$2.4 Billion Gas-Fired Power Project Approved to Supply AI Data Centers

Babcock & Wilcox has been cleared to deliver a $2.4 billion gas-fired power project that will supply electricity to Applied Digital’s expanding artificial intelligence data center campuses.

(Reuters) — Babcock & Wilcox said on March 4 that an Applied Digital-backed company has given a go-ahead to their $2.4 billion deal to deliver equipment that would power the technology firm's artificial intelligence campuses.

Shares of Babcock surged nearly 23% in premarket trading after Base Electron gave the final notice for the 1.2-gigawatt power project.

U.S. power demand reached record highs in 2025 and is projected to accelerate this year as major tech companies rapidly expand data centers, some of which use as much electricity as an entire city at a single location.

Applied Digital had formed Base Electron to produce power for the technology firm's AI campuses under separate agreements. The power producer in turn hired Babcock to design, procure and construct the facility.

Under their agreement, Babcock will supply four 300-megawatt natural gas-fired boilers and steam turbine generator systems.

Applied Digital CEO Wes Cummins said the company is also evaluating an option with Base Electron to deliver another 1.2 GW of generation capacity in the future, according to Babcock & Wilcox.

Separately, Babcock posted a revenue of $161.0 million in the fourth quarter, beating analysts' average estimate of $155.60 million, according to data compiled by LSEG.

Babcock CEO Kenneth Young said they are in discussions on other data center opportunities reflected in its current pipeline of more than $12 billion.

"We are also seeing increased coal utilization and opportunities to deliver coal technologies that provide reliable and secure power to our utility customers in North America," Young added.