Fermi bets its stalled campus on three refurbished New Jersey turbines
The Amarillo developer has $62.5 million of cash, a going-concern note and an unsigned tenant lease, and it is buying cheap used megawatts to fill the gap. Earnings on November 12 will show whether the construction lender exists.
Richard Tangthree-minute read
Fermi America−6.63% — Fermi America, down 6.63 percent today is powering its stalled Texas campus the way a company with $62.5 million of cash and a going-concern evaluation buys time: with other people's retired machines 1. The developer of the Project Matador campus near Amarillo has bought three gas turbines from a former New Jersey heavy-manufacturing plant, refurbished them and nicknamed them the Jersey Boys, good for 114 MW in simple-cycle running 1. That is the trade in one deal: cheap megawatts now, and the maintenance risk lands on the shareholders 1.
The equipment market forced this
The AI buildout's binding constraint has moved from chips to power equipment. Global gas-turbine orders exceed 100 GW against annual manufacturing capacity of 60 to 70 GW, US delivery times average six years, and an order placed today arrives in 2030 or 2031 1. So developers raid the second-hand market: xAI$200B — xAI, private, latest valuation $200B has installed eight converted jet-engine turbines at its Colossus 2 complex in Memphis 1. Used machines run $1.5 to $1.7 million per megawatt against $2 to $2.5 million for new 1.
Used megawatts are the cheap option when new turbines are sold out for six years
Used megawatts cost a third less, and new ones arrive no earlier than 2030
Data
| Value | Range | |
|---|---|---|
| Refurbished | $1.3M/MW | — |
| Used | $1.6M/MW | $1.5–1.7M/MW |
| New | $2.25M/MW | $2.0–2.5M/MW |
Cheap megawatts, expensive time
Refurbished machines cost around $1.3 million per megawatt, but the discount buys schedule, not reliability: uncertain maintenance histories, shorter lives, more repairs 1. For Fermi the harder constraint is that its only tenant lease, with the neocloud TensorWave, becomes effective only once project-level financing is secured, and the October 31 closing date passed with conditions unmet 5. Both companies say they remain committed, and chief executive Lee McIntire promises more on the earnings call 5.
A trade report also says Fermi paid $25 million to drop a 400 MW lease deadline from its loan documents 4; that payment has not been confirmed in the company's own filings this week. The backdrop is uglier still: the stock has fallen 94% since the IPO, the ousted co-founder Toby Neugebauer is suing, and the 10-Q discloses a dry lease on his private jet 3.
Thursday decides it
Fermi reports third-quarter results on November 12 7, and options imply a move of about 19% 6. The name to listen for is the construction lender for the TensorWave lease. Our October piece argued that Fermi's cash could not fund the four reactors it promised; the turbines and the waiver report are what is new since, and the reactors remain unfunded.
Buying used megawatts is a legitimate move for a builder closing the power gap, and the developers who do it fastest deserve the reward. But cheap megawatts buy time, not a lender. If Thursday produces a bank, the Jersey Boys are a bridge to revenue. If it does not, they are three refurbished machines at a campus running on the cash it reported at midyear 2.
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