Bloom Energy Corporation (BE) Earnings Call Transcript & Summary

Good morning, and welcome to the 2022 Bloom Energy Investor Conference. Thank you for being with us today. I am currently standing inside Bloom Energy's Fremont, California manufacturing plant, Bloom's newest state-of-the-art 164,000 square foot manufacturing facility that will provide a gigawatt of capacity when fully utilized. Beginning at 9:30, you will have a chance to hear directly from our CEO, KR Sridhar, and other leaders right here on this stage as they share our vision of a decarbonized energy future and plans to execute on an aggressive multiyear growth strategy. As the energy industry transform, Bloom Energy is well positioned to meet the moment with an unmatched ability to directly convert fuels to net zero resilient electricity and electricity into storable net zero fuels of the future. You'll notice today's theme behind me is mission decarbonization. We chose that theme because our core technology platform was invented to create fuel and oxygen from the atmosphere of Mars using solar power. Now back here on planet Earth, we are at a pivotal moment in history with regards to climate change. The next 30 years will be marked by a massive transformation in the way we produce, transport and consume energy. Bloom Energy is ready for this transition. We have the technology to address many of these challenges, and we are excited about the market this creates for our business. Now before we join the live business presentation at 9:30 today, we will have an exciting technology showcase for you where you will have a chance to learn firsthand about the unique solid oxide platform technology that underscores our power generation and hydrogen production solutions. My colleague, Scott Reynolds, is just down the street at the Bloom Energy Research and Technical Center, where he's standing by with some of Bloom's best and brightest. All of them are ready to take you on a journey through a path to a decarbonized world. Welcome, Scott. How are you this morning?

I am good, my friend. We're really excited to show off some really cool technology today and the people that are making it happen. So thanks for that great introduction. I am very excited to be with you here today because one of my favorite things to do at Bloom is to show off what we do and the people that do it. So I am joined today for our first description of what a solid oxide fuel cell is. I'm joined by [ Hema Huinan ]. [ Hema ], thank you for being here today. So [ Hema ], we talk a lot about a solid oxide cell. So maybe you could start by telling us, first of all, how long have you been at Bloom?

So I've actually been with Bloom for going on almost 11 years now.

11 years. And so in 11 years, you've been working on manufacturing solid oxide cells. Maybe you could start by explaining what is a solid oxide cell?

Yes. So the cell looks exactly like this, and it's made of an electrolyte. And in-house, we print special inks for the anode and the cathode layers, and we use our simple and low cost and effective screen printing lines to print the inks on to the cells.

So you use low-cost processes to manufacture cells. So are these cells capable of making both electricity and hydrogen?

That's right. And using the same manufacturing process. On our end, it doesn't change.

Okay. So how do they make power? And then explain how do they make hydrogen? So, in one direction, they make hydrogen, right? We put in electricity?

In charge mode, they make -- they produce fuel hydrogen. In discharge mode, they turn stored energy into electricity.

So the same cell does both. And so this is a core part of our technology. So you've been here a long time, what kind of changes have we been making to improve these cells over time?

So we've made many changes since our first model, we actually tripled our power output by making a few changes. We reduced the cell thickness of the cells, which give us the ability to have more power density in each unit and increasing our kilowatts per square footage. And looking forward into the future, we're also increasing the size of the cell to produce even more power.

So that's really cool. So in addition to making more power, we've also reduced the amount of material that we use. So that must have a really strong impact on cost.

Definitely. Cost reduction as far as material goes has been huge as far as reducing the size of the cell, the thickness of the cell. And going forward to our new product, we're also simplifying our manufacturing process and reducing some of the components that we currently use, which are quite pricey. So when you take away those components, the material costs go down and also the manufacturing process simplifies and so we also get cost savings there.

So that's really cool. In addition to that they've gotten a lot longer life, right?

Yes, yes. They've gone -- they've actually increased the life cycle by 5x since we first started.

Wow, that's really amazing. So the core part of the technology -- the core part of the technology has improved dramatically, Justin. Back to you.

Thank you, Scott and [ Hema ] for teaching us about fuel cells. I'll tell you what, I learned a little something there that I didn't know. For the next stop on our tour, you will learn how our core solid oxide platform can generate power through our fuel-flexible energy servers running on responsibly-sourced natural gas, biogas or even hydrogen, all without combustion. And it's not just on land, but on sea as the maritime industry takes aggressive measures to decarbonize that sector. Our platform is sea-ready and capable of replacing heavy fuels as a means of propulsion and auxiliary power for ships and ports. Our third stop today will take you through the process by which Bloom readied its fuel cells for life on the high seas. And our final stop on the tour today will explore Bloom's efforts to support the growing hydrogen economy. Bloom's core solid oxide platform can produce zero carbon hydrogen from renewable electricity through the highly efficient Bloom Electrolyzer. Clean hydrogen will be a critical foundation for the energy industry of the future. Scott, can you tell us more how the platform works and how it all comes together?

Happy to do it, Justin. So I'm standing behind a visual that's going to be really, really helpful for people. And the core of the visual here, you'll see this image a lot. This is the core part of the platform. We call it a module. And so whether we're making hydrogen, whether we're making power, whether we're running a microgrid, whether on land, at sea, this is the core module that we use that powers everything. So the great thing about this is the more of these we make, the cheaper they get. That's a big part of our strategy is make a lot of them have the costs come down. And so what you're going to see here in a second is the first application of the module, which is making power, which is where we started as a company. And so what we're going to do is we're going to walk over to our power generation section. We're going to go through the overhead here, and we're going to do a little bit of a history lesson where we show folks where we got started, how we evolved. And to do that, I am joined by one of our amazing star engineers, Jessica Mahler. Jessica, maybe you could start by telling us how long have we been -- how long have you been at Bloom Energy.

Scott, it's great to be here today. I've been with Bloom for 14 years now.

14 years. So you're going to hear that as a theme from us today a lot, a lot of experience at Bloom, and a lot of us have been around for a long time, and we started engineering this device quite some time ago. So why don't you explain what's behind us here?

Sure. So what's behind us is our first -- or our generation zero product. It could make 5 kilowatts of power, it could also co-produce hydrogen. We've been working on hydrogen since the early days, but since the market wasn't ready, we focused on making power.

So this made both hydrogen and electricity. And I think we recirculated the hydrogen to put it in and make more electricity, right?

Yes.

But we are making hydrogen from the early days. And You can see here, this is the size of maybe kind of 2 refrigerators side by side.

Yes, I would say 2 refrigerators. Yes.

So early days, that was kind of a power density. But of course, we've been innovating for a long time. So why don't you explain a little bit? Maybe we can walk over here.

Let's take a look at our...

Go down memory lane here to talk about what you have over here?

So what we have here is our Bloom 1.0 product. It could make 25 kilowatts of power.

Okay. So 5x the increase?

5x the increase, lower footprint.

Okay. Yes. So this looks smaller. So how did we manage to get a lot more power out in a smaller footprint?

Well, we continue to innovate on our cells and stacks. We package things more innovatively and we improve on our power density.

Okay. So packaging and cell improvement. And [ Hema ] just talked about the cells getting better. So the cells get better, we get more power. And so what's the benefit of that for customers?

Well, as we continue to innovate on our cells, our costs will stay the same and we bring cost per kilowatt down.

So more kilowatts, less cost per kilowatt?

More kilowatts, less cost per kilowatt.

Got it. Okay. So this is, of course -- this is ancient history now.

Ancient history.

Ancient history. What do we do next? Keep us going.

Let's keep walking. So next, this is our Bloom 2.0 module. We could produce 42.5 kilowatts of power in this particular module.

So another big jump in power output, another big cost down because of the power improvement.

Yes. Utilizing all very similar components and continuing to improve on our cell and stack technology.

And so this one is still now this one's ancient history.

Also ancient history.

Okay. So let's keep going. Let's walk over here, and let's talk about this unit. So this is the unit that's most of the revenue today. So tell us what this is here behind us.

So what we're looking at here is our Bloom 5.0 energy server. Each one of these modules can produce 50 kilowatts of power.

50 kilowatts. So now we're at a 10x improvement from the early days, and one of these modules is kind of the same size. So huge power density improvements.

Power density improvements and then continuing to use a lot of the same system architecture and components, bringing costs per kilowatt down.

So a major theme for us innovation cost comes down. And this one's starting to become an old relative well, right? Because we made more improvements. So let's go to the last part of the tour here.

Let's go take a look at our brand-new one.

Brand-new one. So you've been working on this one for a while.

Yes, we have.

And so what do we have here as the final stop?

So each one of these modules can produce 75 kilowatts of power in the same footprint as one of the ones from our previous generation.

So now we're at a 15x improvement.

15x improvement and 50% improvement over our previous generation.

So we're making big leaps and bounds?

Yes, we are.

And again, you're doing that because we're...

Improving on cell and stack technology using our same system architecture to break cost per kilowatt down.

Terrific. So I know in addition to doing the work on cost and [indiscernible] and improvement, we're adding features and functionality.

Yes, and you should go check those out next.

We're going to go check that out. So we have a video for you, Justin to play to talk about one of our cool features, which is power independents through microgrids. [Presentation]

Welcome back from that commercial break, and thanks to Jessica Mahler for joining us this morning. As you can see, Bloom's platform can be configured as a microgrid that protects against grid outages and extreme weather disruption. Facilities operating Bloom microgrids have powered through thousands of power outages over the years. Let's check back in with Scott to see what else the Bloom platform can do.

So the platform can do a lot, Justin. And to explain one more feature, I am here with an old friend and colleague, Mike Petrucha. Mike, how many years have you spent in Bloom Energy?

About 15, Scott.

15, and you spent a lot of time working on our technology.

That's right.

And one of the things we've developed is the ability to do carbon capture. So can you talk about how our device is a natural fit for carbon capture?

Sure. So our device is amazing because it doesn't burn fossil fuels. We don't combust anything. Everything is a chemical reaction. So we don't have a lot of extra air going to our system. So the system is very clean and pure in CO2.

Okay. So the natural reaction that the system produces puts out a lot of pure CO2.

That's right.

And so if you have a stream of pure CO2, that makes it a lot easier to do whatever you want with the CO2?

That's right. That's right.

That's great. Okay. So there's just -- there's not a lot of technology development here as much as maybe some downstream cleanup to purify the CO2.

Yes. It's very similar to the systems that you saw previously.

So not a big engineering lift to do a CO2 capture system.

Exactly.

So that's just another example, Justin, of how the platform is extensible. Back to you.

It's worth noting that society still relies on fossil fuels to provide more than 80% of our global energy needs. Global energy demands are too important, complex and large to simply cease the usage of these hydrocarbons. However, implementing technologies like carbon capture that permit their use while sequestering or utilizing the carbon emissions will play a key role in the energy transition. Carbon capture is going to take huge scale. Can we handle that, Scott?

Justin, we absolutely can handle that. So here -- I'm here to look at one of our really cool features, which we call the power tower. And I'm joined today by one of my colleagues, Chad Pearson. So Chad, how long have you been at Bloom Energy?

15 years, Scott.

15 years. So more experience here. So quickly, why don't you explain what's on this backdrop here for everybody and how that enables us to put a lot of power in a small square footprint?

This is what we call the power tower. It allows us to stack up our systems and increase our power density. This build was -- took place in Korea, where space is at a premium.

All right. So how much power can we put in, let's just say, an acre?

Great question. So with the power tower, can put 100 megawatts in about an acre of land and a gigawatt scale plant in about 10 acres of land. That is an extremely dense footprint.

So Justin, that's just another example of how much power we can put in a small square footprint to do things like carbon capture. Back to you.

Thanks, Scott. Incredible to see the versatility of the Bloom platform as Scott makes his way to the next stop on our tour. We turn our attention from land to the sea with more than 90,000 ships making up the world's commercial fleet. Carbon emissions from shipping alone account for approximately 3% of the world's CO2. Modernizing one of the world's oldest forms of trade with cutting-edge clean energy technology is no small task, but that is exactly what Bloom has set out to do. Bloom Energy's fuel cell technology has excelled at powering massive loads like stadiums, manufacturers and other large facilities on land. It makes sense that the same technology would be equally effective at sea. At 2020, Bloom and Samsung Heavy Industries announced plans to design and develop fuel cell powered ships to realize a shared vision of clean power for the maritime industry. Since that time, we have received verification as an alternative power source for vessels as part of the American Bureau of Shipping's new technology qualification service, signaling the readiness of our fuel cells to withstand the harsh conditions at sea. And working with Chantiers de l'Atlantique and MSC, together, we launched the world's first cruise ship operating on solid oxide fuel cell technology. The future is bright as we accelerate the marine industry toward a more sustainable future. Now let's check back in with Scott to learn more about Bloom's efforts to aid marine decarbonization. Take it away, Scott.

