EGH Acquisition Corp.

Multiple Monetization Pathways

Yeah, good point, Chris. And so in addition to utilizing investment capital to pursue the adjacent business opportunities of Thermal and data centers, Hecate could also deploy investment capital to create more value from its traditional business and its traditional customers.

So let's just look at the development life cycle in a simplified form for a power plant, and really think of it as four stages:

Early-stage development: Which is getting the site and beginning to do some of the initial permitting work and some of the initial technical layout work.

Mid- to late-stage development: Which is really advancing that project to its final permits, negotiating and moving toward execution of the engineering and construction contracts.

A build-transfer agreement: Or really think of this as managing a project all the way through construction and commissioning.

And lastly, owning that project and capturing the revenue stream made available by the long-term revenue from a project with the 35- to 40-year life.

When Hecate looks at its development pipeline, I'd mentioned we can exit at various stages of development. Our buyer community is willing to buy at various points so that they can either refine or shape the project, they can work alongside us to refine and shape the project and apply their own capabilities if they have in-house capabilities.

When Hecate exits a project at early stage—and look to the bubbles on the right-hand side of the page—if we exit a project, and I'm going to use round numbers to make the math easier for me to do in my head: a gigawatt project sold at 4 cents a watt at early stage, that's $40 million of receipts that the company would expect from selling that gigawatt project.

If we advance a project to mid- to late-stage, we typically receive around 8 to 16 cents, but 12 cents on average, and 12 cents times a gigawatt is $120 million.

And if we manage a project all the way through construction and commission, we a lot of times are seeing 20 cents or greater per watt as the developer fee or profit that Hecate receives, and 20 cents would be $200 million.

So $40 million, $120 million, $200 million—that's $80 million for a gigawatt project. If Hecate is able to advance that project further through the development process, that's because we're adding more value to the project, and we're also finalizing or narrowing in on what the long-term financial model looks like, which allows the long-term owner to pay us more for that project because uncertainty is reduced.

Yeah, that's a good example, Nick. Not every project is the same, of course, on the sales price or the value-add as it advances, but the general logic holds throughout the portfolio. And so if we are able to deploy—and as an illustration—if a project would take $10 million to advance from early stage to late stage and the company is able to capture $80 million, that's obviously the type of project where Hecate would select to deploy capital that's invested into the company.

Additionally, the final adjacent business we've talked about is continuing to expand Hecate's exposure to the independent power producer model. In today's market, we are seeing power purchase agreements, or the contracted portion of a power plant's life, extend beyond the 15 to 20 years that might be typical for those that have worked a long time in the industry. PPAs are 25 to 30 or even more than 30 years these days.

And if Hecate is able to select which projects from its pipeline where it could choose to deploy the long-term equity, Hecate could establish the ability to earn return from the entire life cycle of a power plant—all the way from development, construction, commissioning, operations, and eventually repowering.