Bloom Energy Corporation (BE) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the investor call to discuss Bloom Energy's Approach to Hydrogen. [Operator Instructions] I will now to turn the conference over to you, Suzanne Schmidt with Investor Relations. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us on this call to discuss Bloom Energy's Approach to Hydrogen. To supplement this call, we will be referring to a presentation on the Investor Relations website. The matters that we will be discussing today may include forward-looking statements regarding future events and the future financial performance of the company. These statements are subject to risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors including those related to the COVID-19 pandemic that could cause actual results to differ materially from those contained in the forward-looking statements. These statements about the effects of COVID-19 on the company's business results, financial position, liquidity, demand for our energy server, and new applications, timing of new applications and the supporting market ecosystem and outlook. We assume no obligation to revise any forward-looking statements made on today's call. During this call, we may refer to GAAP and non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between the GAAP and non-GAAP financial measures is included in our quarterly shareholder letter. Joining me on the call today are Greg Cameron, Bloom's Chief Financial Officer; Venkat Venkatraman, EVP, Engineering and Chief Technical Officer; Sharelynn Moore, EVP and Chief Marketing Officer; and Scott Reynolds, Global Head of Structured Finance. After the prepared remarks, we will take questions. I would also like to note that we are all dialed in this call remotely so we apologize in advance for any audio issues that may occur. I will now turn the call over to Greg.

Thank you, Suzanne, and hey, everybody. Today, I'm excited to continue our discussion on opportunities for Bloom's technology. As we've discussed previously, a significant value of Bloom solid oxide technology is that it's a platform that can be used across multiple applications with limited R&D or manufacturing investment, meaning as we introduce additional applications, they benefit from the technology advancements, robust supply chain and manufacturing excellence we built for our solid oxide fuel cell. Last time, we discussed the Bloom server for marine applications. Today, we have the opportunity to hear from 3 of Bloom's leaders on the progress we're making on hydrogen. On Page 3, we introduced Dr. Venkatraman, our Chief Technology Officer. Venkat has been with Bloom for 17 years and has been instrumental in leading a team of engineers in developing the platform for where we are today. Given our investment and expectations in technology, Venkat is quite engaged. So I appreciate him sharing his knowledge and his perspective with us today. Also with us is our Chief Marketing Officer, Sharelynn Moore. Sharelynn joined us this summer from Itron and brings a deep energy market domain knowledge. Over the past few months, she's already begun to have an impact on our team in product management, brand management and our overall go-to-market strategy. We're also joined by Scott Reynolds. Scott's been with Bloom for 16 years and has had multiple roles across the company. Today, in addition to leading our structured finance team, Scott's played a significant role, both inside and outside the company in advancing our understanding of the hydrogen marketplace. Today, I couldn't be more excited to share our progress on hydrogen and to showcase these 3 leaders. With that, I'll hand it over to Sharelynn.

Thank you, Greg. One of the reasons I joined Bloom is our platform. We have an energy platform that helps us produce low carbon energy today. This platform will also take us to tomorrow where it will produce zero carbon energy. And beyond that, it will also take us to negative carbon. So from low to no to zero carbon power. No other platform that I'm aware of has this much potential. I spent the last 20 years of my career helping create a more efficient delivery and use of energy. Now I'm excited to help transform it. The time for hydrogen is upon us as the world is recognizing the need to move to zero carbon, the appreciation and important hydrogen as part of the energy mix is increasingly clear. We are also seeing the market develop quite rapidly. In fact, just in the last 18 months, the pipeline for green hydrogen projects has increased twentyfold. What you're going to hear today is a detailed walk-through of our core advantages, and why we think we're critical part of a fully decarbonized energy system. We believe and we know we are far ahead of others embarking on this mission. We have advantages in cost, flexibility, efficiency and scale. We have the right technology and expertise. Solid oxide is the core of Bloom. We have a mature platform, which is the basis for hydrogen fuel cells and electrolysis. We are operationally ready to scale in manufacturing and supply chain, and we are commercially ready with the right partnerships and channels. In fact, you may have just seen an announcement this morning out of Korea, which we'll talk about later. We're experienced developers at BE so we're taking a focused approach to 6 key markets. We are estimating the Bloom total available market to be $50 billion by 2025 and up to $300 billion by 2030. So now, Scott, over to you to talk about the very beginning of our hydrogen journey.