So Justin, we're here to talk about Marine. One of the really cool things that we're going to do is show you some of the testing we're doing right now to make these systems capable of running at sea. So we've got a visual for you that I think is pretty neat, which is a tilt table running here in the background, which describe some of the functionality we've used to make this capable of running at sea. And I'm joined here today by one of my longtime colleagues Suminderpal Singh. Suminder, how long have you been at Bloom Energy?

A little bit more than 9 years.

9 years?

9 years and 3 months to be exact.

Quickly explain, what's going on here with this device in the background.

Yes. So my name is Suminder. I'm responsible for bringing Blooms core platform to the marine world. As you can imagine running the fuel cell on the land is slightly different than running the system on ocean. So what we have over here is a steel platform that replicates the environment that our system is likely to see on a ship when it's saving on the ocean. So for the last 6 months, we have been running our hardened, marinized fuel cell on the steel table, tilting it 22.5 degrees constantaneously.

So how are customers reacting just seeing the capability of being able to run at sea, Suminder?

So as you know, International Marine Organization has some very aggressive standards when it comes to reducing the carbon footprint. The 2030 goal is reducing the carbon intensity by 40%. And by 2050, the goal is to reach 75% carbon reduction. However, there are certain marine customers that are moving much more rapidly. An example of that is Chantiers de l'Atlantique, which is a major shipyard that those cruise ships -- they approached us last year -- towards the middle of last year to deploy fuel cell system on one of the ships that is going to sail later this year. So we have made tremendous progress in testing the -- designing the system, testing the system and the units have been shipped to France. And the most exciting opportunity is what we have been hearing is there are 100 cruise ships that are in the funnel, the sales funnel for all the shipyards, that equates to about 4 gigawatt worth of power generation. That is the most exciting opportunity.

So huge opportunity in marine. We're doing the testing as we speak. Justin, back to you.

Thank you, Scott and Suminder. I'm a little sea sick from all the movement on the ship there. While it's not easy to ready new technologies for marine deployment, Bloom is well on its way to decarbonizing a century's old maritime industry. Scott is going to continue his journey through our research and technical center, making his way next to our hydrogen area. Back in 2019, Bloom announced aggressive plans to enter the commercial hydrogen market. collaborating with industry-leading organizations, Bloom Energy has celebrated several milestones since that time in the hydrogen space. We announced the commercial availability of both hydrogen-powered energy servers and electrolyzers that produce clean hydrogen. Our 100-kilowatt energy server pilot project in the Republic of Korea commenced operations in April 2021, and our electrolyzer was successfully installed in Gumi, South Korea and has been producing hydrogen since January of this year. Bloom and the Department of Energy's Idaho National Laboratory established an agreement to test the use of nuclear energy to create 0 carbon hydrogen using our electrolyzer. And most recently, leveraging Heliogen's concentrated solar technology and Bloom's electrolyzer, Heliogen and Bloom successfully demonstrated an economical pathway to scalable green hydrogen production. And then in December, very excited to announce that in December of 2021, the Bloom electrolyzer was named Emerging Technology of the Year at the 23rd Annual S&P Global Platts Global Energy awards. Let's check back in with Scott to learn more about the exciting work Bloom is doing in the hydrogen space. Scott, take it away.

So Justin, I'm outside, we're standing here by some really, really cool technology. And I'm joined by an old friend and colleague, Martin Perry. Martin, how long have you been at Bloom Energy?

I've been at Bloom for 19 years now.

And you've got a ton of experience working on fuel cells and electrolyzer technology?

So my 30-year career in fuel cells and electrolyzers have spanned a number of different platforms, solid oxide, chem, alkaline. So a lot of experience getting us to this place today.

Okay. So this is an exciting place to be for both of us. Why don't you explain what's going on right here with our hydrogen fuel cell?

So just like what we do with the natural gas-based fuel cell. We're putting in a fuel instead of natural gas, it's hydrogen. And that hydrogen goes into our system, goes through the same electrochemical reaction and produces electrons in a very clean and sustainable way.

So is this process much different than running on, say, biogas or natural gas?

Absolutely not. In fact, the premise of our natural gas base systems is actually -- the reaction is on hydrogen itself. So when we went from natural gas to hydrogen, it was a very smooth transition, we're able to take directly into our systems with very minimal changes or impact.

So these systems right now are running on hydrogen?

They are.

Where is the hydrogen run at?

The hydrogen is in a nice big white tank down at the end of the building there and it gets piped into here and then gets distributed to each of these power modules.

So all these cameras we have gone right now, my electric car on the other side of the building, all the lighting we have inside, all that's being powered by hydrogen?

Everything that we do in this facility is being powered by hydrogen.

Okay. And what was it like to go from natural gas, biogas develop into hydrogen, how long does something like that take to make it possible?

It was fairly straightforward. Again, like I said, the hydrogen was the basis of our electrochemical reaction to begin with. So for us to switch over from natural gas to hydrogen was practically seamless. We had to make a few changes in some of the hardware and some of the controls. But for the most part, the big components are exactly the same, and they're manufactured on the same production line that we do our natural gas-based systems.

Okay. That's great. So one of the big questions then is, I know you got a tank back here, but we need a lot of hydrogen to power these fuel cells. So where is that hydrogen going to come from?

We have a solution for that.

We have a solution for that. So Justin, back to you. We're going to walk over to the electrolyzers and why don't you kick us off?

Thank you, Scott. While Scott make his way over to see the electrolyzer. It's worth noting that dozens of countries across the globe have committed to net zero emissions goals by 2050, and more than 30 countries and counting have hydrogen-specific strategies that are being activated. As the hydrogen economy grows, the need for hydrogen for energy storage and power generation will accelerate. For power generation, as production of hydrogen becomes ubiquitous, Bloom Energy's hydrogen fuel cells will be another option in moving to net zero emissions. Let's check back in with Scott.

So Justin, we are now standing in front of some really, really cool technology, also something that Martin spent a lot of time working on. So Martin, what are we looking at here?

Here we're looking at the components that make up the electrolyzer system. So we have one power module on the left, which is what we use to distribute the electricity that we need to make the hydrogen and then module on the right is the actual electrolyzer. And you can see, it's almost identical to what we have for the hydrogen or the methane or the natural gas-based systems that we run.

Okay. So these systems right now are generating hydrogen?

They are, absolutely. We're taking power from the grid, and we're producing hydrogen on-site right here.

Okay. So same question was asked before. You spent a lot of time doing this. What does it take to go from a fuel cell that makes power to an electrolyzer that makes hydrogen?

So I'm going to sound repetitive, but it's almost the same thing. So instead of consuming fuel to produce electricity, we're using electricity to produce fuel and the same components, the same stack components, the same cell geometry, the same manufacturing components are all used to bring this to fruition.

And so what has it been like in terms of testing and performance and have you been happy with how these run so far?

We've been ecstatic. So we started Bloom Energy back in the very early days doing electrolyzers. We kind of put on the shelf for a little while, and then we brought it back in 2019. And in those 2.5 years since we've been manufacturing, it's exceeded all of our expectations. We're hitting our model targets and the production of hydrogen we couldn't be happier with.

And so in terms of the efficiency of the fuel cell, kind of huge amounts of efficiency for fuel cells. What about the efficiency of electrolyzers, how does that compare to other technologies?

So compared to our fuel cell, we're very similar. We're in that upper 50s percent range for LHV conversion.

For the hydrogen fuel cell?

For the hydrogen fuel cell. And when we come over to the electrolyzer, we're, by far, the most efficient of all the other technologies. Be it chem, be it alkaline. So we can hit very high numbers on our electrolyzer, which makes it one of the most attractive aspects of this whole hydrogen economy emerging.

So this must be pretty exciting, somebody who spent his whole career working on hydrogen and fuel cells. This stays pretty cool, right?

Absolutely. When I started my career in fuel cells, hydrogen was the impetus for us to develop the technology. It was on a bit of a hiatus with natural gas, but that's where we needed to be at that time. And now we're back to hydrogen. So it feels like we've come full circle. Everybody's excited about the adoption of hydrogen as a future fuel, and I couldn't be happier. This is great.

Very exciting here, Justin. Back to you, my friend.

Scott, are you having fun out there? All right. It sounds like Scott is enjoying himself. Scott. I look forward to getting over there and seeing it firsthand this afternoon. Thank you to Scott. Thank you to the Bloom team for an informative discussion this morning about how Bloom's technology will support decarbonization efforts around the world. And thank you to those of you joining us today virtually to learn more about our growing business. In just a few moments, we will turn our attention to the main stage right here at our Fremont manufacturing plant where Bloom leadership will kick off formal business presentations and our formal program for today's conference. You will soon hear directly from our leadership team as they articulate our vision of a decarbonized energy future and detailed plans to execute an aggressive multiyear growth strategy. Thanks for joining us, and please stand by. [Break]

Thank you. Good morning, everyone. Good morning. Welcome. On behalf of all of our Bloom Energy colleagues worldwide, I'd like to welcome you to our 2022 investor conference. We have an exciting day for you today, and it actually already started with our technology showcase this morning. In a couple of minutes, we'll start a presentation that will be full of data, full of content that you will actually see quite clearly how we're going to reach our short-term and long-term goals. But first, safety is very important at Bloom Energy as well. So let me share with you a couple of safety messages. Number one, more importantly, fire escape, you see the door that's open there where you came in. That's the fastest way to get out of the building. If needed, I will be calling 911. And if I'm unable to do that, [ Dan Muller ] will be -- will second me to that for the 911 call. If there is any individual emergencies, there's an AED and first aid kit on the offices on the left, we will get that for you. Let's talk a little bit about the safe harbor. There's a slide don't worry. I am not going to read all of it. But what it says is that today, we will be making some forward-looking statements. And these statements are estimates that are made with the best data that we have on hand today. And sometimes, the future does not pan out the way you wanted it to or the way you plan it to be, and we just wanted you to remember that fact. And with that said and done, let's start -- let start today's presentations. Thank you very much again for coming, and I hope you enjoy your stay with us. Thank you.

Please welcome our chairman and CEO, KR Sridhar.

