8-K: Cadiz Inc. Forges Major Clean Energy and Digital Infrastructure Partnership with Hoku Energy in Mojave Desert

Cadiz Inc. has signed a non-binding Memorandum of Understanding with Hoku Energy Limited to develop a large-scale clean energy and digital infrastructure project on over 10,000 acres of its Mojave Desert property, projecting $7 million to $10 million in annual lease and water sales revenue.

Summary

• Cadiz Inc. (CDZI) entered into a non-binding Memorandum of Understanding (MOU) with UK-based Hoku Energy Limited on June 17, 2025.
• The MOU grants Hoku Energy a three-year exclusive option to develop an integrated clean energy and digital infrastructure project on Cadiz's 35,000-acre property in California's Mojave Desert, potentially utilizing over 10,000 acres.
• The Proposed Project includes zero carbon renewable power, low carbon thermal power, and advanced digital infrastructure such as data centers.
• Hoku Energy will pay Cadiz $50,000 annually in option fees during the three-year period and is responsible for permitting, feasibility studies, and securing capital.
• If the option is exercised, a long-term lease agreement would involve Hoku Energy paying Cadiz up to $1,000 (2025 dollars) per acre annually, subject to CPI adjustment, potentially yielding an initial $7.2 million per year for a 10,000-acre lease.
• Cadiz would also supply 2,000 to 4,000 acre-feet of water annually to Hoku Energy for operations, primarily green hydrogen production, at up to $900 (2025 dollars) per acre-foot, subject to CPI adjustment, generating an estimated $1.8 million to $3.4 million in the first year.
• The MOU allows Hoku Energy to utilize Cadiz's existing northern and southern pipeline right-of-way routes for transportation of clean energy and digital infrastructure, subject to further rent.
• This agreement complements Cadiz's existing projects, including the Mojave Groundwater Bank and a 2024 agreement with RIC Energy for green hydrogen production, positioning Cadiz Ranch as a major clean energy hub.
• The total expected annual lease revenue and water supply sales from the Hoku project are projected to be between $7 million and $10 million.

Sentiment

Score: 8

Explanation: The announcement is highly positive, outlining a significant potential new revenue stream and strategic positioning for Cadiz Inc. in the clean energy and digital infrastructure sectors. While the MOU is non-binding, the detailed terms and projected financial impact indicate strong potential for future growth and diversification.

Positives

• The MOU with Hoku Energy has the potential to generate significant new annual revenue for Cadiz, estimated at $7 million to $10 million from lease payments and water sales.
• The agreement provides Hoku Energy with a three-year exclusive option, securing a potential long-term revenue stream without immediate capital outlay from Cadiz.
• The project aligns with Cadiz's strategic land use, leveraging its extensive property, water resources, and existing infrastructure (rail lines, pipelines) for large-scale clean energy and digital infrastructure development.
• This is the second major clean energy development MOU for Cadiz within a year, reinforcing its position as a key player in sustainable energy and water infrastructure.
• The combined Hoku and RIC Energy projects are expected to establish Cadiz Ranch as one of North America's largest clean energy campuses and green hydrogen production hubs.
• Hoku Energy will be responsible for permitting, feasibility studies, and securing capital for project development, reducing Cadiz's upfront financial burden.
• The agreement includes a right of first refusal for Hoku Energy to supply power to any data center developed by Cadiz on a reserved 400-acre commercial area, ensuring potential synergy.

Negatives

• The Memorandum of Understanding is non-binding, meaning there is no guarantee that it will convert into definitive long-term agreements or that the project will proceed as planned.
• The projected revenues are contingent on Hoku Energy exercising its option, securing regulatory approvals, and meeting development milestones over the three-year period.
• The financial benefits are forward-looking and subject to market conditions, demand for clean energy/digital infrastructure, and CPI adjustments, introducing an element of uncertainty.

Risks

• The parties' ability to negotiate and enter into definitive long-term agreements based on the non-binding MOU is not assured.
• Satisfaction of development milestones necessary for Hoku Energy to exercise the option granted under the MOU is a prerequisite for the project's progression.
• The availability and timing of required regulatory approvals could delay or prevent the project's development.
• Changes in market conditions or demand for clean energy or digital infrastructure could impact the project's viability and profitability.
• General business risks and uncertainties detailed in Cadiz's SEC filings, including its annual report on Form 10-K for the year ended December 31, 2024, could affect the project's outcome.

Future Outlook

Cadiz anticipates that the non-binding MOU with Hoku Energy will lead to definitive long-term agreements, resulting in the development of a significant clean energy and digital infrastructure project on its Mojave Desert property. This project, combined with the existing RIC Energy partnership, is expected to establish Cadiz Ranch as one of North America's largest clean energy campuses and green hydrogen production hubs, generating substantial annual lease and water sales revenue.

Management Comments

• "This agreement with Hoku Energy is the capstone of our long-term land use strategy. Hoku Energy’s vision aligns with our mission to support sustainable, scaled development of critical energy and water infrastructure in California and the Southwest."

Industry Context

This announcement positions Cadiz Inc. as a significant player in the growing clean energy and digital infrastructure sectors, particularly in the Southwestern United States. The focus on green hydrogen production, large-scale renewable power, and data centers aligns with global trends towards decarbonization and increased demand for high-performance computing infrastructure. The project leverages Cadiz's unique land and water assets in a region with high solar potential and increasing energy needs.

Comparison to Industry Standards

• The potential for Cadiz Ranch to become one of the largest clean energy campuses and green hydrogen production hubs in North America, combining the Hoku and RIC Energy projects, suggests a scale comparable to major renewable energy developments by companies like NextEra Energy Resources or large-scale data center campuses developed by hyperscalers (e.g., Amazon, Google, Microsoft) seeking renewable power sources.
• The projected annual revenue of $7 million to $10 million from a single project, if realized, represents a substantial new income stream for Cadiz, which has historically focused on water solutions. This diversification into energy and digital infrastructure could be benchmarked against other land-holding companies or utilities expanding into renewable energy asset leasing.
• The strategic use of existing pipeline infrastructure for energy transportation mirrors similar integrated energy projects that seek to optimize logistics and reduce development costs, a practice common among large-scale infrastructure developers.

Stakeholder Impact

• Shareholders: Potential for significant new revenue streams and strategic growth, which could positively impact share price and long-term value.
• Employees: Potential for new job creation related to project development and operations.
• Customers (Hoku Energy): Hoku Energy becomes a key customer for Cadiz's land and water resources.
• Local Communities: Potential for economic development and job creation in the Mojave Desert region, along with the development of clean energy infrastructure.
• Regulatory Authorities: The project will require various regulatory approvals, indicating ongoing engagement with relevant bodies.

Next Steps

• Hoku Energy to conduct permitting, feasibility studies, and secure capital for project development during the three-year option period.
• Negotiation and execution of definitive long-term lease agreements between Cadiz Inc. and Hoku Energy Limited, contingent on the exercise of the option.
• Commencement of construction of the Proposed Project, pending regulatory approvals and successful conversion of the option.

Key Dates

Recommendation

Keywords

Clean Energy, Digital Infrastructure, Mojave Desert, Hoku Energy, Memorandum of Understanding, MOU, Renewable Power, Data Center, Green Hydrogen, Land Lease, Water Supply, California, Energy Campus, Infrastructure Development, CDZI