Thanks, Sharelynn. It's been great to have you at Bloom over the past couple of months, and you've made a huge impact already. Really looking forward to working on hydrogen this year and the future. But to go back, 16 years to when I start at Bloom, like you, hydrogen has what brought me to Bloom. In fact, the back story of Bloom's hydrogen work begins on Mars. It's helpful to note that our founding team, including our CEO, K.R. Sridhar, had a great deal of experience developing different fuel cell types for NASA. And that team picked solid oxide technology to enable humans to not only journey to Mars, but to live on Mars. In order to live on Mars, you need a few things, the first thing you need is resiliency and reliability. The equipment that allows you to live with reliable power was a solid oxide platform that took hydrogen that we would generate from solar electricity and turn that back into electricity at night for 24/7 operations on Mars. You could think of this as a microgrid of source that astronaut could use to live and not only stay on the planet, but to generate the fuel that they would need to get back off the planet. So that's where we started. Luckily for us, that program ran into some difficulties and that was the genesis of Bloom being born. And so it's not a big surprise that our first demonstration hardware also made hydrogen. In this picture, what you see is our friend and colleague, Venkat, who's standing next to one of our first units, and that unit, not only made power like we do today, but also coproduced hydrogen. We ultimately decided not to commercialize that product because the market for hydrogen was in its infancy or nonexistent, but we learned a lot doing that. In fact, we generated 19 patents, many of them have to do with technology that we're using today. And despite the fact that we chose not to commercialize hydrogen way back then, we always knew that it would be part of our long-term strategy and mission. In fact, if you look at the slide here on Page 5, what you see is an early Bloom strategy slide that began with us making power, but as the platform develops, as the cost came out, we knew one day that we would make hydrogen with our technology. And so looking back on the last 16 years, it's really exciting to be with you all today to talk about pulling out that piece of functionality to now really leverage our scale and experience in the hydrogen market. The reason we were excited in the early days about hydrogen really came down to the core platform, the fuel cell itself with enabled life on Mars. And so it's important to understand how that cell works, and how it plays into the hydrogen strategy today. So what I'll do now is to turn it over to Venkat, who will describe in the next slide a little bit about how the cell works. Venkat?