Hello, everyone. We are excited by the opportunities energy transformation is creating for us. We are proud of the role we play in both combating climate change and providing energy security. Our unique platform enables us to achieve a diversified and robust top line growth with continued margin expansion, all aimed at delivering you, the shareholder, the greatest value. The theme of our meeting today, mission decarbonization. Why? Because it is a solution. It is the solution to the existential crisis of our time, climate change. We can successfully slow down the adverse effects of climate crisis by drastically reducing the carbon emissions into the atmosphere. On this mission, time, time is of the essence. Shifting from high to low carbon intensity energy mix. Now it's as important as developing net zero solutions. That will take time to reach scale and have an impact. Why this urgency? In the absence of immediate action taken to substantially reduce emissions in the next decade, our planet is on track to a disastrous 2.7 degrees Celsius temperature increase. We must act now because there is a time value of carbon. You all know this from your compounding of money story, a unit of carbon emissions that's avoided immediately is worth far more than the same potential unit of carbon being removed decades from now. Just think about this. A future technology that is net zero starting many years from now trying to scale. And because of the perilous loops that you have, the feedback loops it has, the impact it has on climate, it's very different from starting to remove carbon in every possible means along the way. So it's and, and, and solution with a time value of carbon, right? Okay. So this is the reason, when you look at it, renewables alone growing at 3x the current record rate, allow that to happen, cannot lower the emissions in a timely manner. That's not coming from us. The International Energy Agency says that and emphasizes the need to focus on carbon capture, hydrogen, waste to energy and a shift from coal and oil to gas. This is also the reason why the European Union has deemed natural gas-based power as a green investment. We, at Bloom Energy, agree with the IEA and the European Union. Our flexible platform will play an important role in all the pathways to decarbonization, short term, midterm and long term. In addition to decarbonization, there is another major factor that will shape our energy transformation. And that is energy security and energy resiliency. Business operations and everyday life are unthinkable when there's a disruption for days of electricity or fuel supply. Digital transformation has made virtually every aspect of our life run on electricity and energy. Geopolitics, geopolitical risks to energy, cyberattacks, natural disasters. And the damage natural disasters cost to poles and wires that bring electricity to us and the inability of the legacy solutions to meet the surging demand that the world has, all contribute to energy security -- energy insecurity and energy anxiety. So the future in this energy transformation is going to be about 2 things. Decarbonization and energy security. Not or, and. We are the one company that does not ask corporations and communities to make a false choice between security and decarbonization. We are an and company. Our solution offers both without compromise. Our technology platform is modular and heart swappable. The distributed architecture located at the edge provides the level of reliability that a centralized grid never can. The energy servers can also be clustered to build an energy cloud. Like computer servers building a data cloud. Such an energy cloud is geared for utility scale carbon capture. And it is designed for green hydrogen production at refinery scale. Let me spend a few minutes now on the unique and proprietary platform whose intellectual property is highly protected for us. The platform converts chemical energy to electrical energy directly. This is the fuel cell module. The platform also converts electrical energy to chemical energy directly. This is the electrolyzer mode. Operated in either direction, we offer the best conversion efficiency in the marketplace. Period. The flexibility of the inputs and outputs from our platform accommodates and enables us to tailor solutions for our customers. Our platform uses an architecture that is similar to the semiconductor industry. I'm waiting for that slide to switch. Thank you. And what it does, this architecture. It emulates the semiconductor industry in its building blocks, but more importantly, it tries to adopt the successful cost down and learning curves associated with that. Look at what you're seeing, the fuel cells, the stacks, the server modules, the systems, the power center. For us, our analogs to the transistor, the integrated chip, the server blade, the rack and the data center in the computer world, right? So what have we done with this? In about 10 years, this company has built over 65 million fuel cells, over 2 million stacks, over 30,000 server blades installed in over 700 locations and the amount of power we generated, 20 billion-kilowatt hours. It's hard to think about this number. But since most of you are from New York City, it's enough to power all of New York City for more than 150 days. Just stop and think about it for a minute, okay? This year alone, we will add another 15 million fuel cells, another 6 million energy modules. What will that do? Enough to power new -- through its life, what we put out this year will be sufficient to power New York City for over 75 days. So when you think about growth, what we did in the last 10 years, cumulatively, we have been able to power 150 days. This year alone, we'll put out boxes that can power for half that time, they're growing fast. Next slide. And one more point out here. Go back, please. One more point out here. Are you able to go back? There we go. So we are able to add something else. Every chip, the stack, unlike the semiconductor industry has a digital twin. That's remotely monitored, controlled and analyzed. And we use machine learning algorithms to learn from each one of those stacks to make it better, cheaper, faster. That's what we do. So let's go to the next slide. So from an energy server evolution, going all the way from a zero generation 5-kilowatt to our latest generation. Our power density, if you just look at the pictures, it's heavily simplified, components are remote. We've gone from increasing our power density. This is the footprint needed to produce the same amount of electricity. If you're going to put them in cities, this is important, right? That's gone up 12x. When was the last time you saw power generation equipment going down in scale that size? Okay? If you look at the material usage, you all ask about cost, less stuff goes in, less expensive it is. If you just take that, look at the material usage, it's gone down 8x kilograms per kilowatt. You have less materials it costs less to build it. It costs less to buy it. Next slide, please. So we stay focused. And in the last 20 years by doing this versatile platform, we have capitalized on everything we can do and bring value to our stakeholders. So when we built this company -- can we go back from this? the script is completely somewhere. Okay. So we have created what is an efficient, high-efficiency footprint, better products at lower costs. That combination of the learning and combination of the systems is what has led us to that. We stay focused for the last 20 years on developing this versatile technology and making it affordable, robust, scalable, built a strong company that's well capitalized and dedicated to delivering long-term value for our stakeholders. And the track record team to execute this is what you should be looking at when you're looking at what we do. So where are we in terms of the markets and where we are with the customers? We're very bullish on our growth trajectory. You could have sensed that. Why? Just look at our customers. They are among the leading companies in the world. They are companies that lead on operational excellence. They are companies that lead on risk management and on ESG. These companies choose us for their energy needs today, and they are confident of our ability to meet their goals going forward. We execute and deliver on the promises we make to them. How can you be sure? They give us large multiple repeat orders. More than 2/3 of our business comes from our existing customers. We offer our customers predictability, resiliency and sustainability. These 3 core value propositions are getting better and more compelling by the day. The alternative for them is to procure power from the grid. It's getting less predictable, less resilient, less reliable. Bloom on the other hand, is more predictable by the day as you saw in the numbers, more affordable and more reliable and resilient. You should not be surprised then when I tell you, Bloom's share of the U.S. stationary fuel cell installations is 80%. We play to win. We have a very strong sales funnel, the best we have ever had. Speaking of real markets, leadership and winning, let me say a few words about Korea. We entered the Korean market 5 years ago. We were head and shoulders above the rest of the competition. Better in efficiency, better in capacity factor, better in availability. Bloom and our partner, SK ecoplant, won 100% of the Korean utility RFPs we were eligible for. Let me repeat, 100%. We have deployed over 200 megawatts already out there. In October of last year, our Korea partner, SK ecoplant, made a significant equity commitment and something that is seldom seen in our industry. A $4.5 billion minimum take-or-pay contract for our products and services. Yes, their trust in our team, confidence in our execution and superior performance, they're all important considerations in them making this decision. But even more important was their confidence in our future products and our hydrogen strategy. Why is that? Korea as a country has committed to a national hydrogen policy that will position them as a global leader in that field. The SK ecoplant team are confident they will secure market leadership in Korea's hydrogen economy with our best-in-class hydrogen fuel cells and electrolyzers. This desire to be a part of Bloom's hydrogen future was a critical factor in their investment and supply agreement. In fact, our first hydrogen-powered fuel cells and electrolyzers are already installed and operating in Korea. Like in the U.S., we now have the dominant position in stationary fuel cell deployment in Korea. 5 short years after we entered the country, even though competition is robust and was in the market a decade prior to our entry. Well, we move deliberately with intentionality and we execute with focus to become the market leader. So where are we headed next? Europe. It is clear that the current geopolitics, commitment to decarbonization, support for hydrogen and electricity growth arising out of electrification of transportation and digitization. The timing is right for us to enter the European market. I'm happy to announce that our Head of International Business, Tim Schweikert, from whom you will hear soon, is going to relocate to Europe. Additionally, Carlos Lange, a power industry veteran for 20 years, who ran distributed power business for GE, Alstom Power and MAN will join us as a special adviser in Europe. We look forward to our market entry and growth in Europe. In many ways, as the industry transforms, we are in a category of our own with growing revenue, margin expansion, strong backlog and the best, most innovative solutions for customers who want low-carbon and resilient power today and zero emission synergy tomorrow. We'll continue to build upon our mature technology platform, solid record of accomplishment and robust growth road map. We are extremely excited about our future. Thank you. [Presentation]

