Babcock & Wilcox has announced a limited-notice-to-proceed (LNTP) agreement with Applied Digital Corporation to build a 1 GW natural gas facility for a future AI data center project. The agreement is valued at more than US$1.5 billion, with its broader data center pipeline now exceeding US$3 billion. This also takes BW’s global projects pipeline past US$10 billion valuation.
Financially, Babcock & Wilcox reported its Q3 2025 results, with US$149 million in revenue, and an increased operating income of US$6.5 million. The company’s backlog was also up 56 percent compared to the same quarter in 2024.
Project Overview
Under the LNTP, Babcock & Wilcox will begin preliminary work for the natural gas plant with about 1 GW capacity to serve a planned AI data center campus.
Scope of work involves installation of four 300 megawatt (MW) natural gas fired plants. The facility will also use boiler and steam turbines instead of cycle gas turbines. Start of commercial operation is expected in 2028. The full definitive contract is however expected in Q1 2026.
B&W is also in partnership with private-equity firm Denham Capital to convert existing coal-fired plants to natural gas-powered facilities. These are also expected to supply data centers.
Factsheet for the $1.5 Billion, 1 GW Natural Gas Powered Data Center Partnership by Babcock & Wilcox
Developers: Babcock & Wilcox (B&W) and Applied Digital Corporation
Scope: 1 GW natural gas facility to power planned data center
The Facility: four 300 MW natural gas fired plants
Start of Operations Date: 2028
Investment Value: Over US$1.5 billion
Status: LNTP signed. Contract expected Q1 2026.
The Growing Natural Gas-Data Center Co-Location Bubble
As the demand for AI-powered computing environments expands, energy providers are increasingly shifting their focus away from traditional methods like steam generation and retrofit services. High density energy sources are becoming the go-to sources alongside renewables, like what is happening at Silicon Ranch solar project in South Carolina and at Enbridge’s Clear Fork PV farm to power Meta’s data centers.
Babcock & Wilcox announcement for a $1.5 billion 1 GW natural gas powered data center partnership is a most recent example of this shift. Others also on this trail are MPLX LP and MARA with gas powered data centers build-out in West Texas,
What to Expect
This project could anchor B&W into a provider of power for the booming AI data center sector. Its completion will also drive revenue streams from the market now considered high-growth. Reflecting on Q3 2025 returns, the over $1.5 billion investment could also further strengthen the company’s backlog and margin profile. The timing is also favorable. With enterprise, hyperscale and AI workloads growing in scale across the globe, demand for dedicated power supply is also rising.
