Transcription of The Stock Network Interview with Kalina Power (ASX:KPO), Executive Director Tim Horgan
Tim Horgan: Kalina Power is an ASX listed power company developing natural gas power plants in Alberta, Canada to satisfy the extraordinary surge in demand from some of the largest AI companies in the world. Our team has developed over 20 gigawatts of power worldwide. We are well capitalized at the ASX level, having received Canadian $18 million from Meta and have appointed New York Bank PEI to raise project level finance to develop our high value portfolio.
I recommend Kalina Power to ASX investors looking for exposure to the North American AI and power thematic. There’s a nice series of quotes set out on this slide. So pointing out deliberately just how central power is to the exploding AI and data center thematic.
Mark Zuckerberg also put it nicely stating that energy not compute will be the number one bottleneck to AI progress. It’s not surprising that data center size is usually described by electricity consumption in megawatts or gigawatts because power is the ultimate bottleneck and the true measure of operational capacity. The recent demand for power by AI is unprecedented.
Meta announced in July a $13 billion Canadian 1.8 gigawatt facility in Alberta which rivals the electricity demand of major cities like Calgary or Edmonton and is one of the largest private sector investments in Canadian history. Alberta’s local grid operator reports over 20 gigawatts of applications for power from other local and international data center users. That is enough for approximately 15 million homes coming new as new applications.
Kalina’s portfolio of Alberta sites has an initial potential capacity of approximately 900 megawatts with potential to expand to approximately 1.5 gigawatts. We started developing these sites three years ago and have a significant early mover advantage in the region. This graph reflects our recent share appreciation from a market cap of less than 10 million to approximately 75 million today.
We see that number is still not reflecting the potential value of our projects. Our share price rise was largely driven by our receipt of 18 million Canadian dollars of non-dilutive funds from NETA. This transaction transformed our cash position and balance sheet overnight.
It’s important to note that as a listed ASX level company we are well funded with over $14 million in cash and a relatively low burn rate. We plan to fund our portfolio with subsidiary and project level funding and have appointed New York infrastructure bank PEI Global to do so. Quick bit of background to our share register.
Board, management and their families have put in over $5 million of cash reflecting very high levels of belief in the company we are developing. Our top 10 includes our CEO, a number of high net worths and one institution that recently joined our register and is now our third largest holder. The register is tightening as we work towards a suite of catalysts we believe will attract our next round of institutional support.
This slide shows the explosion of interest in Alberta from participants in addition to META. They’re coming to Alberta as it has the lowest price for gas in North America with huge proven reserves, second only to Texas. It’s extremely cold, which computers love and has spent the last few years developing a supportive regulatory environment to attract AI investors.
This has led to approximately 20 gigawatts of large load applications being received for group power as at July this year. To put that demand in context, the most power the entire province has ever used in a single hour is 12.8. The regulator has been frank that the additional 20 is not currently sustainable. The new rules for data centres therefore require grid connections and grid connected data centres to build new power with groups like Kalina on a one-to-one basis to match whatever it is that they consume.
These rules were developed in conjunction with a working group of nine key industry stakeholders to inform the process. It included some of the biggest energy and data centre players in Alberta and internationally such as Beacon AI, Capital Power, Dow Chemical, Imperial Oil, IRN, Kineticor, TransAlta and the final member, Kalina Power. This slide shows our five secured sites of approximately 900 megawatts initially with potential to expand to over 1.5 gigawatts.
All of the sites were selected to be adjacent to unconstrained power lines and gas pipelines, accessible fibre optic transmission lines and four of them are also near dedicated carbon sequestration hubs, which is invaluable to some AI customers seeking essentially net zero generation with the possibility of adding carbon capture in future. That Venn diagram of features is rare and the number of available sites like that in Alberta is very limited. It’s important to note we started working and securing and developing these sites over three years ago.
We have a significant early mover advantage of the groups just realising there’s no further capacity on the Alberta grid and Alberta’s new rules require them to build as much power as they plan to consume or to contract with developers like Kalina to build them. Important to take a quick look at this slide. It shows an extremely confident and experienced team with great success in developing projects in Alberta and internationally.
The team has done over 20 gigawatts of power project development worldwide. It was put together by our CEO Ross McLaughlin and includes significant members like Stephen White who co-founded two midstream energy companies for approximately $20 billion they were sold. It also includes Matthew Jenkins who was formerly the CEO of Macquarie Capital Markets Canada we showed him our projects a few years ago and he liked them sufficiently to come and join our board and he’s been brought on to help us finance the projects at the project level.
Also Peter Lithergood, X2IC at China Light and Power which is a $35 billion Hong Kong listed entity that owns Energy Australia. It’s an extremely experienced team and it’s important to have such a team as well as to have really good portfolio projects when speaking to finance groups about potential investment into our company. We have a number of important potential catalysts coming up essential steps to progress our portfolio to what’s known as Financial Investment Decision or FID includes securing subsidiary and project level finance to complete pre-feed, to do the feed and the regulatory work to secure gas supply and eventually to secure off take agreements for our power.
As we set out in our recent filings our engagement and negotiations have significantly expanded most notably after the July 8th announcement from Meta and we’re engaging with a range of hyperscalers data center developers, power marketing firms and gas producers. On the financing front our investment bankers have coordinated positive presentations with well-qualified major investors. Successful funding will govern the number and timing of our projects to reach FID and to proceed to construction.
We are targeting various FID dates within 12 to 18 months of securing financing. I cannot state what our sites may be worth at FID but it’s worth noting the more advanced US market have risen exponentially and we are seeing sites valued at 300 to 500,000 per megawatts with even more achievable in hyper-constrained hubs such as Northern California. The size of the prize we are working towards is considerable and our team has never witnessed electricity demand and tailwinds of this nature.
The coming months and years will be extremely exciting for Kalina Power.
Ends