Thank you, KR, and welcome to Bloom Investor Conference. The last one we did was in December of 2020, and we were virtual as we were under significant COVID restrictions. Today, we're joined by over 60 participants in person in our facility here in Fremont, California and many more streaming from around the world. I know Ed gave the safety instruction to start off, but I want to apologize if there's some background noise. This is a current and future manufacturing facility. And given the need for capacity, I wasn't going to ask them to stop building today. So you're going to hear some beats and noise as we go through the day. Today, you'll be hearing a lot about Bloom's mission to decarbonize. Bloom is in a unique position to provide technical solutions for multiple pathways to assist our customers in their journey to net zero. You'll also hear how Bloom is positioned to drive profitable growth and generate cash. To accomplish this, we're going to leverage our mature core platform across applications. As we expand into new markets, simplify our business and drive down costs as we scale. Let me begin with leveraging the core platform. We hope you all enjoyed the demonstration this morning over our technology test center. We wanted to highlight how our core platform can be leveraged in many different applications, whether you're looking at the Bloom 5.0 or the 7.5 as a natural gas fuel cell or hydrogen, in a large industrial power tower or as a prepackaged energy server, on land or on sea, providing resiliency as a microgrid or converting waste to energy or producing clean hydrogen as electrolyzer. It's all built off the same core platform. While we'll optimize for each application, you can see it's the same basic design. This allows us to utilize the same supply chain, manufacturing capacity, logistics and engineering teams. Leveraging the core platform is incredibly important also as we talk about cost down. Moving on to expanding in our markets. Our power generation value prop of sustainability, resiliency and predictability resonates with our customers. By offering fuel flexibility, we're providing customers with a road map to decarbonize, while delivering resilient power, which moves us from a transactional selling to value selling. Our commercial pipeline remains strong. We're seeing increased interest in our ability to quickly bring power to our customer sites. This time to power value proposition is not only increasing demand, but it's creating a sense of urgency that is accelerating our sales cycle. We expect these opportunities to continue to grow, especially with the resurgence in U.S. manufacturing, increasing electrification and the acceleration of the digital economy. Globally, and KR talked about this, we're investing in commercial resources in markets where we can drive scale. Coupled with our opportunities for hydrogen electrolyzer, carbon capturing, marine, we're confident we can meet our growth targets. When I think back to December 2020, I'd only been with Bloom a few quarters. I just left GE after 26 years, and I joined Bloom because I believe in the mission. At the last investor conference, we pledged to do a few things differently to simplify our business. We knew we had the best technology to help the world decarbonize. And my job as CFO was to give Bloom the long runway to meet that opportunity. We focus on increasing transparency and becoming more resilient. To gain the trust of the investor community, your trust, we've worked hard to increase our transparency. We've wanted to provide you with not only the ability to evaluate our commercial execution in the market, but management's effectiveness in leading the company. We've made improvements to our financial reporting package. We've published white papers. We've issued sustainability reports. We've participated in investor events to provide you greater insights. And based on your feedback in our recent investor perception study, I think we've made some progress here over the last 2 years. We also want to make the company more financially resilient so that we'd have the resources to invest in growth. We executed a $230 million green bond in 2020. And last year, we completed a $255 million investment with SK ecoplant. Over the last 2 years, we've increased our unrestricted cash by 2/3, while we dropped our recourse debt by 1/3. We have the resources to fund our near-term investments while we build our cash generation capability. To scale this business quickly, we need to continue to simplify. We've made changes to our operating processes to our commercial strike zones, and we are leveraging partnerships. Examples of this include, we've built a really robust product management team in Sharelynn's group to manage their ability to create different applications on the core technology. We're also focusing on larger opportunities to lever not only our commercial organizations, but our service organizations as well. In addition, we continue to lever partners for originations, financing and installations to allow us to focus on our core competencies while delivering better outcomes to our shared customers. You're going to hear a lot about partners throughout the day. While we continue to invest in technical and commercial resources, we know it's extremely important to have experienced leaders to meet the needs of a $15 billion to $20 billion revenue business. In addition to the executive leadership team, we've been adding accomplished leaders in accounting, IT, compliance, treasury, ESG, EHS, Internal Audit, Investor Relations. These professionals have come to us from the most accomplished companies across the industry and bring tremendous leadership perspective. It's the leadership we're going to need to scale effectively. We always have remained focused on cost reductions across product, install and service as they each contribute to the delivered cost to our end customer. We have set and have historically achieved cost down across all these categories. We've reduced product costs 10% to 15% annually by increasing our power density, simplifying the design and implementing lean manufacturing and leveraging off our supply chain. As KR described, each generation of the energy server provides more output in the same footprint. As we move from Bloom 5.0 to 7.5, the power increases 50%, reducing our cost per kilowatt. As we operationalize Bloom 7.5, we've already begun to think about the next generation of technology. There's more opportunity here. As you can see in this facility, we have a very automated manufacturing process. Economically, that's allowed us to keep our stack manufacturing here in California close to our engineering teams. Innovations in optical tooling and machine learning and advanced manufacturing, created an opportunity to implement robotics previously unavailable. That's just not about reducing cost, but we're going to need to automate for us to scale effectively. This year, we plan to invest $150 million in this building on our increasing our fuel stack manufacturing capacity from 280 megawatts at the end of last year to 580 megawatts by the end of this year and over 1 gigawatt by the end of 2023. And our assembly facility in Newark, Delaware can expand to over 2 gigawatts of capacity with minimal investments. These are extremely attractive investments because as they reach full utilization, the payback on this is less than a year. And as we increase throughput, we gained valuable operating leverage to help us drive down our manufacturing cost. Many of our key suppliers have been with Bloom since the early days. Like all companies leveraging a global supply chain, we're currently experiencing some pressure. But we have a tremendous opportunity to reduce our costs. We work closely with our suppliers on targeted component costs, and they know that reducing cost is a key lever in our growth strategy. They also know that as we grow, they grow. We also have some inherent advantages to our technology. Solid oxide does not rely on precious metals like iridium or platinum. So we avoid all those shortages and price volatilities. Our solid state process is virtually no moving pieces, allowing -- giving us a longer service life. With the current pressure on the supply chain, it's unlikely we're going to get to our 10% to 15% down this year. But with improvements we're implementing, we expect to regain the cost down momentum. And if prices reduce as the supply chain stabilizes, we'll recognize additional benefits. Said more simply, we're going to target cost down, assuming the current inflationary environment continues, and if or when it normalizes, we'll capture those reductions in addition. For installation, we've been very focused on reducing not only cost but improving our cycle times, and we're leveraging EPC partners to increase the certainty of our revenue timing. The packaged energy server that I hope you saw over there this morning is one of those examples where we're leveraging technology to reduce costs rather than our traditional approach of assembling the servers on a customer site, we're packaging a unit altogether in a standardized manufacturing environment in Delaware. That also allows us to leverage EPCs for the installations, freeing up our team to be more strategic on reducing costs while improving our revenue predictability. We believe improvements like this, we can continue to reduce our cycle times and then continue to reduce our costs 10% annually. Our service business is transitioning from a gross -- to a gross margin profitable business through a relentless focus on performance and cost. To reduce our cost, we utilize a really robust, reused refurbished program. This provides lower cost replacement modules, and it's also just better for the environment. The other big lever to reduce service cost is increasing the time between power module replacements. Our servers are built with multiple sensors, gathering billions of data elements each day. The concept of digital twin or machine learning, it's not new to this team. We can tune variables to support different operating modes, improve performance and extend life. These enhancements, coupled with technology advancements for our 2016, 2017 fuel cell shipments, we've recorded a median stack life of over 5 years on average. That's 2.6x what the life was versus 2011. And for the fuel cells that we're shipping today out of this factory, our modeling says that we're approaching 6 years, and we're targeting 7 years for our shipments in the next 12 or 24 months. We are leveraging product costs down with data to improve our performance and to meet our annual service cost reduction of 12% and our 20% non-GAAP gross margin target for this business still remains by 2025. We've often used the cost of electricity for a U.S. customer as a proxy to measure our cost down efforts. As we are selling more on value, to me, the LCOE analysis is less relevant, but it still remains a yardstick to measure our progress on cost down. In 2015, for a typical 15-year U.S. PPA, we were selling a solution with an average cost per kilowatt of $0.14. The tolling or the costs associated with the server, installation, service and financing was about $0.11 and the remainder being fuel. At our last Analyst Day, we talked a lot about getting our reduction in costs has enabled us to get to about $0.09. Based on our continued cost reduction efforts, I would expect a Bloom portion of cost to be reduced to half again to reach $0.03 by 2028. And remember, while we show this for a natural gas PPA, this cost down benefits translates across our platform. Think electrolyzer, marine, all the savings translates across. Now given the increase in natural gas, I thought it would be worth spending a minute on the topic. First point, these are 15-year investment decisions. And given the abundancy of natural gas, one could expect that pricing to moderate over that period. Second, to the extent prices remain elevated, we have an inherent advantage as we operate at a higher efficiency than gas combustion. We do not see the recent natural gas movements as an issue for competitiveness for this business. We entered 2022 with a strong backlog. It was nearly double what it was the year before at $8.5 billion. This backlog will enable us to deliver 2022 revenue of $1.1 billion to $1.15 billion. Now we expect first half revenues to be roughly flat with the first half of 2021 and the growth coming in the second half as we add the stack manufacturing capacity. Our first half margins are challenged by higher costs on lower builds. While the average selling price is roughly the same, so it's not a price issue, selling price is roughly the same, our unit costs are elevated. So I would expect for the second quarter margins to be similar as they were in the first quarter of this year. As we add capacity throughout the year and our volumes increase, this will result in a lower unit cost, and we'll get the benefits of that. To date, we've been able to offset the commodity inflation pressure through our cost down efforts. And while this challenge does continue to increase as we go into the second half, we believe we can offset this with revenue mix. We remain confident in our margin targets and to deliver positive CFOA, cash flow from operating activities, for the year. Listen, the -- getting to operating income positive, non-GAAP operating income positive and cash flow positive is a big rallying cry for this team. And we know once we get there, we can expand upon it. So we're very focused on delivering it for the year. Our prior accomplishments give us the confidence to think boldly about our business. Since 2017, we've grown our products and service revenue over 35%, and we've expanded our margins 25%. In February, based on the opportunities we were seeing in leveraging our core platform, we increased our revenue guidance rates to 30% to 35% through 2031. This was based on the growth prospects we saw in our core power generation business to continue to grow at our historical targeted rate of 25% to 30% through multiple fuels and geographies. We added 5 points for additional growth over the next 10 years as we build additional applications for electrolyzers, carbon capture and marine. Today, you're going to hear a lot about these strategies in these markets. This growth, coupled with our cost downs, we're reaffirming our 2025 targets for achieving 30% non-GAAP gross margins and 15% non-GAAP operating margins. As we move beyond 2025, we would expect that there would be continued operating leverage to further expand these margins. And based on our expected cash performance this year, coupled with expanding margins, we are well positioned to increase our cash generation from operations in line with our revenue growth. Now let me review the agenda for the day. Following me, we'll have Sharelynn Moore lead a discussion on our growth road map. We're seeing incredible interest in our fuel cell for power generation as our customers need clean, resilient and abundant energy to grow their business. She'll be followed by Rick Beuttel, who leads our hydrogen electrolyzer and carbon capture strategies. Rick is a 30-year veteran of the industry and recently came to Bloom based on his belief in our differentiated technology. We'll then hear from Tim Schweikert on marine and international strategy. Tim is a fellow GE veteran, and he brings a tremendous amount of operating experience in leadership to this combined role. Our goal in this section is to provide you with deep proof points that we can grow our revenues 30% to 35% over the next decade as we leverage our core application -- core platform across applications and geographies. I'll then come back up, lead a discussion with Glen Griffiths, Carl Cottuli and Satish Chitoori. These gentlemen have the responsibility of delivering the products to support our play and growth. Glen leads our quality, service and operations teams, Carl leads our engineering teams and Satish leads our global supply chain, a role that's gotten a lot more interesting over the past several quarters. You'll see we've positioned our operations like this new facility to support our growth. We'll then have 30 minutes to respond to your questions. We've already collected a few beforehand, and we'll have microphones in the room for you all. Bloom's at an inflection point. The grid is becoming less resilient and more expensive. The world needs to decarbonize, solutions like hydrogen, renewable natural gas and carbon capture of the future. We have those solutions and they are in demand. We will continue to invest, reduce costs and build our capacity. Our mature technology platform can be leveraged across multiple applications to provide customers a decarbonization pathway while meeting their needs today. We will deliver robust growth, attractive returns and we're generating cash. We have a clarity in our mission. We are extremely excited about our future. All this combined makes Bloom a compelling investment, and we hope you all agree. Thank you. [Presentation]

