Useful information
Prime News delivers timely, accurate news and insights on global events, politics, business, and technology
Backed by former U.S. Energy Secretary and Texas Governor Rick Perry, AI energy startup Fermi Inc. went from nonexistent to an IPO in October with a mammoth market cap of $16 billion in less than a year without any announced customers or construction, not even a single dollar of revenue.
The electricity player is pledging to build an extensive “HyperGrid” of nuclear, solar and gas power to support massive data center complexes in the rural Texas Panhandle, enough to eventually power 8 million homes. The successful IPO demonstrates that investor enthusiasm for the rise of AI is far from waning.
Amarillo-based Fermi is shamelessly profiting from the Trump administration: The company is run by the president’s former energy secretary and a CEO who is the son of a retired Republican congressman. Fermi, which has support from the White House, is even tentatively calling its site “President Donald J. Trump’s Advanced Energy and Intelligence Campus,” a venture almost as ambitious as OpenAI and Oracle’s “Stargate” AI company, nearly 300 miles away, near Abilene, Texas.
“There was no way we were going to create a large-scale gas-powered AI campus during the Biden administration. They were completely focused on renewables. Absolutely, the change in leadership made it possible for a project like this to happen,” said Fermi co-founder and CEO Toby Neugebauer, son of retired congressman Randy Neugebauer.
The confluence of the AI rise, election results, and political and industry connections make the Fermi team and its site perfectly positioned to build the necessary energy infrastructure, said Neugebauer, best known for co-founding the energy-focused private equity firm Quantum Energy Partners, now Quantum Capital Group.
“We are the solution to the AI bubble,” said Neugebauer Fortune. “There is an AI bubble, but not in the way you think. The bubble is that you can’t achieve the growth rates these hyperscaler companies are talking about without a massive increase in electrons.”
Bottom line: “We can’t overload the grid and consumers with AI power, so we’re building them their own private service.”
The Fermi plan aims to bring the first generation of gas-fired power online in the spring, essentially bypassing the long tail of gas turbines by purchasing a combination of reconditioned second-hand equipment and “boxless” turbines from failed projects. Fermi would then add solar and battery storage power and, eventually, a fleet of nuclear power reactors. The goal is to generate 11 gigawatts of power (double New York City’s average energy demand) at an ambitious rate of 1 gigawatt per year. Each gigawatt is approximately equivalent to powering 750,000 homes.
In its expanded initial public offering this month, Fermi sold 32.5 million shares at $21 each after trading them at $18 to $22, making Neugebauer and the Perrys (Rick’s son, Griffin, owns a larger stake than he does) into paper billionaires. The stock was trading above $26 per share on October 10.
Travis Miller, energy and utilities analyst at Morningstar, said he viewed Fermi’s IPO as a litmus test for current optimism in appointment center development. “This is clearly an early-stage company, but it still got a tremendously positive reaction from the market, so there’s still a lot of excitement,” Miller said.
“We think investors are taking a big risk by valuing a company like this, with no revenue and limited assets, at a price like what the market is trading right now,” Miller said. “Investors are basically getting very cheap land leases in Texas. That’s nothing like other companies that are actually operating power plants.
“This will be a story of: ‘If you build it, will they come?’”
Quick start-up with a long history
Neugebauer had the massive 5,236-acre site in mind because of its access to natural gas and pipelines, water supplies, potential solar capacity and, perhaps most importantly, its adjacency to the U.S. Department of Energy’s Pantex nuclear weapons assembly site.
The land is owned by the Texas Tech University System and is partially leased to the DOE, which has already approved Fermi’s location there.
“There really is no other place like this,” Neugebauer said. “The best place to build civil nuclear power is the best nuclear site in the United States, so I knew I had the ability to get permission quickly.”
Just days after the November presidential election, he approached Rick Perry with the plan. Neugebauer was a major political donor to Perry and they have been friends for a long time.
As Neugebauer tells it: “When I go to present a proposal to the governor, and I’m literally sitting there, he says, ‘Toby, I’ll do anything with you, but I’m not going to make any damn nuclear deal. Everybody’s offering me a nuclear proposal.’ I said, ‘Damn, Governor, I was going to propose Pantex.’ He said, ‘I’m doing the deal with Pantex.’ Instantly he knew exactly what I was thinking. It happened. from a ‘No’ before I even sat down to a ‘Yes’ when my butt was barely touching the seat because he understood how extraordinary this place is.”
Perry was not available for an interview for this article, but both he and Neugebauer refer to Fermi as the “modern Manhattan Project.”
It’s about winning the AI war with nuclear power to help the country prosper and compete against China, Neugebauer said. “A modern superpower will have nuclear-powered submarines, nuclear-powered aircraft carriers, and nuclear-powered artificial intelligence. We don’t see our nuclear energy business as a consumer business. We see it as a defense industry business.”
US Secretary of the Interior and chairman of Trump’s National Energy Domain Council, Doug Burgum, supported Fermi with a public statement. “This campus demonstrates that we can integrate natural gas, nuclear energy and artificial intelligence into a single, powerful ecosystem. Modern energy infrastructure is not a luxury; it is the foundation of global leadership.”
Advancing the supply chain
Fermi has partnered with nuclear leader Westinghouse for four of its AP1000 advanced modular reactors. Although that is at least a few years away.
Meanwhile, Fermi will renew about 200 megawatts of used GE gas turbines in New Jersey. Fermi is also purchasing 400 megawatts of new Siemens gas turbines from a stalled gas export project, Firebird LNG, in Suriname. Neugebauer said Fermi aims to have at least 350 megawatts online by early April.
Fermi has an additional letter of intent with Siemens to deliver 1.1 gigawatts of gas-fired turbines to Amarillo.
Neugebauer gave a lot of credit for the early deals to Perry and Fermi energy director Larry Kellerman, with whom he worked at Quantum years ago and leads supply chain contracting.
“Rick Perry is like having the wind at your back every day. He’s a global brand,” Neugebauer said. “I joke that you used to be governor and secretary of energy, and now you’re just a procurement officer.”
