Base Electron's $2.4B gas contract signals 2028-29 AI power delivery
A 1.2 GW natural gas plant order shows the asset class trading upfront cash for future capacity.
Babcock & Wilcox booked a $2.4 billion design-build contract with Base Electron for a 1.2 GW natural gas-fired power plant, driving its backlog up 470% to $2.8 billion in a recent filing. Shares closed at $14.54, up 129.34% year to date.1
The contract is a concrete read on how the market is bridging the timing gap between AI data center demand arriving now and the power to serve it arriving years later. Base Electron is already weighing another 1.2 GW option, and the company's global pipeline exceeds $12 billion.1
The demand case rests on hard numbers. Power demand from data centers could reach 9% to 17% of U.S. electricity supply by 2030, or up to 790 terawatt-hours, against around 4% as of 2026-05-19, according to the Electric Power Research Institute. The IEA says data centers already account for about half of the country's incremental demand growth.5,6
But the timeline for new generation stretches well past the immediate demand wave. Grid engineers, utility executives and regulators describe a system where permitting, supply chains and connection queues cannot match the speed of data center growth. The U.S. needs about 5,000 miles of high-voltage transmission, one report noted.6
Babcock & Wilcox is betting gas-fired baseload fills that gap. Management guided 2026 core adjusted EBITDA to $70 million to $85 million, roughly 80% year-on-year growth, before any data center upside. That figure excludes the Base Electron contract and the potential second phase.1
Yet the risk sits on the legacy balance sheet. Stockholders' equity stands at negative $131.5 million, and a 6.50% note is due for refinancing in 2026. The company is not yet profitable, so the build-out is being financed on a weak foundation.1
Other parts of the market are chasing the same thesis. Battery storage firms are seeing surging interest from power-hungry AI data centers, but lengthy grid connection queues and a supply chain heavily dependent on China are slowing their ability to scale.5
Renewables are not standing still. Recent U.S. forecasts point to installed solar capacity reaching about 737.8 GW by 2035, up from roughly 231.4 GW in 2024. Total renewable capacity could reach around 1.06 TW by 2035, more than double the roughly 414.5 GW of 2024. Analysts expect solar to stay the dominant growth engine for new capacity, helped by cost declines and policy support.4
But solar cannot run a data center at night. BloombergNEF found the data center expansion needed to support AI is expected to keep fossil fuels in use for longer, a direct challenge to transition timelines.2
Globally, data centers now account for more than 1% of total electricity use, according to the IEA. Porter of the agency noted that while 10-20% of U.S. data center energy is currently consumed by AI, that share will likely "increase significantly" going forward.3
The Base Electron plant delivers power in 2028-29. Every quarter of slippage in that timeline means another quarter of incremental demand leaning on diesel or pushing existing gas peakers to higher utilisation. The market is paying for the capacity now. Whether the grid actually delivers it by then is the risk sitting behind every gas-fired contract signed this year.1,6