Thanks, Scott. Thanks for the picture. I already feel 15 years younger. Thanks to everyone. And the objective for me is to go through slowly and explain why solid oxide fuel cell is superior to any competing technologies when it comes to electrolyzes. I don't want to walk through all the technical details, which support the claims or the takeaways that [indiscernible] in terms of efficiency, scale, cost and flexibility. I'm going to cover 4 items, which is because of the lack of time. One is related to the reversible cell concept we all talked about. What does it actually mean? What it means the business? Second one is, I'd like to cover the efficiency and brought through the fundaments physics, which shows that solid oxid fuel cell will operate at a higher efficiency than other technologies -- competing technologies. Third one I'll cover is, more exciting one, is we not only have the input electricity as the input for electrolyzer. We can also take a heat and integrate the system, which makes sense in certain applications, why it's important. Last bit is going into cost, why we think we'll be lowering costs. First and foremost, a reversible cell. I just want to go through the details. You can ask the question on why does it matter? What is it the influence on the market space? There are a couple of things I want to point out: One, first of all, if you take the fuel cell, which is shown on the Slide #6, we are capable of operating of the fuel cell in 2 different mode. On the fuel or not where we can put in hydrogen and produce electricity. Now we can actually reverse the fuel for the electrolyte mode where we can have electricity and have water and produce hydrogen. The fuel cell itself or the solid oxid cell itself is flexible. It helps us in 2 different ways: Number one, we have invested significant amount of money and effort in perfecting the solid oxide fuel cell in the last 16 years. We almost invested $1 billion in terms of R&D to perfect it and go through 5 generations of fuel cell, right? We can now take advantage of that now that it's reversible, We can plug it into electrolyzer, which puts in a much better sheer position in terms of competition in terms of many things, including technology, manufacturing, scale up and also cost. Second one is, today, we are more focusing on hydrogen production. So if you kind of fast forward in the future, there will be a situation where you have to take the energy, convert that to hydrogen, use hydrogen as a storage and then from hydrogen, we have to produce electricity. So with the reversible cell was actually put perfectly into the situation, we can even generate a single unit, which can do both running in fuel cell electrolyzer, which is providing -- going to provide a great advantage. And the round-trip efficiency will be far higher than what the competing technologies solve. Now I'd like to go through a little bit about the chemistry and the physics associated with the solid oxide cell. On the right-hand side, on Slide #6, you see the fuel cell -- the solid oxid cell operating the fuel cell mode. The secret sauce here is the electrolyte, which is nothing but a ceramic plate with some components, and it has a unique ability of transporting oxygen ion through it at a temperature 750 to 850 degree C. So now we can -- depending on the partial pressure of oxygen, you can imagine the oxygen ion transporting through the electrolyte and mixing it the fuel. In the process of doing that, it releases the electrons which produces electricity. This is a direct conversion of chemical energy into electrical energy. Now you see that black and green ones, which are on either side. Those are the electrodes, which are nothing but kinks, which are painted on top of the electrolyte. One key thing to note here, which is going -- I'm going to be referring into future slide is, if you take one mole of hydrogen, right, one mole of hydrogen, and it really takes about 2 electrons, right? So essentially, what it means is, the current is directly correlated to the amount of hydrogen you consume, regardless of which technology used, that I will be using it to demonstrate our technology, why it's going to be better than the competing technologies in the next slide. Now you can reverse it into electrolyze mode, what do you do? You apply potential across the cell. Now the oxygen transport actually reverses. So if we have steam or water on one side, it dissociates and produces hydrogen as a product. The key thing to note is the basic structure doesn't change. The electrolyte remains absolutely the same. The only thing we do is, in terms of the inks or the electrodes, we do an optimization. So it will be fitting in the electrolyzer mode. So we already have a technology which is ruggedized. In terms of selection of these inks, we've already done the optimization. So when you release a product, we can apply to it in large scale manufacturing. If you go to the next slide, I'm going to -- this is the slide which explains why solid oxid fuel cell is better than other technologies. I'd like to spend a little bit of time, please bear with me. So this is a typical curve, which you recall as the polarization curve. First to explain the chart, it is on the y-axis, what you see is the self potential out of voltage. On the x-axis, we see what is the current density. This is the current per unit area. Right in the middle, you have a 0 division. On the right-hand side of the chart is that the represents the fuel cell mode. On the left side, what it represents is electrolysis mode. And we are comparing in this chart, different technologies, ours, including -- and the other technology like ping, solid film, electrolyzer as well as alkaline electrolyzer. The key thing to note -- first one to note is that if you look at our curve, which is the solid oxid fuel cell curve going in 2 different modes, you can see there is no discontinuity at the 0 point. That is basically a concept of the fuel cell. If you take any other technology, there is a kinks in it, so it takes more energy. The kinks that you see on the left-hand side in the electrolysis mode corresponds to additional power required to produce hydrogen that means that with the same amount of power, we can produce more hydrogen. To illustrate the point, I've taken a sample point. So pick the thing which is at 200 milliamp per square centimeter. Now you can manipulate to your cell area to produce 1 kilogram per hour. As we talked about, the current and the production of hydrogen are correlated. So this is exactly the same regardless of which technology you use. However, the fundamental difference is in the voltage that you're running, right? For solid oxide cells, we'll be operating close to 1 volt. And then if you look at the other technologies, they require higher voltage to produce hydrogen. Now the conventional thing, people who have worked in this industry will know that the product of the current and the voltages, the power that is required at the cell level. So obviously, we consume less power to produce hydrogen compared to any other cell, and that's where may make a significant advantage, and we are -- they are highly efficient compared to any other technologies. One other thing to point out is, I chosen only one point just above our solid oxide cell. If you look at the other curves that you have, the difference is even higher that mean they operate at a lower efficiency. Furthermore, people who work in the industry will tell you that 200 milliamp per square centimeter is good, which is close to 0, but there are people who would like to run at higher current density because they want to produce more hydrogen. But as you do it and you move to the left, what happens is, there is a drop in efficiency. So this is a significant advantage we have. So by physics, we are more efficient. One other thing I want to point out is the heat integration part I mentioned that is when you bring in heat, other technologies cannot take advantage of the heat that's available. So you can imagine there is a solar concentrator or nuclear power plant where they are shutting down during the daytime for -- because of the DUC curve, they have not only electricity and also they have heat. In both cases, we can take the heat to our advantage because we operated high temperatures. So the heat that is available can help us out to way price water to steam or integrate with the fuel cell itself. So that gives you additional amount of energy, which is going to be wasted that we can use to our advantage. In addition to that, you see in the curve, I had an arrow pointing down, it also helps to bring down so-called the VI curve, which means that from purely electric generation in the cell itself, we can be more efficient. So in summary, I think we have a technology that based on the physics, inherently more efficient than any other technology. Furthermore, by the heat integration and the electrical integration we can do, we can even move it further. We see a range anywhere between 13% to all day up with 31% advantage based on the calculations you have done over other technologies in producing hydrogen that means will be consuming less power for the same amount of hydrogen we produce or you can reversibly, if you take the power, you can produce more hydrogen. So hopefully, it's clear that the fundamental physics supports our claims. If you go to the next slide that I think Scott will kind of walk through our -- how we have done in the past. Over to you, Scott.

