(Bloomberg) — Daniel Rice — a serial dealmaker and natural gas mogul — is set to take the reins of a clean-power technology company through a deal with a blank-check firm.
Rice Acquisition Corp. II, his special purpose acquisition company, agreed to merge with NET Power in a deal valuing the combined company at about $1.5 billion, including debt, according to a statement Wednesday confirming a Bloomberg News report.
NET Power, which has come up with a way to make power plants pollution free, is a game-changing company with enormous upside potential, Rice said in an interview. He believes in it so much that the Rice family is investing $100 million in the business through a private placement. He’s also taking over as chief executive officer.
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That’s striking because he said it’s the largest-ever investment made by the Rice family, which built natural gas explorer Rice Energy from scratch. SPAC executives also rarely run the companies their SPACs buy and Rice reaped an enormous payout from his last deal in the space. He was also CEO of Rice Energy before selling it in 2017 to EQT Corp., which his brother runs.
“I have the good fortune to do what I want to do, whatever makes me happy,” Rice said in an interview. “I’ll be with the company as long as it takes to achieve the true potential here.”
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That potential includes replacing the 2,000 or so natural gas and coal-fired power plants in the US with NET Power’s technology, he said. That would be good for the environment and enormously lucrative, he said, adding that NET Power could soar in value if it becomes the dominant player in what he pegs at a $150 billion market.
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“That’s awfully ambitious. But that’s the potential,” he said. “We don’t have an energy source today that is low cost, reliable and clean. Everybody is looking for this energy trifecta. For us we’ve really found it.”
NET Power has developed a way to generate power without emitting any carbon dioxide, the main cause of global warming. It does this by burning natural gas with pure oxygen, which creates water as well as carbon dioxide that is used to power a turbine. The leftover carbon dioxide is either recycled back into the turbine or captured, stored and resold, according to its website.
Cost Competitive
While burning fossil fuels with nearly pure oxygen, rather than air, presents an opportunity to simplify carbon dioxide capture in power plant applications, “the capital cost, energy consumption, and operational challenges of oxygen separation are a primary challenge” to make the process cost-competitive, according to a note from the Department of Energy’s National Energy Technology Laboratory.
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NET Power has tested this process at its own, small power plant in Texas and is in the process of building out a “utility-scale” version in the Permian Basin. It owns the intellectual property for the process and intends to commercialize it as older power plants are replaced in the coming years for cleaner alternatives.
“I followed the NET Power story for a number of years and knew that when the technology is commercialized, it would play a meaningful role in decarbonization,” Akash Patel, chief financial officer of Net Power, said in an interview.
NET Power’s technology has also become more economic thanks to the Inflation Reduction Act of 2022, which increased tax credits for carbon dioxide sequestration, Rice said.
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“The table is really set for this company to not just achieve rapid commercialization but really to become a cornerstone of any state or country’s net-zero plan,” Rice said.
In addition to the Rice family, existing investors Occidental Petroleum Corp., Constellation Energy Corp. and 8 Rivers Capital committed to a $235 million equity investment to support the transaction, which is expected to close in the second quarter of 2023, according to the statement.
—With assistance from Gerson Freitas Jr..
(Updates with more details on technology in ninth paragraph. A previous version of this story corrected deal statement date)
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