About
Bloom Energy produces fuel cells that are designed to deliver clean, reliable, and cost effective electricity at the customer site. Data centers and large corporate campuses have become early adopters of this technology in efforts to reduce their carbon footprint and dependency on the electrical grid. Customers include Google, eBay, CocaCola, and Wal-Mart among other Fortune 500 companies. Federal and state incentives currently reduce installation costs by 50%. Bloom Energy has raised close to $1 billion in equity financing with Kleiner Perkins as its lead investor.
Thesis
Bloom has the potential to revolutionize the distributed energy model and help companies be greener while also generating potentially enormous savings compared to legacy technologies. The electricity-as-a-service model will help produce better earnings visibility, which should drive a higher valuation for the company.
People
CEO and Founder KR Sridhar has a strong reputation and technical background. He was the Director of the Space Technology Laboratory at the University of Arizona where he served as professor of Aerospace and Mechanical Engineering. He was also the lead advisor of NASA's 2001 Mars Surveyor Lander mission. Bloom Energy has routinely hired and retained renowned experts in the fuel cell field.
Key Board Members:
- John Doerr
- Colin Powell
- Scott Sandell
Management Team
- Bill Kurtz, CFO
- CFO Novellus Systems, VP at AT&T
- George Nguyen, COO
- SVP Hawker Beechcraft, VP Eaton Corp.
- Bill Thayer, EVP
- American Power Conversion
Product
The Bloom Energy box uses solid oxide fuel cell technology, which is among the most efficient fuel cells with >50% efficiency rates. Other technologies remain at 45% efficiency and below. Bloom Energy's technology requires operating temperatures of 800-1,000 degrees Celsius, while competing technologies can operate at 300 degree Celsius.
Potential
Fuel cell energy is very efficient and has been considered the holy grail of power generation. The total fuel cell market is expected to grow by 30% annually over the next 5-6 years, reaching $3 billion by 2015.
Megatrends
- Sustainability
- Globalization
- Brands
- Demographics
How Big Can This Be?
If Bloom Energy continues to achieve improvements in efficiency, reliability, and cost, we estimate Bloom could generate up to triple-digit revenue growth and significant margin improvement in the next 3-4 years.
Predictability
Bloom Energy's business model is shifting towards "electricity-as-a-service." Revenues are growing fast but driving down production and service costs is essential for long-term success. At present, customers are large enterprises that place a premium on Bloom Energy's smaller carbon footprint, however, the technology is too expensive to compete in the mass market without subsidies.
Risks
A reduction or elimination of government incentives could adversely influence demand. Reduction in production and service costs is critical to expanding the market. Natural gas is a key cost component in operating Bloom Energy fuel cells. Fluctuations in natural gas prices might impact profitability.