Hello. Well, this is really fun. I almost feel like I just completed a really big remodel, cleaned the entire house, sent out invitations and I'll be damned, everyone showed up. This is awesome. Now, truly, thank you for being here. It's really fun for us to spend time with our investor community. KR opened with the talk about the existential threat of climate. You can't go anywhere right now without feeling the threats of climate risk. We open the papers, we see articles, we're experiencing extreme weather. And unfortunately, the past is not the predictor of our future from an extreme weather standpoint. So while none of us want the planet to continue to warm. I don't see it as doom and gloom because from our standpoint at Bloom, we're working with customers every day in the private sector that are looking for ways to do better for the environment, while at the same time doing right by their shareholders. In fact, I was listening this morning to the CEO of Salesforce, who's at Davos. And he was talking about environmental capitalism, and that is exactly Bloom's sweet spot because what we do is practical, it's pragmatic. It's right for the environment, it's right for our customers, it's right for the communities. And that's what powers me and why I'm so excited. We put together a ground-up plan. Our team of product experts, strategic business developers and marketers and took a look at our 3 businesses and what we can do in the short term, the medium term and the long term. How are we going to go after these markets? How are we going to grow? How are we going to operate in a way that captures profitable growth in the right way? How do we prioritize? Prioritization is key for us. With everything that's going on in the world, we could be spread a million different ways because there are so many opportunities. So we've put a plan together, looking across all of this, both from an operational standpoint as well as a market standpoint. So for us, it's really nice to be able to share it with you because we are very confident, and we actually feel, if anything, it's very conservative. There are more upsides or accelerators that could happen, policies that we'd all love to see. Unfortunately, even worse climate risk impact out in the world will drive our business. But at the same time, there's way more fewer risks than there are those increased opportunities. So again, very confident. So with that, one of the common themes that you're going to see across these business plans is the concept of the platform. You heard it from Greg. You heard it from KR. This company was built on this platform. Our corporate strategy of everything we're doing around the platform is clearly important, but so is our market strategy. And there's 3 key ways that the platform plays an important role across all 3 of our businesses. First, the platform allows us to tailor unique solutions. A really good example of that is in waste to energy. We took our same core platform, made a minor modification so that we could input biomethane, and we can turn that biomethane into electricity. What do that mean for us? It provided a whole new unlock. We sell them out of municipalities. We sell them out of markets in Europe potentially that we wouldn't have sold into prior. So with a slight tailor modification of the platform and unlock new markets, that's a key concept of what we're going to talk to you about in our market plan. The other key element of this is value driven. You've heard already about our 3 key value drivers: resiliency, predictability and sustainability. Think of a moment of a safe, a safe that has 3 dials, 3 combinations. One dial is resiliency, one dial is predictability and one dial is sustainability. It's the magic of all three of these that create a unique combination that unlocks that safe to the gold or the value. Every customer has their own unique combination, every market, every segment, every geography. And that is what we will be really good at doing is knowing exactly how to unlock the right, most profitable markets, key considerations. Third, we will expand with partners. Greg said it as well, partners are key. First, we unlock new markets like South Korea with SK through a partner. In less than 3 years, we went from a nobody to the market leader, providing utility-scale power plants all across South Korea. We also will use partners to unlock those new markets. You'll hear from Rick about carbon capture. Carbon capture will be made possible with the power of our technology, teamed up with the right partner that can provide CO2 utilization and/or sequestration, better together. And last, how do we cover the world that can value our solutions? We do that through partners. Partners will increase our sales presence, it will open new channels and will give us the reach in the areas that we already aren't. So partners become a key enabler and a critical ecosystem and something we will invest in. Another important consideration as you look at our plans, is the fact that we are starting from such a strong position of market leadership. Worldwide, we have more than 1/3 of the stationary power fuel cell market. In the U.S., KR said it, we have 80% of that market, and we have a very similar market share in South Korea. This is our intention. This is how we will look at new markets like Europe, which Tim will talk about. We will lead. We will win. Second, we have such a strong competitive advantage with our technology. We're going to use that competitive advantage everywhere we can to drive profitable growth. Our energy conversion platform essentially does really 2 things, really, really well: It converts molecules or fuels into electrons; and it takes electrons, clean electrons and converts it into clean hydrogen molecules. No one else can bridge the gap between electrons and molecules in both directions, the way Bloom can in the most efficient way possible. As we look at that energy transition, that is a key requirement. So much of our energy needs are right now powered by dirty fuels. This ability to think about that hyper interchange between electrons and molecules becomes extraordinarily important. And again, no one does it better than us. Last, there's inherent advantages in our business and what we can provide to customers. As we look to larger industrial customers, and we're behind their fence, they don't need manpower to manage their systems. There is no downtime to factor in. We're at 5 9's availability. For larger critical customers and key infrastructure, these benefits matter. And last, future forward fuel flexibility for customers that are hesitant about investing in a 15-year natural gas asset, they're not doing that with Bloom. We may start with natural gas, but immediately, our entire fleet is already converted to responsibly sourced gas or low leak methane gas. Second, they can transition to a cleaner fuel as the business drives them, as affordable fuels become available, they can blend their fuels and they can do it now or they can do it tomorrow. Customers will not have stranded assets. These are just some of the core inherent competitive advantages but not only are strong and increasing with what's going on in the world around us, they're really, really defensible. It's a very sustained competitive advantage. It's the 20 years of maturing and building down and cost down and building this amazing team that is poising us for the growth for tomorrow, and it's incredibly exciting for all of us. We have organized our business into 3 key business segments. I talked about the simplicity of what we do. Our first business is power generation, molecules into electrons. In this business, we provide microgrids. We provide primary power. We provide waste-to-energy solutions, which I'll talk about in a moment. And we provide utility scale power. That's what we have in South Korea, many power plants deployed on power towers, as you would have seen over the technology showcase. This is a monster market. So we're a $1 trillion market. And when we put our plans together, we're going after a very small sliver of that market, and we're going to do it in a way that we are very selective to best utilize our resource and our partner resources. Our next business, hydrogen carbon capture. These are our net zero businesses now. We have extraordinary competitive advantage to exploit both in our high-efficient electrolyzer as well as our carbon capture capability with partners. No one can really beat us on either of those fronts when you look at the sheer economics, and we are at the ground floor as the world starts adopting these net zero technologies, we are right there. And last, our marine business. This is a business driven by the IMO or International Maritime Organization, ambitious goals for decarbonization. Through partnerships like with Chantiers de l'Atlantique, we are at the forefront of the marine industry showcasing here's how you can decarbonize. Here's the way. As Tim will tell you, it's not the fastest-moving industry, but it's a great industry for us to help make a market. So with that, I wanted to share a little bit of going back in time. Greg mentioned our last Analyst Day was December 20, 2020. I shared a road map, which you're seeing here exactly like this, no changes. And in this road map, we just wanted to share with you a few milestones, both from a market and a product standpoint to let you know here's how we're going to define success. And what I want to share with you is we are well on our way. In many of these categories, what I'm most excited about is not only we built this extraordinarily solid plan, but we built an absolute team of rock stars. And there's a few of us that are here today and many more that you didn't get to see today and may have been over at the technology showcase. The only change that I would acknowledge from last year is a change in strategy in U.S. C&I or in the U.S. state approach. We've used to look at the market a little bit more transactionally. We said the easiest place to sell is when we're way cheaper than the grid. So we're going to keep unlocking those states and making life easy and sell that way. And we've really changed our approach, we now have a very focused vertical sales approach. We have teams that are leading semiconductors, teams that lead health care, teams that are leading batch manufacturing, teams that would lead data centers. We have a team leading oil and gas. The reason for this is value selling. Greg mentioned it. We are moving from a transactional environment to value. You need to move the value selling when we're selling the 3 combinations of resiliency, sustainability and predictability. You need to be able to speak with everyone at a more executive level, and we need to land and expand. And you land and expand by being customer intimate and knowing your customer. So the people in Billy Brooks organization that's with us today, their job is to know that customer know their vertical, build a strong customer base and build upon that and cultivate that over time. Partners will augment what they do, and that's how we'll win. Naturally, we'll go into more states. In our waste-to-energy segment, which I'll talk about next, we are naturally being pulled into different states. Many of our customers in the segments that I just referenced, they're multijurisdictional. So they will naturally have us go through the whole portfolio. So if you hear nothing else, we're very vertically focused. We're going after the cream of the crop. We're relying on partners and we're value selling. Okay. Let's take a look and look at power generation a little bit deeper. Again, this monster trillion dollar market. You heard a little bit about how we're going after it in the United States. We see very much replicating that similar playbook in Europe, which Tim will talk about. This market is absolutely driven by major tailwinds in electrification, increasing capacity and the need for predictability. We're estimating that in the state of New York, if you look at the filings that are already filed and will file, New York City or State of New York customers will be paying over $0.25 a kilowatt hour by 2031. Electricity rates are going to far outpace any form of natural gas increases that Greg talked about. One of the more immediate benefits that's really driving our business, that's worth my spending a little bit of time is this time-to-power concept, which is in our predictability category. We have customers, and I have one case study, that already had a deployment with us in the State of California. They wanted to expand their operation, their business was dependent upon it. And they came to Bloom because their utility wasn't able to deliver power in any reasonable sort of time. It would have been over 2 years. So by working with Bloom from the moment we had that order, we converted that to power on in 9 months, and it was a significant size installation. This is happening to us every day right now. There's a lot of potential U.S. increase in manufacturing. If you look at what's going on in policy, many -- the reality is there's a big business boom have a lot of capacity in places in the world, in the country that aren't as obvious. So it's forcing us to really think about our business model a little bit differently, how can we be really quick to adapt and meet the market needs of customers that need power now, this time to power, number one. Number two, how can we ensure our systems are super easy to just drop in? So if you missed it, Joe Tavi was talking about our packaged energy servers. Essentially how do we bundle our servers with as much of the piping and the wiring as possible. So you literally forklift it in, drop it in, hook it up and go. Of course, nothing is quite that easy, but essentially you get the idea. It limits the permitting needs that are required when you're not pouring concrete and allows us to really accelerate the time to power. So again, a big business driver. And it's just important to note that with our value proposition at any moment in time, the wins of policy or the needs of the market are poising us to be really responsive. And that's the resiliency inside Bloom that we're driving and that we're leading so that this factory can meet the needs of all of our customers. So with that, I will also turn to one more segment of power generation before we leave this market, and it's waste to energy. Chuck Moesta, who's not here today, heads this business for us. He has over 30 years of experience in environmental and wastewater markets. He's actually at the Biogas Americas show, and I hope he's booking some orders. We'll check in later. But in this business, it's really unlocking a selling motion into the municipals into landfills, wastewaters. If you've seen a recent announcement with Fayetteville Public Works. This is an interesting one. They're actually taking swine gas along with landfill, along with wastewater in North Carolina. By the way, it's Fayetteville, North Carolina, and creating resilient electricity. This kills more than a few birds with one stone. They need a regulatory constraint of flaring biomethane. So they eliminate that need. They're also able then to provide critical electricity in the city that they need it. So for them, it's a great way to eliminate methane in the environment, not flare the methane as well and provide resilient electricity. What we love about this is this a very replicatable solution and one wastewater organization or one landfill organization or one municipal, they follow what each other do for best practices. So it's our job to continue to make each one of these kinds of customers a showcase. And where one is, many will follow. The other side of waste-to-energy is in renewable fuels. Think sustainable air fuel or renewable natural gas. We all know there's a shortage of these renewable fuels in many markets and certainly in the U.S. Developers are scrambling to put new plants together. It's a very energy-intensive process. And the name of the game for a renewable fuel is its carbon intensity. And on average, we have less emissions than 18 -- by 18% less emissions than on average anywhere on the grid. So by being able to use our servers in those greenfield developments, we lower the carbon intensity score, they have a more competitive product. So we're working with developers across the country. And again, there is no state-based constraint on these kinds of developments. So we're very excited about that. As I leave this power generation topic, I just want to leave you with a few points. It's a $1 trillion market. There are way more tailwinds than there are headwinds in the future. We have an opportunity to take our competitive advantage and a very smart market strategy and more than exploit the market. And again, we're really excited about it. So with that, I will leave you. Thank you.