Thanks, Venkat. So maybe that gives you all a little bit of a sense as to why we talk about the cell so much. The efficiency of it and the inherent advantage of that efficiency is one big driver, and it's something that we've improved over time. The other reason we really like solid oxide as the platform has to do with cost. And so if you go back to the early days of Bloom and the purposeful choice to pick the solid oxide platform, one of the big reasons was because there is no precious metals in our materials and that lends itself very well to low-cost at high-volume manufacturing. Back then we had grand aspirations to scale, and that's exactly what we've done over the last decade or 1.5 decade. And so if you look at the chart that's up right now, there is 2 different sets of data. On the left, what you have is the speed of our cost reductions, measured as a function of our volume. This is a tool that is referred to as learning curves, and it's used often in the renewables industry, especially when you look at things like solar and a lot of us know how quickly solar costs have come down. If you look at the data, solar costs have come down about 26% every time the cumulative production volume of solar panels has doubled. And if you look at our technology the same way, which is to say, what have our costs done every time we've cumulatively doubled our production capacity, it's about the same level. In fact, it's a little bit better at 28%. And so this, in the industry, is a very fast learning curve rate, and that's exactly what we expected early based on the qualities of the solid oxide cell. It just lends itself to steep cost reductions. Now in the right part of the chart, if you look at cost, not just as a function of volume, but cost is a function of time, here you have our actual costs year ending for the last 5 years or so. And what you can see is that our product costs, or our product cost of acceptance was just under $6,000 a kilowatt at the end of 2015. And if you look at the numbers that we've just released, at the end of Q3, we are at just above $2,400 a kilowatt. That's about a 60% reduction over 5 years. So if you look at time, you can also see what's been happening to our cost, and of course, the way that we've done that is to continually make improvements to our core platform. This is the hard work that Venkat's team has put in and because of that as we introduce new platform changes, we've seen that really drives our cost down, especially as our power density goes up. And as you know, we're on the verge of releasing our next platform, Bloom 7.5, and we expect we'll continue to get this nice trend of cost down as our technology evolves. And what we really like about this is that the same core solid oxide platform that today makes power in a distributed setting is the exact same platform we'll use to make hydrogen in different settings. And so now I'm going to turn it back to Venkat to describe exactly how we take a solid oxide fuel cell and turn it into a solid oxide electrolyzer that makes hydrogen. Venkat, over to you.

Thank you. I'm on Slide #9 for those who are following this conversation. I will start with the solid oxid fuel. So we just ended -- Scott ended the conversation saying where we will be landing, that is $2,420 per kilowatt. That's the current solid oxid fuel cells that we are shipping to the customers. So I'm just going to go through an illustrative example on how this translates into the electrolyzer cost. So if you take the typical module, which we have the 50 kilowatt module, we have 80 kilowatt of natural gas coming in, and then you produce 50 kilowatt of power. And if you look at the bill of materials, which is this is below, it falls into a few categories: One, obviously, we have the fuel processing as well as all the stuff related to the fuel side of it; then you have the tax, right, and then also then you have the mechanical or BOP, which takes care of the air side of it and other components; and the last bit is related to the power electronics. So this is why we are -- our bill of materials kind of gets split at a high level. Now if you go to the next slide, so now think about this, we've got $2,420 a kilowatt. Now I'm flipping it in the reverse mode, making it an electrolyzer. First of all, the -- now in the reverse mode has got input, which is the energy coming in as electricity is 130 kilowatt in this case. We're operating this particular module, and it produces roughly about 3 kilograms per hour of hydrogen. So from -- you look at the bill of material, first and foremost, the significant portion of reduction happens because you don't have to carry all the modules, which are on the fuel side. So that's good news. So we can remove them. Then you look at the fuel cell stacks, they remain the same because they are identical to what we use in the fuel cell mode. And the mechanical can be done simplification. From a top level perspective, it roughly remains the same, and you still have these power electronics. So fuel side is gone. We do have to add some components, which is, first, you have to take the water and vaporize it into steam. So we have to add a module to it. And also to keep the cell operational, we have to have some stack heaters. So those are that in a component. But when we roll up the bomb in this case, what it comes out to be already from a purely, purely material perspective and the construction of equipment, we reduced the roughly about 10%. Just purely out of the number of components we have, all the -- we take the common components, take the cost, remove the ones that is related to the fuel and add other costs. That is where we stand. Now the normalization occurs differently in the electrolyzer. In the previous case, we are looking at output, which is 50 kilowatt. In this case, we are going to be normalizing as conventionally it being done is based on the energy input or electricity input, which is 120 kilowatt. So by virtue of the overall costs coming down by 10% and also the kilowatt rating going from 50 kilowatt to 120 kilowatt come to $908 a kilowatt. That's the math. So we already are down below $1,000 a kilowatt. Obviously, as the -- as Scott pointed out, we have the next platform coming up pretty soon. And also, this is based on basically the first version we are releasing. We have lots of opportunities to go and reduce the costs. So in summary, I think our technology is reversible. It helps us going from [indiscernible] easy. We are on the verge of releasing the product, and I think we are pretty confident that we'll be superior to other technologies and also cost competitive. With that, I will turn it over to Scott again.

