The gap between the headline and what Bloom ultimately installs is the difference between a scaling infrastructure platform and a product that is more hat than cattle. There is nothing new about this. Whether it is the Big E exploration or technology, the potential shows up in the order book and investors are asked to bet on its quality.
The pattern underneath holds either way. Getting to the groundbreaking ceremony is the hard part, and plenty of announced projects get bucked off in the queue and never energize. What keeps one on to eight seconds now is a signed buyer. Post-2024 combined-cycle plants cost around $2.0 million/MW to build while existing gas trades near $1.0 million/MW, so an acquirer pays 50 cents on the replacement-cost dollar. Nobody spends into that math on hope.
Williams proved it in the US yesterday. It pulled $5.34 billion from a Blackstone-led group, with Apollo and KKR, for 49% of its first five behind-the-meter gas projects, keeping control and pointing the capital at a backlog north of 6 GW. Pembina builds gas in Alberta against a Meta toll. Williams builds gas in the US against contracted demand and shared capital. Fuel cell or turbine, the rule holds. The buyer signs first.
Coming up: Join Pat Lynch of CBRE and me tomorrow as we discuss “Bringing the Site to the Power” and the realities of data center development.
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