Good morning, everyone. It's so energizing to be here with all of you. After what we've gone through for the last few years, isn't it wonderful to just have the opportunity to be together, to have dinner together, to have conversations like this? It's really wonderful. And I just want to thank all of you for making a journey from wherever you came to come here and spend some of your valuable time with us, hear our story and ask some questions, get to know us a little bit better. So Rick Beuttel. I joined Bloom in January of this year, after 31 years at Air Products. My last several years, we're developing very, very large hydrogen and syngas projects in the Americas. Bolted on to many of those projects were clean ammonia and renewable diesel. And when I looked at Bloom's platform and you've heard Sharelynn and KR and Greg talk about platform, and I'm going to talk about platform a lot. You look at the applicability of Bloom's platform to high-temperature process that's going to be used to synthesize and manufacture all of these fuels of the future whether it's low carbon intensity ammonia, whether it's methanol, renewable fuels like sustainable aviation fuel, renewable diesel or even hydrogen itself. Our platform, because it runs at a high temperature, is the most efficient way to make clean hydrogen from electricity. We'll talk a little bit more about that but all of those processes run at high temperatures, we integrate extraordinarily well, and it gives us a 15% to 30% advantage over competing electrolyzer technologies. The technology platform and its applicability to the growth of these fuels of the future is why I came to Bloom. And I'm really excited to be here today to talk to you not just about hydrogen, but also carbon capture. Personally, I believe that in the long run, by 2050, there will be a trend of everything will be electrified or everything will be fueled by hydrogen. There's a long time between now and 2050. And natural gas, particularly in regions where it's abundant, like the country we're sitting in right now or our neighbors to the north and south, is going to play an incredibly important role and continuing to supply mankind's energy needs, particularly considering the abundant sequestration geology that we're blessed with. And we understand quite well from decades of oil and gas exploration. So I'm going to talk you about hydrogen. I'm going to talk to you about carbon capture. As soon as the slide advances. I spoke about, we have the most efficient electrolysis technology. Probably all of us have really tried hard to forget, our high school chemistry classes, our high school physics classes, our college thermodynamics classes. I know I have. But it's a matter of simple chemistry and simple thermodynamics. Our device runs at 800 degrees C, give or take. Because it runs at such a high temperature, we need to input less electricity to produce a kilogram, a normal cubic meter, a standard cubic foot of hydrogen than low-temperature electrolysis technologies like PEM and alkaline. And I really mentioned earlier, one of the things that best suits our platform are the synthesis of these fuels of the future. And right now, we don't need to make any bets as to whether methanol is going to succeed over ammonia or is it going to be renewable diesel made from beef tallow and used cooking oil? Or is it going to be sustainable aviation fuel? Or is it going to be the hydrogen molecule itself? Because our technology is the best route to hydrogen compared to any other way of doing this if you want to do it truly cleanly. I spoke about carbon capture. I've done some carbon capture projects in my past life. I did a very, very large one in Louisiana, also one in Edmonton, Alberta. Our technology already, all of the 700 megawatts of installed base that we have out there in power generation, already emits an anode gas stream, which is very, very rich in carbon dioxide. And further on in the presentation, I'm going to talk about how this proven technology, which is in every device that we've built and all the devices we're going to be built, can be very, very simply modified with some piping connections so that we can work with partners, as Sharelynn talked about, to either use that carbon dioxide for beneficial purposes like food and beverage, or to sequester that carbon dioxide and produce 24/7 zero carbon intensity power, which is a value in many industries today. But I think, ultimately, in the long term, we all acknowledge we're going to need 24/7 zero carbon power to limit temperature rise to hopefully 1.5 degrees. Just a further thought on that. I don't know how many of you may have gone to CERAWeek this year, and listen to Secretary Granholm and special environmental envoy, Kerry, speak about the challenges of holding 1.5 degrees C. And how we're going to need all of these technologies. I would have to say it was wonderful, a, to be back at CERAWeek and bond with the community and the energy industry again. But you would have been not terribly mistaken to think that it was a hydrogen and carbon capture conference, not necessarily a global energy conference. And the last CERAWeek that I went to, I guess, was 2019, yes, hydrogen is important. But people that were talking to us about hydrogen at that time, what did they want to know? And what do they want in hydrogen? They wanted hydrogen that was cheap and they wanted hydrogen that was reliable. Why? Because they're running barrels through their refinery or they're making ammonia. In the last 2 years, our collective consciousness has changed. And now every conversation with respect to hydrogen is how are you making the hydrogen? And what is the environmental footprint of that hydrogen production? And if it's electrolysis, how efficient is it? Where is the electricity coming from? If it's so-called blue hydrogen, right, where you start with natural gas and you sequester the CO2, how are you doing that? Can you get a Class 6 well permit? What does the geology look like? Are you certain that, that hydrogen once you shove it at 7,000 feet underground is actually going to stay there, right? And what safeguards are you putting in place to do that? So it's really fascinating to me, and I'll bring it back to carbon capture before I move on to the slide with the 45Q tax credit. Even at the current level of $50 a ton, we are very, very close, and I'll walk through economics to parity with combined cycle with anode gas carbon capture from our fuel cell if it's sequestered. And that's, again, for 24/7 zero carbon intensity power that doesn't depend on if the sun's shining, if the wind's blowing or there was a lot of snow the winter before that's going to melt in have robust flow in streams. Really, this slide should say why are we confident that with our technology, we're going to meet or exceed what we have all looked at in terms of a forecast for our market penetration in hydrogen and our growth in hydrogen. And what I would pose to this group is that 3/4 of the applications for low carbon intensity hydrogen, clean hydrogen -- I'll use colors. I'm not personally in favor of using colors, but fine, green or pink hydrogen. 3/4 of the applications are high-temperature applications. Our device is a high-temperature device. The customers are hosts, the people that are going to buy hydrogen from us that are running exothermic processes and again, high school chemistry, we've all tried to forget that. But processes that give off heat in addition to making a molecule of renewable diesel or a molecule of ammonia. We can take the value of that heat quite simply and not feed water into our electrolyzer as every electrolyzer company does, and we can take water, but if we're able to feed steam into our electrolyzer, really, to me, that is the game changer. That gives us a specific power, again, kilowatt hours of electric energy per kilogram of hydrogen that's 30% or more, more efficient than competing technologies than low-temperature technologies. All of these segments, I've said it, the fuels of the future, sustainable aviation fuel, renewable diesel, ammonia, we don't care what wins. We're hedged to all of these. Whatever wins, we have the killer application to deliver it and even sort of historically sleepy segments, steel production. Steelmaking isn't going anywhere. If you look at all the infrastructure in this country and around the world that needs to be replaced, zero carbon steel is going to be trading at a premium in the future. Similarly, other hard-to-decarbonize segments like cement, the cement industry, very focused in looking at this. You can deal with 1/3 of the challenge of producing cement from clinker with hydrogen, using hydrogen as a fuel as opposed to really, really dirty fuels, like no kidding, like bunker, scrap tires, pet coke. I mean you can imagine the combustion CO2 footprint. And not just the CO2 footprint, right, all the other nasties that go up the stack when you're using waste fuels like that. So 3/4 of the applications, we're dialed in for. And these are all applications that are going to remain where they are or most likely going to grow. And finally, one more thought on this slide. Everybody's got their own forecast of how much hydrogen is going to be required, right? I like the IEA's one. Bloom is now a member of the global Hydrogen Council. And actually, there's a meeting of the global Hydrogen Council next week in Washington, D.C. They just issued a new forecast, of course: It's going up. Unless you have a crystal ball, you don't know what it's going to be, but it's going to be tremendously large. And we're very well positioned to capture it. We are more efficient than low-temperature technologies. This is a view based on today's costs, 3/4 of the cost of making clean hydrogen is the electricity itself. Our efficiency, if we're fed with steam, is under 40-kilowatt hours per kilogram. And that casts a longer shadow than every other component in the equation. I'm not saying capital cost isn't important. I'm not saying O&M cost isn't important. I'm not saying that any other facet whether it's degradation or efficiency, and by the way, during our stack lifetime, unlike PEM and alkaline, we don't lose capacity. We don't lose efficiency. We're level steady Eddie during the life of the analysis. But no matter how you slice it, efficiency carries the day. And whether it's with steam, as I spoke of, if you're integrating with a high temperature customer process or we're fed with water because not every process on the planet is a high-temperature process. We're markedly better than competing technologies like PEM and alkaline. And I'll just rip for a moment on something that Greg said. We also don't have iridium in our box. We also don't have platinum in our box. Everything in there is not a rare earth metal. It's nothing that we don't have difficulty finding. It's all dual sourced. And to the best of my knowledge, Satish, I don't think any of it comes from Russia or the Ukraine. Thank you. So we talked about efficiency. So I'm not going to beat that to death any further. Proven performance. We've got 700 megawatts of fuel cells out there operating today. It's going to be a gigawatt by the end of the calendar year. If you were to do electrolysis equivalent of that installed base, that's almost 2.5 gigawatts. Manufacturing platform. I hope everyone got the opportunity to walk around and see this beautiful factory that's just been built, all the tools and equipment that's moving in. The manufacturing platform for electrolysis is identical to the manufacturing platform for fuel cell, which Bloom have been practicing for 15 years. The factory is flexible. The order book in a given month, if it's 100% fuel cell, that's what the factory builds. If the next week, we sell an electrolyzer to an ammonia producer and we need to adjust and say, "Okay, we're going to cram an electrolyzer into it." It's real-time adjustable. It's the same materials. It's the same platform. It's the same inks. All of the know-how, all of the IP that has been developed with respect to fuel cell is directly applicable to electrolysis. And finally, I come from the big hydrogen world. Our modular approach in terms of what it offers the customer, in terms of -- we speak about it in electricity terms and electrons as resiliency. In the molecule world, we think of that as availability. And so if you're building a steam reformer, if you're building an autothermal reformer, you're very happy to get 97% or 98% availability. With our modular architecture and a number of stacks all operating in parallel, as a minimum, you can expect 2 9s availability, but our fuel cell experience has been 5 9's availability, and that just does not exist in the process plant world. It's really, really a compelling story. Where are we? So we launched the product in 2021. We have done a series of small-scale demonstrations. I am happy to speak in some more detail about that with anyone in the room. We are now in the process of launching 10-megawatt demonstrations. And actually, we just announced fortuitously this morning that we're able to reach agreement with an ammonia producer, LSB Industries. We also are talking to other customers in other segments such as refining and renewable fuels and the nuclear industry, who were all focused on getting to clean hydrogen. As we get through that in 2022, we deploy those units in late '22, early '23, really, that's like the final set of preproduction cars that go down the line, and we work the bugs out. And then we're ready for large orders starting in the second half of 2023. And my view personally is that the world will be ready for that with us because they'll be able to go look, see, touch, feel, see the efficiency, talk to the operators, understand the resiliency, understand the availability, and that is going to be a big differentiator for us and it's going to supercharge our efforts in this segment. I'll spend some time on carbon capture. What I'd like you to think about with respect to Bloom and carbon capture compared to conventional power production, so for example, with a combined cycle gas turbine. If you look at the exhaust of a combined cycle gas turbine compared to the exhaust that comes out of our fuel cell, much higher CO2 concentration, right? We're over 50% CO2 in the exhaust and a combined cycle facility that might be 4%, much less mass flow because we don't have all that nitrogen. It's just going along for the ride. So what does that mean? That means if you're trying to get to CO2 that you can do something with and take economic advantage of it, whether it's sequestration with a $50 45Q or God willing in the future, an $85 45Q, or you're looking to commercialize it and do something with it. It's much less energy to purify it because you're starting with a much higher concentration of CO2. And it's also a little silly things in the EPC, right? Like the pipes are a lot smaller. So you also put a lot less CapEx into the ground. Getting from our 52% CO2 stream that comes out of the exhaust of the box, about 40% is also water. Really easy to knock that water out. Dehydration, very, very mature technology. The other technologies to go to 95% or 99% or greater that's sequesterable or usable as industrial-grade CO2 for food and beverage or heat treating or other applications, all very mature technologies, very well-known, practiced for decades. These are all things mankind knows how to do. Evidently, it's not what I know how to advance the clicker here. So I spoke about combined cycle, dirty power, gray power, the power we're all probably using in our homes and businesses, $0.06 a kilowatt hour. Now that's subject to $3 gas, yada yada yada, levelized. If you were to try and capture the exhaust of that and sequester it, and get the 45Q benefit, that $0.06 a kilowatt hour jumps to about $0.10 a kilowatt hour. With Bloom, because of the concentration in CO2 in our exhaust and the ease of making that sequesterable, our number is very, very close, $0.065. And again, that's for 24/7 green power. I guess it'd be blue power, 24/7 carbon-free power. How about that? We'll settle on that as a compromise. It's much simpler because we're starting with a higher purity stream. It's very scalable. We can fit 100 megawatts of power generation in about an acre. And what does that unlock? That unlocks very low barriers to siting, right? What do you need to be near in order to cite this and do a carbon capture? Really, you either need to be near the hole in the ground or a pipeline to the hole in the ground, the sequestration. But from a placement of these asset standpoint, because we have no NOx, no SOx, no particulates, it's quiet. They're actually pretty good looking, right? I think you guys probably saw what the boxes look like. I mean, I think they're aesthetically pleasing, very low barriers to siting. Two more points, who are we going to sell this stuff to, right? So the people that are coming to us now and asking us questions about this today are people that are manufacturing products that are traded on their carbon intensity. Sharelynn talked about renewable diesel. And even our base platform without carbon capture is significantly more efficient than the grid from a CO2 perspective. If you add carbon capture, and you're able to take the benefit of the 45Q into your economic calculation, you get to zero carbon power and then your ammonia, your renewable diesel, your SAF, your methanol, you can sell it at a much higher premium. And Greg said it, Sharelynn said it, and now we're value selling. We're not just competing against the grid. We can put some of that margin in our pocket. I think ultimately, it will be hard for any of us to disagree that we all need 24/7 zero carbon power. That's a fact. With Bloom, that can be done economically. And again, we don't depend on is the sun shining, is the wind blowing, did it snow last winter. Can you get a nuclear permit? Thank you very much.