Thanks, Venkat. So now hopefully, you're starting to see how -- the scale of our platform and the experience we've doubled over the last decade or so is really translating into positioning us well in hydrogen. One way of talking about that scale is just in terms of revenue. So if you look at the left part of this chart, it's helpful to remember that when you look at the size of Bloom today, we are larger than our 6 largest competitors combined in terms of revenue. We've been able to do that by growing the topline at over a 30% CAGR over the last decade. We've built an installed base of over 500 megawatts. We've operated these units in the field or if you look at the individual life of individual sales over $800 billion cell hours. And to do that, as Venkat said before, we've invested $1 billion in research, development and demonstration. That's what it's taken to get to the amount of scale and cost that we've seen so far. And so what's really nice about that in the hydrogen space is that we can leverage all of that scale and experience by using the same core platform that Venkat has been talking about. We can use the same supply chain to make electrolyzers as make fuel cells. We'll use the same manufacturing projects with the same kind of equipment, and we're already working with the same partners that we have today. In fact, we're even able to leverage our same monitoring infrastructure to watch electrolyzers in the field like we watch fuel cells in the field. And so what that sets up going to the next slide here on Page 12 is a platform with unique flexibility, we think, in the hydrogen space, and we're really excited about this. We think this is a key differentiator, which is the ability to work not only in green hydrogen from electrolysis, like Venkat was talking about. So you see here on the upper-left part of the chart, the green color indicates our ability to make hydrogen from renewable electricity like solar and wind or even to use heat integration, like Venkat was talking about with solar thermal, that's green hydrogen. We also have the ability because of our ability to make use of by product to make pink hydrogen, which is when you integrate an electrolyzer with nuclear power. Many folks have been talking about electrolysis for hydrogen, and that excitement is well placed, but the colors of the rainbow don't end with green and pink. If you go back to that early system that we showed you, it made both power and hydrogen from natural gas. If we take that natural gas and make power, it also makes CO2. And if we grab that CO2 for sequestration, which is something that our technology is a very good fit for, we can make something called blue hydrogen. And what's even more exciting is, if we take that same process, putting in gas, making power, grabbing the product CO2 to sequester it, we can make something that we call gold hydrogen if we use biogas as the fuel. And what's really great about gold hydrogen is that, that creates a pathway because the input fuel is carbon negative, a pathway for carbon-negative power and carbon-negative hydro at the same time. That's something that we haven't heard anyone else talking about. We think it's really unique to Bloom, and we think it's really exciting. So if we take this multiple paths to make hydrogen in a variety of ways, green, pink, blue and gold, and then look at the market, it gives us multiple avenues to demand sources to make use of hydrogen. So you've already heard us announce, for example, the partnership we have with SK to ship our units to Korea to run the fuel cells that we have today on hydrogen. That's exciting because many markets, like Korea, are looking to fully decarbonize using hydrogen to make zero carbon power. So that's something we've already announced. It's very exciting, and it dovetails nicely with other work we're doing in Korea in the shipping space, where we can take the fuel cells that we make today, convert them to being able to run on hydrogen, like Venkat was talking about earlier, which creates a pathway through our partnership with Samsung to start, as Sharelynn said, with a CO2 reduction strategy running on LNG and then transition to a full decarbonized strategy running on hydrogen so you would have a ship that runs on hydrogen. That's a big source of CO2 reduction in the world. It's work that we're already doing, but our flexibility opens up new markets as well. One thing we're talking to many customers about right now are distributed generation, hydrogen microgrids that would run on green hydrogen. They could also run on pink hydrogen or other forms as well, but we're seeing a trend and a lot of interest in that space, and of course, there are other applications for hydrogen as well. Long-haul transport is a good fit, blending into natural gas grids. This is very popular right now in Europe, for example. That's pushing very hard on decarbonization. There is also applications in steel and industrial feedstock. I'll talk about those more in a second, but what's nice from a platform perspective is now that we've gotten the cost out of the platform, and we enable this new functionality. We have what we think of as a very unique ability to flexibly both make different kinds of hydrogen and then attack different markets using those tools to serve our customers in different ways. And of course, that's a high level understanding. So let me now talk a little bit about specific markets that we think are interesting in the next couple of years. So here, on Page 13, what we've listed is a set of markets that we think Bloom is uniquely positioned to succeed in based on the competitive dynamics in those markets. The high level point of this slide is when we look at these 6 discrete markets. We think the TAM for these products is $50 billion by 2025 and $300 billion by 2030. This is an exciting, exciting field. But in order to be successful, we will be very careful and very analytical about where we want to compete on the basis of the technical advantages that Venkat was talking about earlier. So to give you a few examples. One of them is green hydrogen in Europe, particularly where we can integrate for steelmaking with the byproduct heat of steel mills. Similarly, pink hydrogen in the U.S. and the EU would allow us to integrate with byproduct heat from the nuclear process. So those are 2 markets where our efficiency and our ability to capitalize on waste team creates a large market for us, where we think our efficiency advantage is substantially better than competing technologies, but we'd like to also create a diverse portfolio by looking at other markets as well. So in the middle of the page, what you see is the application of blue and gold hydrogen, where we can make, as you'll see in a second here, low-cost hydrogen and low-cost power for utilities, particularly in the U.S., where lower natural gas prices mean that hydrogen has to reach lower price points in order to make competitive power. We'll talk about that more later, but this is an exciting application of our technology. We think it's very unique. The third category is where there has been a lot of interest in virgin, particularly around green hydrogen transport, especially in the EU and Japan and Korea, where the relatively high value of hydrogen, given high fuel cost, make a good fit for efficient fuel cell vehicles. That market is seeing a lot of attention right now. And again, because of our efficiency advantage, we think that we can make lower cost hydrogen in those markets. And similarly, our efficiency advantage, we think, gives us lower cost waves of making green hydrogen blend into the natural as networks, particularly in places like Italy, U.K., Germany and the Netherlands, but are pushing very hard on decarbonizing their natural gas grids. Of course, the ability to have insight into the size of these markets and our ability to compete, depends a lot on the economics. So let me now, on the next slide, describe to you a little bit how we're modeling this, which ties into the scale and experience we've had so far developing billions of dollars of power projects with our existing platform. Many of you on the call know this, but in a very simple way to calculate our competitiveness, we're going to look at the levelized cost of hydrogen compared to other technologies by dividing it into the capital cost and the operating expense. I won't go through all of this, but suffice it to say that when you look at the capital cost, we're really looking at the cost of the equipment. And as I talked about earlier, our faster learning curve and scale today, we think, gives us an advantage on equipment cost and also as we've talked about, our ability to generate more hydrogen with the same amount of power gives us an efficiency advantage of about 13% to 31%. And so if we go to the next page, we roll all this together for you to give you a sense of the analytics we're using to look at our competitiveness across the markets. So there is a lot behind this chart and there's a backup in the slide for those of you that are interested in the footnotes. But the high level point of this slide is that whether we're talking about green, pink, blue or gold hydrogen, we think we have a significant cost advantage from anywhere from 9% to 24% in the case of green and pink or as high as 53% for gold hydrogen, where we believe that we can reach plus points of between $2 and $3 a kilogram in 2025 for green hydrogen, about $2 and $3 for pink hydrogen as well. And as we scale up and costs come down, and particularly as the cost of renewable power comes down, we think we'll be up to $2 to $1 range for green and pink hydrogen. And as I said, we'll talk more in the future about blue and gold hydrogen, but in these markets, we think that we can compete with SMR for blue and other kinds of bioenergy with carbon capture products to offer a low cost way to deliver carbon-negative power. So as I said, there is a lot of detail behind this chart. The key point is that we think there is a cost advantage of between 9% and 24% and for green and pink hydrogen based on deep analytics and our experience modeling energy projects over the last decade. And if there are questions, we're happy to answer them. There is a lot of modeling work behind us. So now with the analytics and the math lay down, I'll turn it back over to Sharelynn to talk about how we plan to commercialize our platform and attack these markets. Sharelynn, over to you.

