Why NET Power faces a class action lawsuit over Project Permian cost overruns and delays

NET Power Inc. (NYSE: NPWR), a once-hyped clean energy innovator that went public through a SPAC transaction, is now the target of a federal class action lawsuit. The company’s investors, particularly those who purchased shares between June 9, 2023, and March 7, 2025, have until June 17, 2025, to apply for lead plaintiff status. At the center of the litigation is the dramatic cost escalation and multi-year delay of NET Power’s first commercial-scale facility, Project Permian—a setback that erased over 30% of its market capitalization in a single day.

The case, Luciani v. Net Power Inc., et al., is pending in the U.S. District Court for the Middle District of North Carolina and accuses NET Power and several executives of failing to disclose material risks tied to the project. The allegations revolve around a March 10, 2025 announcement in which the company revealed that Project Permian’s cost would now range between $1.7 billion and $2.0 billion, far above the previously estimated $1.1 billion, and that the project wouldn’t be operational until 2029, a significant delay from the prior timeline of 2027–2028.

What Happened on March 10, 2025 That Shook Investor Confidence?

In its Q4 and FY2024 earnings release issued before the market opened on March 10, NET Power dropped two bombshells. First, it revised the estimated cost of Project Permian upward by over 50%, citing engineering scope changes, inflation-linked procurement, and updated contingency buffers. Second, it acknowledged that the project’s timeline had slipped by more than 12–18 months, citing permitting and engineering delays.

The immediate fallout was swift. NET Power’s shares plummeted by 31.46%, closing at $4.75, down from $6.93 the previous day. For a company valued heavily on the promise of future delivery, the dual blow of higher costs and delayed revenues severely undermined market confidence.

Equity analysts tracking the clean energy and infrastructure sector flagged the scale of the revision as a “valuation reset,” with several institutions downgrading their price targets. As a result, retail shareholders and institutional funds alike saw rapid erosion in mark-to-market portfolio values.

What Is Project Permian and Why Does It Matter?

Project Permian is the company’s marquee attempt to commercialize a proprietary natural gas-based power generation process called oxy-combustion, which enables zero-emissions electricity by capturing carbon dioxide as part of the combustion cycle. NET Power’s value proposition lies in aligning natural gas infrastructure with decarbonization objectives—making fossil-fueled electricity clean and economically viable.

The project was initially envisioned as a flagship installation to prove out scalability in one of the world’s most active hydrocarbon regions, the Permian Basin of Texas. The company’s go-public narrative, bolstered by strategic partners including Baker Hughes and Occidental Petroleum, was predicated on cost-effective deployment of modular plants globally. However, the revelation that the first such project could exceed $2 billion in cost—and remain offline for at least four more years—has cast serious doubt on scalability claims and capital intensity assumptions.

How Does This Case Fit into the Broader SPAC and Clean Energy Landscape?

NET Power’s legal and financial troubles are emblematic of a broader trend among SPAC-listed companies in the energy transition space. Many of these firms, flush with capital but light on operational history, pitched aggressive forecasts to Wall Street with minimal risk buffers. In a rising interest rate environment, where access to cheap capital is no longer guaranteed, infrastructure projects with long gestation periods and uncertain revenue horizons have come under intense scrutiny.

SPAC deals involving capital-intensive energy technologies—ranging from hydrogen production to direct air capture—are now experiencing post-de-SPAC volatility. Lawsuits like this one reflect growing investor intolerance for missed projections and material non-disclosures. Legal scholars and institutional advisors are closely watching the NET Power case for precedential value on what constitutes “material misrepresentation” in the context of cost escalations and project delays.

What Are the Allegations in the Class Action Lawsuit?

The plaintiffs allege that NET Power knowingly or recklessly misled investors by failing to disclose known risks related to Project Permian’s budget and timeline. They argue that the company had access to internal data suggesting cost overruns and logistical delays well before its March 2025 earnings call but failed to update investors in a timely manner.

The legal filing seeks damages for shareholders who suffered financial losses as a result of the share price drop. By applying for lead plaintiff status, investors with significant losses—typically those exceeding $100,000—can shape the legal strategy, settlement terms, or trial proceedings.

What Are Analysts and Institutional Investors Saying?

While NET Power’s core technology is still considered promising, analysts have been vocal about the credibility gap that now surrounds its execution track record. Research desks at mid-cap energy funds have highlighted that a more than 80% increase in capital estimates for a first-of-its-kind facility signals poor internal cost control mechanisms. Some funds, according to recent 13F filings, have reduced their exposure to NPWR, citing “capital inefficiency and timeline risk.”

One institutional note, circulated post-earnings, stated that “revised economics suggest a longer path to breakeven and diminish the likelihood of independent project financing without government support.” Market chatter also suggests that future project deployment may require NET Power to seek public-private partnerships or Department of Energy loan guarantees to proceed.

How Are Retail Shareholders Being Advised to Respond?

Retail shareholders are being encouraged to review their trading records and assess their losses during the Class Period. Legal advisors at Kahn Swick & Foti, LLC, the firm backing the lawsuit alongside ClaimsFiler, note that submitting a lead plaintiff application is a procedural step that does not require upfront legal fees. The legal team offers free case evaluations to eligible investors and provides filing support through the ClaimsFiler platform.

The firm also emphasizes that even investors with smaller losses can benefit from participating in eventual settlements, should the case result in financial recovery or negotiated resolution.

What’s Next for NET Power?

As of May 31, 2025, NET Power has not released further updates regarding the mitigation of Project Permian’s cost escalation. Nor has it announced alternative capital raising efforts or updated project delivery frameworks. The company’s next major investor communication is expected at its Q1 FY2025 earnings release in mid-June, which could prove critical in either repairing sentiment or deepening investor skepticism.

Some analysts speculate that the company might soon signal interest in strategic partnerships or project co-financing arrangements to offset the impact of ballooning costs. Whether NET Power can reassure stakeholders through improved transparency, adjusted financial modeling, or external validation of its engineering milestones will define its trajectory in the coming quarters.

Will This Lawsuit Reshape Expectations for Energy Infrastructure SPACs?

The lawsuit against NET Power may become a watershed moment in investor protection enforcement tied to post-SPAC energy ventures. If the courts find that the company breached disclosure norms, it could force a higher standard of forward guidance for energy companies operating in uncertain regulatory, engineering, and cost environments.

For NET Power, the challenge now lies not only in building Project Permian but in rebuilding investor trust—one update, and possibly one court motion, at a time.