Good morning, everybody. It's great to see all of you, and I really enjoyed our conversations last night at both the cocktail hour and dinner. So I do -- I wanted to start by just talking a little bit about myself and my journey and how I got to Bloom. I joined Bloom beginning of last year, and I'd like to tell people that I was happily retired from GE after working at GE 33 years and really not looking for work. But I got to call, and they said, "Hey, we're moving into the marine space, and we need someone to help lead it. My last role at GE was leading the GE marine business in London. That really intrigued me because having worked in the marine space, it was apparent that the marine industry is facing a huge challenge in terms of weaning itself off of heavy fuel oil. Rick alluded to it as waste energy that -- a waste product, some of the worst things that you can burn. And not just CO2, but heavy sulfur content and heavy metals. It's just really not a sustainable fuel for the marine industry. And everybody now recognizes that. And I thought I've been following Bloom for a while. And I thought, wow, this is really intriguing because I was very familiar with the incumbents in the marine space, which are the internal combustion engine providers. And what we differentiate in terms of our fuel cell is the fact that we have no NOx, SOx, particulate matter or a negligible methane slip. We are also much more efficient, 20% to 30% more efficient than internal combustion engines. And that's important because that means you have to load less fuel on a vessel. And then probably the most important thing is, in talking to customers, is future-proofing their vessel. There has been a very large and quick update adoption of LNG over the recent years. But there's a lot of debate and questions as to what is the life of LNG as a marine fuel. How long can we continue to use it, given that it still is a fossil fuel? And there's -- it's really uncertain in terms of where the marine industry will ultimately go in terms of net zero carbon fuels, whether it be green methanol or whether it be ammonia. What I think is probably our biggest differentiator is our platform can run today on LNG. And today, LNG -- the amount of power needed for LNG vessels is about 4 to 5 gigawatts per year over this 10-year period that we're looking at. But we also are positioned to run on wherever the market goes in terms of net zero carbon fuels. So whether that be green methanol, ammonia or some other net zero carbon fuel, we are going to be positioned, and we will make the investment when required so that we can run off of any fuel wherever the market goes. So let me talk a little bit about our progress. So -- and many of you have been following Bloom, probably remember that we signed a joint development agreement with Samsung about 2 years ago. And this was kind of our first foray, this happened before I started, but it was our first -- Bloom's first foray into marine. And we've done a tremendous amount of engineering work to basically with SHI, develop a fully powered SOFC vessel, which was really interesting work. Carl and his team put a lot of man-hours into that. But the concern or the problem is, is that the marine industry is very conservative. And they are very much a show-me industry. And the likelihood of launching in the near term, a fully powered SOFC vessel, particularly on something the size of an LNG carrier, is probably pretty small. So we made a pivot beginning of last year, and we said, "Hey, let's explore the cruise market." And we started to get tremendous feedback from our discussions with the cruise market and saying, "Hey, what we really like about fuel cells is we could potentially run our hotel loads when we're in port to avoid having any sort of particulate matter or emissions when they go to some of these more pristine destinations." And we think that's a terrific application for fuel cells. So we have made really fast progress since the beginning of last year. We completed the design of the marine power module, which you saw today. We have completed the testing, including the tilt test that you saw with the technology showcase today. We signed a contract with Chantiers de l'Atlantique in June of last year, and we have -- and that's a 150-kilowatt system that will go on a World Europa MSC vessel. That equipment is already in France. It will be installed at the -- in July, August of this year. And it will be on the water in the third quarter of this year. So really moving fast and rapidly. And we think that, that project with Chantiers is going to be a huge catalyst in terms of gaining recognition in the marine industry that fuel cells are a very viable power source as an alternative to the incumbents. The other thing we're doing is we're working with Chantiers and a number of other cruise operators on doing what I'll call the next-generation design, which would be a 1-megawatt design. Our intent is to have that completed and ready for shipment in 2023. And then the follow-on in terms of a product plan, we get to 10 megawatts. So if you see a large cruise ship, typically, their hotel loads in terms of the power requirement is at that sort of power level, 10 megawatts. We're not abandoning the other segments in terms of freight-carrying vessels. So I had a meeting earlier this week with one of the oil majors. They are very interested in replacing a 1- to 5-megawatt generator on some of their tanker ships. And we're also working with a number of LNG carrier operators to do something similar to replace generated. So we think on the freight-carrying vessel side, similar to the cruise side, it's going to be a partial power application. Could we do something like a fully powered vessel in the future? Yes, it's possible, but it would probably require a hybrid-type approach, potentially marrying our system with either a battery or potentially a reciprocating solution as well. So really good progress moving fast on the marine side. Let me switch hats here. Now I'm going to talk a little bit about my second role, which is the international job. I got a call from KR. I guess it was probably November of last year and said, "Hey, I'd like you to do the international role in your spare time." I said, "Sure, why not, that sounds great." And actually, I'm really excited about this because when you look at what we've accomplished in 20 years, a lot of -- good penetration in the United States, 5 years of great success in terms of the building of South Korea. But when you look beyond that, it's a white space, right? And I don't -- we don't think that South Korea was a unique opportunity. We think there's many more South Koreas out there. And as KR said, we are laser-focused on Europe right now. And why is that? Europe, when it comes to energy security, decarbonization and potential need for resilient alternate power, there is no other market that has a greater need. With the Ukrainian crisis, the whole energy equation and supply chain has been completely disrupted the way governments are thinking about policy has changed dramatically. As an example, Germany, as you know, had decided some time back to wean itself from nuclear and coal power. So heavily relying on gas. It is impossible for them to not have an economy that runs on gas. About 50% of their households, 50% of their C&I run on gas. What they're going to have to do, and I'm sure you're aware of this to the news is they're going to have to find alternative suppliers of gas. What does that mean? Prices are likely going to be higher. What does that require? It requires more efficient technologies like Bloom fuel cells, particularly in a combined heat and power sort of system. The second thing is reliability and resiliency. Even a few months ago, before the Ukrainian crisis, you go talk to people in Europe about fuel cells. And we say, "Hey, we're a resilient, reliable power. Your grid goes down, we can -- we're always on, and we're therefore..." And they say, "We don't really have that problem in Europe." But now with the Ukrainian crisis, they're -- all of the solar and wind projects are being accelerated. And it's really -- customers are starting to say, "We don't really know if the past -- the future is going to be the same as the past because the grid now in terms of where the generation is happening is -- the scope of that is changing dramatically." And it's starting to put in a question mark is will we have resilient power off the grid going forward? The last thing I would say is that there is a number of places in Europe where Sharelynn talked about time to power. Where if you want to go put a data center in, as an example, Ireland, you might have a 3- to 7-year wait. And so they're -- we're having a number of those discussions throughout Europe or either because of lack of power generation or the -- because of distribution shortfalls, a Bloom solution looks extremely attractive. Let me tell you specifically what we are doing. So we got our first win in Italy in April of this year. It's a 1-megawatt system. That system is actually already in Italy and being set up. And we have a -- we're going to go through a trial period of 12 months with an opportunity to expand that to a 15-megawatt system, which would be a combined heat and power or a CHP system. We -- that's our first in Europe. We think there's a lot to follow. We're working with a partner in Italy that we think that like this customer is very interested in future-proofing their system as Snam looks to bring hydrogen into the region in this part of Italy. Let me talk a little bit about U.K. So we are working with Conrad Energy. We had an announcement probably the end of last year, where we're working with Conrad, who's interested in doing behind the meter, resilient energy solutions in the U.K. We are working on a number of deals, including Teledata that I think was mentioned in the announcement. They have -- Conrad has a broad portfolio of energy projects. And their interest is in also, including Bloom fuel cell platforms, for future future-proofing needs. Let me go back to Germany for a second. We've got a lot of activity going on in Germany. We've got an 18-megawatt project that we're working on. It's a data center project, CHP. Again, this is a grid access issue. It's really driving the value proposition, but our cost of electricity is very competitive with the grid. And then we are working also with a partner in Germany, where we're working on a number of smaller systems and similar to the system in Italy. These first phase systems, once we prove our performance in terms of efficiency and electricity output, we're going to be really well positioned for another 30 megawatts of power just for those 4 opportunities. In all of these markets, we are developing significant pipelines. And all of that, that I've talked about so far is SOFCs. As you're probably aware, that hydrogen is also top of mind in European countries. Spain is looking to be a hydrogen leader in Europe. We have a discussion underway with a partner to position ourselves in Spain. Policies like in the U.K., they just announced 2 months ago that they're upping their investment in hydrogen from 5 gigawatts to 10 gigawatts by 2030. So we're in discussions with potential partners in the U.K. Same goes in France and Germany. So a lot of activity. I'm extremely bullish on Europe. As KR said, I'm going to be moving there with my family. I can't wait to be back in the marketplace and be on the ground because I think it's really going to be a tremendous opportunity for us. So listen, thanks for listening. I think we're going to turn it over to Greg and the capacity and cost panel. Thanks, again. [Presentation]

This should be fun. Welcome to my world. Listen, let me start, Glen, with you. 2 years and 2 months ago, we were into a shelter in place here in this county, restrictions are easing, but there's still risks remain. We've been pretty clear with folks. We haven't missed a day of production through that period. Can you talk about how we've been able to achieve that?

Yes, sure. I was looking for some wood to touch whilst we're doing that. So yes, I'll put it under 3 things: people, process and execution and innovation. And some people may be surprised you're talking about innovation and how do you do the innovation. So let me talk to you about what really happened. Just over 2 years ago, the world changed on all of us. We thought things are going to get better and so on. We went -- as the world was going into lockdown in the Bay Area, we had a team here that overnight, they basically reimaged, reengineered whatever term you want to do, and redesigned our whole production process. Some of the guys that walked you around, [indiscernible], literally worked through with the group and the EH&S team. And so we redesigned our whole factory here so that there was no job required 2 people to be within 6 feet of each other. And so there was some heavy lifting stuff. We brought new equipment in and so on. And then we also restructured the whole factory flow so that no 2 people have to cross over each other as well. So that was -- and then we masked up straight away. So that enabled us to go into -- continue our 24/7 operation. But on top of that, at that time, at that stage, we are also reaching out and helping the local community. We believe in helping out others. So Joe Tavi was mentioned earlier on, also, at the same time, overnight set up a ventilator refurbishment program in partnership with Stanford as well. And as that work move forward, we actually also extended that partnership. I think KR picked up the phone to the head of Stanford. And we actually put on a laboratory, a testing laboratory was -- mobile and was put on to our site. So we were able to test everybody within hours, get results. And then maintain safety for our people, at the same time of restructuring and reengineering what we did as well. And that's enabled us to keep operating 24/7 throughout this whole area. But let me add something around what other things around the people. Some things you really learn a lot about people when you see them under pressure. And so the organization actually rose across the whole organization, rose to the occasion. And we actually looked at our employees. We're testing on site. And our culture is around trust and respect, you know as well. And so therefore, if people didn't feel well and felt they had symptoms, we would actually pay for them, they stayed at home. We would rather that they were safe. And so we made them to be safe. And then if anything happened with the testing, we could literally put protocols in place straight away, clean the factory and so on and isolate the issue. So those sort of things really helped, but also we're going to talk a little bit about the supply chain team, the miracles, the supply chain team have done under pressure. But I want to give you another example of something that we were able to do that don't think other companies are able to do because one of my other roles is head of service as well. And Satish talked a bit about -- well, didn't talk, he signaled, "Hey, I'm going to have a trouble with this part. I'm working what I can to try and get this part." We were able with our service organization who uses a portion of new parts to actually work with our engineering team and develop a new recovery process and refurbish parts. And we were able to put those refurbished parts into our service organization and reduce the demand that we needed on parts for service, which enabled us to meet our revenue goals as well. So being able to do that flexibility, reengineer, redesign and this sort of thing has enabled us to actually deliver and keep.

That's great. Thanks, Glen. Satish?

I love attention.

Yes. Toilet paper shortages, baby formula shortages. A lot of things have been in high demand. You've been able to supply the parts to keep the factories going over those 2-plus years. How?

Before we get to how, I really want to acknowledge my team. They have been phenomenal. Without them, all this would not be possible. I have no more hair to lose, so it's their turn now. So secondly, the cross-functional teams in Bloom, phenomenal support. And the last but not the least, the supply partners we have, without their support, we wouldn't have done what we have done. I think the -- what we did was a combination of being proactive and also being nimble and show some -- demonstrate some innovation during this process. I'll give you an example, when you order pizza, you get a pizza. But what you don't know is that pizza box needs to be made with a food-grade paper. So you forget about the pizza box. You say, why am I not getting my pizza. So what we did was when COVID started hitting, we went and mapped our entire supply chain, not just for the Tier 1 suppliers, but we went down to Tier 2 and Tier 3 suppliers, like the food-grade paper. So in our case, it was the resins that was used to make connectors. It was BracePaste that is used to brace our hot boxes. So we mapped the entire supply chain. We found out where the choke points were. Then we did something really creative. Bloom supports a lot of hospitals in the U.S. So we sent letters out to all our suppliers that we support emergency services, and they could use this letter to show their local governments because we had to secure supply. There were 2 parts to this problem. One is how do you make your suppliers produce parts. And the second one was how to bring the parts into the U.S. or where our manufacturing was. So this letter actually helped in many cases where our suppliers were able to keep their factories running, bring people in. Of course, they did testing, everything was done safely, but it did help quite a bit to us. Then the second part was to bring parts here. We did many things. Well, one of it was like -- courtesy, Narcos TV show. When Shenzhen was shutting down, we put parts on a truck and put it -- bought it into Hong Kong. The guy was just driving around in Hong Kong until we found a container to put those parts on and bring it into the U.S., right? So we actually changed our entire logistics footprint. There is something we call cross-docking. A lot of people don't use it in the modern day, which basically maps the ports in the U.S. for congestion and you find port where there is less congestion and you go dock your ships there. You pay a little bit extra, like what we did. Most of our parts come into -- for the Sunnyvale factories come into L.A. port or Oakland port, but then we crossed up it all the way in Baltimore and truck the parts from Baltimore here because Baltimore port didn't have a lot of congestion. So that was one innovation we demonstrated. Second is we created something called virtual hubs with help of FedEx and our logistics partners where we consolidate shipments from the same country. Normally, suppliers don't work together to put all their parts into one container to ship to the U.S. We enabled that by creating a virtual hub in Taiwan, in India and in Hong Kong, where we consolidated. So we had predictability of parts coming into the U.S. Then of course, we found a lot of alternate sources because Tier 2 and Tier 3, they're available if they're just not qualified. So we -- with the help of engineering team and cross-functional teams, we did qualify a lot of alternate materials. Now flip side of this is the electronic components. They're very standard. They're not unique to us. This is where I think my background in semiconductors helped where typically electronic components are spread around geographically. When you look at Germany, they are very strong in automobile. If you really want parts, automobile great parts, if you try to go find that in Southeast Asia, you usually don't find them. So we had boots on ground in Germany, in Belgrade to find -- source these parts because even the automobile guys who are struggling, they didn't have matching parts to make the cars. So they had excess parts of something which they couldn't use. So we approach these distributors in Europe to get those parts. We changed our BOM not to just buy from direct sources but also to buy from distribution and use them in our products. So it is a combination of all these strategies that actually helped. I'm proud of my team. We didn't have a single line stoppage for materials, touch wood.

I'd make 2 points to add to that. First is, it has come with some cost, those activities you have, and we've prioritized make -- keeping the factories open and meeting demand for our customers for that. So that has come at some cost. I think your team has done an amazing job offsetting that.

Thank you.

You've had the advantage. I think Rick refer -- Rick and I both referred to iridium and platinum. We don't have to source that. That's a precious metal, not a rare earth metal. So I just want to be clear on that.

[indiscernible] Great. Carl, KR referred to it, Rick referred to it. We've got an efficiency advantage not only in the electrolyzer but in our fuel cell -- hydrogen fuel cell as well. What do you guys thinking about what we could do with that efficiency benefit that we might not have talked about today?