Thank you, Scott. Probably by now, you can see why I'm so thrilled to be part of this team, and as a product and market strategist with a long history in this industry, I'm really excited to see our transition to hydrogen. Let's talk about the commercialization strategy. First, as you saw early, using solid oxide to produce hydrogen is not new to us. It is part of our foundation. However, it is just this year where we've decided to enter this market because the timing is right, and we've been busy this year. We've been working to align our partner strategy to our 6 key segments that Scott talked about and key geographies. And if my partner Venkat can attest to, we've been busy in product development. We are ready to ship 100% hydrogen fuel cells now. We'll be embarking on these projects next year. We'll be shipping our first electrolyzer units next year and ready for electrolyzer programs in 2022. By 2022, you'll see larger projects across hydrogen fuel cells and electrolyzers and across many of our targeted 6 segments we've discussed. We've also talked about the importance of partners. Today, you've seen our news that we won a very competitive RFP for hydrogen fuel cells and electrolyzers with our partner SK. It's a project in Changhua, Korea, which is part of the RE 100 global program. This takes advantage -- takes advantage of one of our key segments in supporting hydrogen vehicles and hydrogen charging stations, the transportation segment, Scott mentioned. We're shipping hydrogen fuel cells next month, and we'll be using hydrogen to create electricity on-site in 2021, and we're also providing electrolyzers, producing hydrogen on-site using solar and battery in 2022. We're developing new arrangements and new projects with existing partners as well. This is very exciting. Just today, we signed a nonbinding letter of intent with Southern California Gas Company with the objective of doing a hydrogen fuel cell and electrolyzer demonstration project together to demonstrate hydrogen's potential towards their key element of the transition to a low-carbon energy future. We are aligned. There is a great potential in the use of hydrogen as a clean, reliable, resilient and always available energy carrier to advance a clean greenhouse gas reducing hydrogen economy. We are also working on new partnerships. For instance, we are working with Idaho National Lab, INL, to demonstrate the feasibility of hybrid nuclear power plant. It's producing electric power and pink hydrogen that we talked about using solid oxide high-temperature electrolyzers, HTE. This helps maximize the nuclear power plant revenue by using the clear energy to produce hydrogen at times when electricity production is curtailed. As part of the agreement, Bloom Energy and INL will integrate and demonstrate a solid oxide electrolyzer system with the nuclear power plant to demonstrate the concept of the hybrid nuclear power plant in 2021. Those are just a few examples that I'm able to talk about today. I hope to be sharing more of these as the projects evolve -- as many more projects evolve. Finally, we hope you found some of this helpful. We're obviously proud of our platform and very excited about all the markets and developing market opportunities. Now I'll turn it over to Greg to tell us what this really means to you, our investor community.

