Enterprise Group Eyes Data Centers as PowerX Expansion Gains Momentum

Key Points

• Enterprise Group is targeting data centers and other industrial markets as it expands Evolution PowerX’s distributed natural-gas generation business amid grid-access constraints and lengthy transmission timelines.
• PowerX operates more than 40 megawatts of mobile capacity and has added a 3.2-megawatt SPG4 turbine to complement its smaller Flex units. The first SPG4 has received Canadian approvals, with three potential energy-sector deployments under consideration.
• The company reported fleet utilization approaching 95%, with recent capital spending focused primarily on growth. Management also cited potential fuel savings of about 60% versus diesel and recurring revenue from long-life rental assets.

Enterprise Group TSE: E outlined plans to expand its power-generation business as President of Evolution PowerX Desmond O’Kell said the company seeks to capitalize on rising demand for distributed electricity across industrial, energy and potentially data-center markets.

In a presentation, O’Kell described Evolution PowerX as a Canadian provider of natural-gas power-generation solutions built on more than two decades of industrial-services operations. He said the company has generated approximately 18% compound annual revenue growth since 2021 and maintained adjusted EBITDA margins in the mid-30% range while investing in its generation fleet.

The company currently has more than 40 megawatts of mobile generating capacity, according to O’Kell, along with exclusive Canadian relationships involving turbine technologies. He said Evolution PowerX has been reinvesting operating cash flow in long-life rental assets intended to generate recurring revenue.

Integrated power and site infrastructure model

O’Kell said the business operates through two divisions: an established site-infrastructure segment and a Power Solutions division that is expected to be the principal growth driver. The company combines generation equipment with electrical distribution, engineering, field service and other site infrastructure, rather than solely renting generators, he said.

The company’s systems can replace multiple diesel generators at industrial sites with centralized natural-gas turbine generation and electrical distribution. O’Kell said its turbines can be synchronized into microgrids and scaled based on customer requirements.

According to O’Kell, the technology has achieved uptime above 99%, requires limited scheduled maintenance and provides continuous remote monitoring. Depending on gas availability, he said customers may realize fuel savings of about 60% relative to diesel, potentially approaching 100% when otherwise flared gas is used. He also cited lower particulate emissions and reduced noise compared with diesel generation.

“We are not simply changing the fuel source; we are helping the customers change the way they power their operations,” O’Kell said.

Broader markets and larger turbine platform

While the company has historically served Canadian energy producers, O’Kell said it sees applications in mining, remote communities, industrial facilities, construction and data centers. He said constrained grid access and long timelines for transmission upgrades are creating opportunities for rapidly deployable distributed generation.

Evolution PowerX has added a 3.2-megawatt SPG4 turbine platform to complement its smaller 333-kilowatt Flex turbines. O’Kell said the larger unit was pursued after customers increasingly requested larger power loads, noting that synchronizing multiple smaller units can become more costly after roughly seven units.

During the question-and-answer session, O’Kell said the first SPG4 unit has been received and completed Canadian Standards Association approvals. The company is considering three initial deployments with named energy-sector clients and expects the unit to be deployed shortly, subject to site requirements and project start dates.

O’Kell also said the SPG4 platform has prompted discussions with data-center builders, though the company has not yet deployed equipment into data-center infrastructure. He said the company can potentially build and deliver power to a site in approximately eight or nine months because its Houston-based SPG arrangement provides access to inventory.

Natural gas and LNG opportunity

O’Kell pointed to Western Canadian natural-gas development, including activity in the Montney and Duvernay formations, as a source of potential demand for both site infrastructure and power solutions. He also characterized Canada’s emerging LNG industry as a long-duration opportunity, citing more than CAD 100 billion in announced capital investment for highlighted projects.

As natural-gas production activity expands, O’Kell said the company expects opportunities not only from greater industry activity but also from providing more electrical infrastructure per project. Some generation equipment can remain deployed beyond drilling and construction phases, potentially extending customer relationships, he added.

Capital allocation and utilization

O’Kell said capital discipline remains central to the company’s strategy, with priorities including high-return organic growth, accretive acquisitions, balance-sheet flexibility and shareholder returns. He cited the FlexEnergy Canada acquisition and addition of the SPG platform as examples of expanding capabilities.

The company has retired more than 12 million shares through its buyback program since inception, according to O’Kell, while insiders own more than 30% of the company.

In response to an analyst question, O’Kell said annual maintenance capital expenditures have generally been about CAD 2.5 million to CAD 3.5 million, compared with recent total capital spending of approximately CAD 12 million to CAD 16 million. He said most recent spending has therefore been directed toward growth, though maintenance requirements will rise as the fleet expands.

O’Kell said fleet utilization was approaching 95% heading into the company’s fourth quarter, supported by expanded activity with existing clients and new customer additions. He added that client discussions pointed to robust energy-sector activity in 2027.

About Enterprise Group (TSE:E)

Enterprise Group, Inc is a consolidator of services-including specialized equipment rental to the energy/resource sector. The Company works with particular emphasis on systems and technologies that mitigate, reduce, or eliminate CO2 and Greenhouse Gas and other harmful emissions for itself and its clients. The Company is well known to local Tier One and international resource companies with operations in Western Canada.

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