Bloom Energy reported record fourth-quarter and annual revenue on Wednesday and upped its target to reach profitability to 2021, a year ahead of schedule. A fourth-quarter sales surge brought annual fuel cell deliveries to 132.6 megawatts, while an effort to reduce costs improved its margins and strengthened its balance sheet, capping off what CEO K.R. Sridhar described as its “best year yet.” 

But Sridhar placed even higher expectations on a longer-range plan to adapt Bloom’s solid-oxide fuel cell technology, originally designed to run on natural gas and emit carbon dioxide, to generate electricity from hydrogen, make "green" hydrogen via electrolysis or capture the carbon from "blue" hydrogen made from natural gas. 

This combination of carbon-free resources is aimed at giving Bloom a stake in the booming future market for hydrogen as a carbon-free fuel, as being promoted by gigawatt-scale production targets being set by European and Asian governments, and multibillion-dollar investments being planned by clean energy, chemicals and oil and gas companies around the world. 

Bloom announced its first fuel cells that can run on hydrogen in June 2019. Last summer it expanded its scope to making electrolyzers — essentially reversing a typical fuel cell’s conversion of hydrogen into electricity and water. 

Bloom’s foray into hydrogen was anchored by a partnership with SK Engineering and Construction, an affiliate of South Korean industrial giant SK Group. In November the partners announced a contract win involving 1.8 megawatts of hydrogen-powered fuel cells through late 2021 to 2022, and Bloom’s analyst day presentation in December set a 2022 delivery date for its electrolyzers.  

Multiple fuel cell competitors are also targeting the green hydrogen opportunity, including some with long-standing product lines built to use and produce hydrogen, such as Plug PowerBallard Power Systems, PowerCell Sweden and Hydrogenics

From hydrogen fuel cells and electrolyzers to biogas and carbon capture 

But Sridhar insisted during Wednesday’s earnings conference call that Bloom is well positioned to capture a share of the “multitrillion-dollar” hydrogen opportunity by offering modular combinations of its technologies to serve backup and always-on power for commercial and industrial sites, as well as zero-carbon transport. 

The San Jose, Calif.-based company signed a joint development agreement with Samsung Heavy Industries last year aimed at designing and developing fuel-cell-powered ships. Sridhar also promoted the value of Bloom’s fuel cells to bolster power grids struggling to accommodate the scale of electricity needed to charge an electric vehicle fleet that’s expected to grow tenfold over the coming decade — a market opportunity made stronger by the Biden administration’s commitment to decarbonizing the country’s power grid and transportation sector. 

Sridhar also highlighted Bloom’s next steps in its technology roadmap for 2021. Those include plans to commercially deploy fuel cells capable of running on biogas from landfills, food processing plants and other sources, which requires additional processing but yields a carbon-neutral electricity source. 

Bloom also intends to complete work on technology capable of capturing and extracting carbon from the emissions of its natural-gas-powered fuel cells. The company is “working very hard to demonstrate” the ability to combine “blue hydrogen” production, or turning methane into hydrogen and capturing the carbon emissions, with electricity production, he said.  

That offers customers a set of modules to meet a variety of end needs, Sridhar said. “We can separate out hydrogen and carbon dioxide. We can either send the hydrogen back into the fuel cell to generate electricity or supply the hydrogen to hard to decarbonize industries.” 

Bloom, a Silicon Valley startup that reached "unicorn" status with $1.5 billion in investment before its 2018 IPO, saw its share price tumble in 2019 amid problematic financial statements from executives including Sridhar, headwinds in key markets such as California and New York, and uncertainty around its long-term profitability prospects. 

But the company’s shares have steadily risen to exceed its post-IPO highs since its move into hydrogen. Bloom reported fourth-quarter revenue of $249.4 million, up 16.8 percent from the same quarter last year, which helped drive 2020 revenue to $794.2 million, up 1.1 percent from 2019. 

Shares of the company were trading at $41.41 at the close of trading Wednesday, down from an all-time high of $44.95 on Monday but up from the $30 range in trading at the end of 2020. 

The stationary fuel cell market opportunity 

Bloom’s natural-gas-fueled Energy Servers remain its bread and butter at present. The 100-kilowatt units have been deployed at factories, data centers, hospitals and other commercial and industrial sites for customers including Apple, AT&T and Home Depot. 

The company backed away from its “Bloom Electrons” energy-as-a-service offering several years ago, but it does sell fuel cells through competitive energy providers such as Southern Company’s PowerSecure and Duke Energy subsidiary Duke Energy One

Bloom has promoted its fuel cells as a stable source of on-site power for customers looking for reliable service during grid outages, an increasingly valuable proposition in blackout-prone markets like California or the hurricane-threatened East Coast and Gulf Coast. But because they need to run constantly to maintain efficiency and pay off their capital costs, Energy Servers are in price competition with utility-supplied grid power. 

Those costs have fallen from about 14 cents per kilowatt-hour at the end of 2018 to about 12 cents per kWh in mid-2020, and they are projected to reach 9 cents per kWh by the end of 2021, according to figures shared with analysts in December. That implies that “any place where commercial customers are buying electricity for 9 cents or higher, we can economically compete with them,” Sridhar said, though he didn’t specify the price of natural gas that yields that figure.

Bloom also made progress on the next generation of its fuel cell and took steps to expand into international markets, while building up its cash position by paying down debt and cutting costs in manufacturing, installation and services. 

It also delayed investment in a new manufacturing facility last year to conserve cash, pushing out to mid-2021 a $50 million to $75 million expansion expected to at least double its current production capacity to roughly 400 megawatts of fuel cells or 1 gigawatt of electrolyzers. That facility has can be scaled up to nearly double that capacity yet again, although the company has booked its capacity through 2021 and is “not reliant on any new bookings to meet our projections,” CFO Greg Cameron said on Wednesday’s earnings call. 

With this combination of cost reductions and rising sales, bolstered by other factors such as the extension of federal tax credits as part of the omnibus spending and COVID-19 relief bill passed by the U.S. Congress in December, “we are projecting to achieve profitability for the year 2021,” a year earlier than previous guidance, Cameron said. 

Bloom is projecting 2021 revenue in the $950 million to $1 billion range.