The disclosure and our analysis
Evidence dates
Evidence: Applied Digital Form 10-Q for the quarter ended August 31, 2026, filed October 7, 2026, and its fiscal first quarter 2027 earnings release furnished the same day. The power purchase agreement is dated October 4, 2026. Lease and capacity figures are as of August 31, 2026 unless another date is given.
What Applied Digital disclosed
**The power deal:** On October 4, 2026, Applied Digital entered into a power purchase agreement and a related credit support agreement with Base Electron for capacity and energy from an approximately 1,200 MW natural gas fired generation facility to be developed in Center, North Dakota. The company says the plant is intended to provide dedicated generation for its Polaris Forge 3 campus. [Source 1]
**Terms disclosed:** The agreement has a 15-year delivery term and provides for fixed monthly payments based on target contract capacity. Base Electron may terminate it if financial close for the facility has not occurred by March 31, 2027. The filing does not disclose the payment amount, the target contract capacity, the energy price or the terms of the credit support agreement. [Source 1]
**The 1,200 MW figure is generating capacity.** It describes the planned power plant. It is not data center load, critical IT load or leasable space. [Source 1]
**Related party:** Base Electron is an independent power producer formed to develop dedicated generation for high-density AI data center campuses. As of October 4, Applied Digital owned about 10% of it. Base Electron is owned and managed by certain Applied Digital officers and directors acting individually, including Wes Cummins, Mr. Zhang and Dr. Nottenburg, along with third parties. Mr. Cummins and Mr. Zhang serve as Base Electron's chief executive officer and its president and secretary. Applied Digital's board approved the agreements after review by a board committee for Base Electron related party transactions. [Source 1]
**Other exposure:** As of August 31, 2026, Applied Digital also held a related party demand promissory note from Base Electron of up to $100 million, with $58.5 million of principal outstanding. Applied Digital says it is not Base Electron's primary beneficiary and does not consolidate it. [Source 1]
Polaris Forge 3 and the wider lease book
Applied Digital says its two buildings at Polaris Forge 3, with an aggregate 300 MW of capacity, are under construction. The 10-Q does not state the basis of that figure. The company anticipates initial ready for service in the second half of calendar 2027 and full capacity in the second half of 2028. The earnings release says Polaris Forge 3 is leased to a tier-one investment grade hyperscaler, which it does not name. [Source 1] [Source 2]
As of August 31, 2026, Applied Digital says it has leases for about 1.41 GW of critical IT load across five campuses: Polaris Forge 1, 2 and 3 in North Dakota, Delta Forge 1 in Louisiana and Delta Forge 2 in Alabama. It says those leases represent about $36 billion of contracted revenue over their initial base terms, or about $86 billion if all renewal options are exercised. On October 1, Polaris Forge 1 reached 250 MW of critical IT load ready for service, and the company expects initial operations at Polaris Forge 2 in Harwood to bring delivered critical IT load across its North Dakota campuses to 300 MW by the end of calendar 2026. [Source 2]
The company also says it closed $1.59 billion of 7.000% senior secured notes due 2031, issued at par through a subsidiary, to fund the third 150 MW building at Polaris Forge 1 and repay a $300 million bridge facility. [Source 2]
Buyer analysis
This is our analysis.
**None of this is open capacity.** Applied Digital describes all five campuses as leased. Buyers looking for space in North Dakota should not read the power deal or the 1.41 GW figure as inventory.
**Dedicated generation is becoming part of the campus plan.** A fixed monthly capacity payment for 15 years means Applied Digital is committing to pay for a plant before it is financed or built. If the plant reaches financial close, the campus gets power that does not depend on the shared grid alone. If it does not close by March 31, 2027, Base Electron can walk away, and Polaris Forge 3's power plan would need another source.
**The related party structure deserves scrutiny.** The supplier is run by the buyer's own chief executive and other insiders. The board says a committee reviewed the deal. Tenants, lenders and counterparties evaluating Applied Digital campuses may want to understand how pricing was set and how conflicts are managed, because the payment terms are not disclosed.
**Watch the March 2027 deadline.** That date is the clearest public test of whether the plant moves from planned to financed.