Thanks, Sharelynn. In closing, I want to highlight a couple of points. Our platform is unique, and its flexibility to be used across multiple applications. Clearly, as Venkat described, the inherent efficiency benefits of the solid oxide technology is a competitive advantage. This advantage and the flexibility enables us to leverage our platform across the multiple colors of the hydrogen spectrum. We believe we are uniquely positioned to grow in the hydrogen economy. In addition, we have a competitive cost advantage today that will expand as we move forward. As we leverage the benefits of our scale, which includes supply chain and manufacturing, we expect to maintain our 15% per year cost out that we've achieved with our solid oxide fuel cell. We are committed that after a few cost out cycles, we can deliver and electrolyze with a cost below $600 a kilowatt. I'm confident in our proven cost out leadership. It's part of our DNA. On the third quarter earnings call, we shared we would be investing in additional manufacturing capacity. The flexibility of the platform allows us to allocate our capacity across applications based on demand. In 2025, we expect to allocate capacity to manufacturing 1 gigawatt of electrolyzers. Volume of this size would represent a rather modest penetration of the available TAM Scott highlighted on Page 13. Depending upon market pricing, we would expect this to yield about $750 million in revenue in 2025. This would be essentially creating an additional Bloom of today in that space. We're excited about the opportunity ahead of us. I want to stress, this is just one of the growth levers that we are working for our future. We will continue to share our progress on this and opportunities as we go forward. On our investor call in mid-December, I look forward to providing an update of how these initiatives sit with our overall financial framework. With that, operator, we can open up the call for questions.

[Operator Instructions] And your first question comes from Michael Weinstein with Crédit Suisse.

1 gigawatt by 2025 would sort of imply over 200 megawatts a year, which is, I guess, almost double or triple the amount of output versus 2019, 2020. Is that -- can we expect some of this to start flowing into the -- I guess, when you eventually put out your backlog forecast next year, February. Are we going to see some of this in there?

Yes. So here's how we think about it, right? We've got capacity today. We've talked for about 200 megawatts, right? And we're going to make the $75 million or so of investment going forward, and that's what we announce. That would take us to about 400 megawatts. To get us to where we need to be for a gigawatt and doing the math on that, you're probably looking at one more turn of investment, so call it $100 million. Clearly, we'll share more as we go forward, but it's really around our pipeline and our backlog and our commercial acceptances that we see both in the fuel cells we have today as well as really excited about the additional technologies that we're bringing forward.

Right. And on cost, I think [indiscernible] in the recent presentation said that they were expecting about $750 a kilowatt for electrolyzers in 2025. Are you guys projecting this sort of or lower than that from your technology.

For cost? Yes, that's on that last slide. We're talking about breaking $600 kind of by the third turn, which generally a click here is about a year of a cost-out cycle. So if we're at the $900 or so that Venkat showed you, if we're getting the same 15% out a year in our electrolyzer that we've been getting in our fuel cell, we would expect to be below that price.

Got you. Also what kind of carbon capture are you anticipating would be the most attractive technology out there for actually capturing it? And how much do the carbon capture tax credit program that can be [indiscernible] the 45 tax credits, how much does that play into the economics?

So let me start with Venkat on the technology, and then we'll go over to Scott on the economics, if that works.

Yes. From a technology perspective, we actually have created a scenario on how to capture it. So we are working where the technology which has already shown to be really proven to work well. We are demonstrating and finishing the integration by the end of the year. The technology side of it, what we are doing is, using membrane technology, downstream upper unit. One advantage we have is the fuel side and the air side on mix. So we can take the CO2 pure from the fuel side. So then we go through a separation of the CO2 from hydrogen and recycle the hydrogen back to the system or we can actually have an opportunity to -- what Scott was talking about. When you go into more on the blue gold category, we can even take the hydrogen out as of products. So we can choose to do whatever makes sense. So we have the technology. Right now, we are experimenting it. We already put together the unit, and it shows promises. Now it's a question of scaling up.

Yes. And on the economic side, from 45Q, it does have a meaningful impact on the delivered cost of the power. It depends on when you're talking about, but something like $0. 05 on the delivered cost of the power. The nice thing about the solution that Venkat has developed is that the marginal cost of the carbon capture is quite low because the the concentration of the CO2 streams, very, very high. So one of the problems that carbon captures it's kind of a needle in the haystack problem where you're hunting for the CO2 molecules, that's maybe 4% or 5% of the exhaust stream in the combined cycle plant. But what Venkat has been able to do is basically to take a very pure stream of CO2 already, pulled the hydrogen out, as he said, that gives us a separate revenue stream that we can sell. So what that means is that between the value of the 45Q credit, the low marginal cost of that carbon capture equipment and the cost down of the platform that we've been talking about. But the economics look really, really nice, especially at scale, which is a nice way to compete in the U.S. where a lot of utilities are kind of scratching their heads a bit on hydrogen because the -- even at $2 a kilogram hydrogen, you're talking about something like $0.11 or $0.12 per kilo for the fuel cost. So it excites about the carbon capture pieces that we've got a really nice technical solution that nobody else has, and it integrates nicely with our core platform in a way that produces really attractive set of economics.

One last question. Is the -- which nuclear power plant are you guys planning on doing pink hydrogen with first? Is that [indiscernible], is it?

No, we haven't picked the plant yet. So we're working with INL to do the validation of technology next year. After that, I think we'll work on -- we will take INL's or DOI's advice also on this and pick a plan for us to demonstrate.

Our next question comes from Eric Lee with Bank of America.

Can you hear me?