Sure. So looking at those 2 products, particularly when you combine them together, you can yield a relatively high round-trip efficiency. And just to explain round-trip efficiency, in the energy world, think about it, a bank account. You put money in, you take money out, you earn a little interest. You get a little bit extra for storing your money there. Well, the parallel to that is energy storage, except there's kind of a negative twist to it where you put your energy in a bank, and when you take it out, it kind of costs you a little bit. Think about it as a negative interest checking account or savings account. Consequently, as the market looks at that, that amount of energy that is lost, that turns into an efficiency loss, and that's a round-trip efficiency. So as it relates to the energy storage market, currently today, energy storage is most predominantly with battery systems. Different sized battery systems, most of it for short-term storage duration, and that's an important note. However, because of our products and our platforms, it's becoming more and more apparent that hydrogen is going to be the next level of energy storage, particularly for long-term energy storage. And as you look at our different products, as everybody has pointed out, and Greg had just mentioned, as I look at the pathway for development of our solid oxide electrolyzer, because of that high temperature, and Rick spoke to this a little bit, there's a pathway for development, to get up into about the 87th percentile of efficiency for that electrolyzer. Conversely, as I take energy, hydrogen energy, in my SOFC and I convert that to usable energy, in a fuel cell, I can get up to 95% total efficiency out of the SOFC for hydrogen. Now when I take those 2 together and I put them in a round-trip sense, I get to about 82%. To start at 87%, I get 95% of that, about 82%. That's rivaling what battery storage is doing today, and you get the benefit of it being a long-term strategy. Conversely, if you go look at some of the other technologies that are out there, particularly as you talk about PEM, their round-trip efficiency is going to be about 35%, right? That means you have to pay 65% to get your money back. Only thing worse than that is my wife's perks because I still [ buy mine ]. So as I look forward into our platform, with a high temperature and our 2 main systems and there are similarities, long-term energy storage is the way to go for Bloom. We see it as a core market we can win in.

That's great. That's great. Thanks, Carl. Glen, back to you. You -- in one of your many duties, you run our service platform, and we committed to getting that to non-GAAP gross margin profitable. We've made a massive -- a significant improvement to it last year. We're targeting profitability this year. Talk to us about how.

Yes. Totally. Strangely enough, it's a bit of a familiar theme. People, process execution and innovation is the core things that we're driving. I'll split it up into around the cost reduction and then enablement of innovation to do that. So if we look at the cost reduction, I think many of you have got a chance to go around and look at the service, look inside, look at a fuel cell module, look about -- talk a little bit about how the replacement time 2 hours to get it sort of in and out and make a replacement. When we take that unit out, we take it back to our repair and overhaul. So we have complete ownership of all of those units, and we do. Every single one is refurbished, and we recover about 97%, either refurbishment or reuse, 97% of the fuel cell much. And so -- which we recover a lot of the parts. An example, when you saw -- you looked at stacks and you looked at columns and you see the ceramics down the side, we recover pretty much 100% in the ceramics that are put into a fuel cell. If you look at the stacks that you saw, we actually separate those stacks, recover the electrolyte. Those ICs go through the same line out there and then they come back off, and then they go back in at a lower cost for us because we're not paying for the core IC, just a recovery cost. And then it's back into a hot box. So we put out a new hot -- we can take the hot box out of the field, turn it around in 3 weeks, restore a full 5 years plus of life, and that's 60% of the cost made over a new one. And we're constantly innovating and driving those improvements. So that's one thing that's keeping us in. Last quarter alone, we reduced the price of a refurb unit by 2.9%, the last quarter. So though there's still headwinds, still there on the new parts and is causing us a difficulty in keeping our nose forward, we are still able to drive the cost down to meet the goals. The second part that really, really drives a big difference when -- is innovation that we have. So I'll talk a little bit about my previous career. I was the Head of Global Engineering for Hewlett-Packard, and I was also the Chief Quality Officer of Hewlett-Packard. So my whole time, I supported every single business unit that was in the company. I never had access to the data and information that we do in Bloom, not even close. Even if you go to the data center area, stuff like that, incredible data and information that we've got, the instrumentation that's been put into the systems. And then the other beauty is being integrated into the company, I can bug the c*** out of Carl and his team and so on around how can we look at innovation. So not only have we got an innovative product, we've got innovation through everything that we do, throughout the whole company. I told you a little bit about manufacturing, but let me talk to you a little bit about service. We created a team that -- we've got a great design, design goes in the field. But those 700 sites that are out there, all those services are out there, we're capturing data back from them real time. And so we're able to determine how to operate our equipment and optimize its performance in the field on an ongoing basis. And it's very interesting because the bigger we get, the faster we learn. You think it will be a reverse when you see larger and larger companies because we've got more of an installed base, I'm giving more information back. I'm learning more about how to manage their systems and operate the systems. So in conjunction with Carl and his team, we've found ways with our existing design to get more power out of them and to get more life of them. So we've taken the inherent design and driving controls, the way we manage fuel, the way we manage temperature, the way we manage current, et cetera, to get more life out, which means I replace less of them, which means its cost goes down on that alone. If you put all that together, that really is an end-to-end system that we have. Well, it's enabling me to keep on track and make my commitment to it.

Great. Satish, just quickly, we talked a little bit about the past. How are you positioning your organization to support the future? The growth rates we've talked about, international, here, et cetera, how are you thinking about that?

I think kind of our approach is 3-pronged. One is grow the existing supply base, right? We have significant growth trajectory in front of us. We have talked to majority of our key suppliers, and they are investing significant amounts of money to increase the capacity. Secondly, post -- during COVID, one of the proactive measures we did was we -- when countries were shutting down, we issued a lot of risk by authorization to most of our suppliers to buy the raw materials in bulk. As they say, every challenge is an opportunity. What we found was if we can go directly to the mills, we can get preferential pricing and allocation. In the past, our volumes were not so big. Now, with these volumes, we have their mind share. We are in a much, much stronger position to negotiate better raw material pricing. So we are going to start contracts, long-term supply contracts with our raw material suppliers. And the last but not the least is we have to look at our supply chain footprint optimization going forward. Building a port in the U.S. and shipping all the way to Europe when the volumes are low probably makes sense. But if we have to, if the European market grows quite big, we probably will look at some joint ventures with some of our supply partners who already have infrastructure there. This is, again, scope expansion. It's motivation for them to grow with the company and also helps us to use our cash position better. So it's all these 3 strategies, Greg, that we're going to use to scale and support the growth.

Great. We're going to need all the help, got big growth numbers. As I think what you heard today is that we've got a team here that is executing and continues to execute. We've got technology differentiation that we haven't yet even applied. And we have the opportunity to drive profitable growth. What I want you to take most from this discussion, why we had this roundtable, is these gentlemen lead teams of equal caliber, great caliber, in order to help the company grow. And I just want to give you a sense of their great leadership skills and their command in further areas. So thank you all.

Thank you, all. It was a pleasure.

Thank you.

So I think we're going to move on to Q&A now. So I'm going to ask Sharelynn and KR to come up, and then we'll have some microphones in the room. As we get that all set up, a couple of you asked me last night, what would be the takeaways, right? What would I write if I were you? And hopefully, what you took away from this, as I straighten that pant leg out is, first, is we have a mature technology with high barriers of entry. Solid oxide is differentiated, and we have a head start against others with this technology, and nobody operates at the scale we do. We have multiple pathways for growth by leveraging the core platform. You saw the stack bar that we had. Who knows how that's going to play out? I'm very confident in the trajectory. Different applications will come in at different points, and that's important for us. We are gaining velocity and have velocity around our capacity and cost and continue to drive that through the company. We think that's incredibly important. And then lastly, KR and I use this word a lot, inflection point. The company is at an inflection point. We were moving into profitability, and we're moving into cash generation, and that's differentiating the company going forward. So those would be, hopefully, the 4 highlights that we've shown to you. And if we haven't, we invite you to ask those questions to us if we haven't convinced you that through the next period. So we've got some time for Q&A. You guys can queue up -- just queue up at the mics. Go ahead, Joe. Yes. As you're getting -- Julien's getting to the mic, Rick, you -- a little press release this morning. Can you give us the 2-minute what that was?

I think Rick -- Rick should come up here.

Come on up.

Sure. And in respect of our announcement on LSB this morning, we've been working with LSB. I guess I got here in January. We started engaging with them in February. I'm incredibly bullish, as I mentioned during the presentation, about the integration of our platform with ammonia producers just because of how ammonia is made. And I also am very bullish personally, and maybe I bored some of you to death with this at dinner last night, but ammonia is the fuel of the future and low-carbon ammonia is fuel the future, and Bloom has the platform to do that. LSB is a well-known producer of ammonia and ammonia derivatives, urea, urea ammonium nitrate, principally used for fertilizers, although they do have some industrial customers. And LSB, like many of the ammonia producers, and you can go look and read announcements, the market leaders like Yara, CF Industries, Nutrien are all making aggressive moves now in the area of decarbonizing their operations. LSB are on that same journey and have selected Bloom, and they're also going to, in parallel, evaluate another technology. We welcome that. We're going to be side by side and let the efficiency show itself. And LSB have shared, in addition to their carbon capture project that they're doing in another one of their facilities, they do have very large scale ambitions in continued decarbonization and other projects. So we're very excited that the application, it's a strong fit for our platform, and we think that Ammonia, Inc. will be watching what we're doing.

Great. Thanks. Julien?

Congratulations again, guys. Thank you for the time. Appreciate it. Rick, let me focus the questions since you just had the mic there a second ago. So congratulations again on joining the team. It seems like a great win. I'd be curious if you could expand on your targets, where you talk about a sort of a handful this year maybe. Obviously, kudos just now. Let's talk about how you scale that, right? So what does that large-scale order look like in '23 that you alluded to momentarily ago, right? Who are those customers? What are they looking to prove out? Why are they waiting to the back up of '23? Is it simply operational hours, or is there something about the technology that they're looking for? And then in tandem, large-scale orders, 100 megawatts apiece? I mean what is large scale to you? And if I could throw one cherry on top, how do you think about that translating into revenues? Is that like typical backlog where that '23 orders fits into your '24 target?

Julien, you're the master at run-on questions.

You only had 1 question, but it's in 17 parts. So let me try and unpack that. And if I missed some things, I'm sure you'll remind me that I missed a few. So with the background that I bring to Bloom, what I would say is that knowing how the industry that processes hydrogen uses hydrogen to make something, operates. I mean Neom's in the public space. Neom's been in development for 4 or 5 years. Those decisions take a long time. When I came...

And how much longer before Neom's up and running?

Well, Neom won't be running until -- I can say what's publicly known, right? So 2025, 2026. These are very, very large projects. These are mega projects. And I think to affect the energy transition, maybe I'll tackle one of the middle parts of your question. What do I see as a large order? There are going to be more Neoms, right? And it's not just going to be done by the industrial gas industry. The business model we are mindfully choosing to take with respect to hydrogen, and we're sitting here in California, I'll use the California analogy, right, is that we want to make the best shovels to support the gold rush, right? The guy that sold shovels or the lady that sold shovels for the gold rush did really well. Some of the miners did really well, many of them didn't. So we are taking a tact of building the most competitive, the most efficient technology, making that available for everyone. Because there are many companies that are very well-capitalized with decades of experience in producing hydrogen, we don't want to compete with them. There are also many companies and there are little companies you might have heard of, right, like Aramco and ExxonMobil, little people like that, they view hydrogen not just as their entitlement, because of their production and use of hydrogen in the refining sector, but also probably key to their future survival as we transition into a clean energy environment. And look, we don't want to compete with them either, right? So our business model with respect to hydrogen is we're going to sell equipment. We're not going to sell molecules, and then we're going to be there to service the equipment, provide replacement stacks, et cetera. I think in 2023, I see a large order is a couple of hundred megawatts, right? I mean, that's what we're fishing for, right? This is a big game.

And maybe expand a little bit on -- I think what I heard you say, Julien, is what is -- why are you doing the small scale first? Why is that a step before we get to large-scale orders? Which is really a good and important question.

Super question, and thank you for bringing me back to that. So I joined Bloom at the beginning of this calendar year. And when I was having the discussions with Sharelynn and KR and all the great leadership that you had a chance to meet here today, it reversed my position because as a long-term, efficient auto of hydrogen and developer of hydrogen projects, I always looked at electrolysis as, geez, solid oxide is going to be the killer app, the game-changing technology, but it's 5 to 10 years away. That was my view, and look, I bring a bias of selling steam reformers for my entire life pretty much. And then I came to Bloom and then I spent some time with KR. I went to the factory, I looked at the installed base. I came to understand the platform and how Bloom has gone through 15 to 20 years of an awful lot of hard work, and people with scars on their hands from figuring out how to make the stack cost competitive, how to make the stacks live longer, how to make the architecture resilient. And that convinced me, knowing what I know about hydrogen, that with the future fuels that we're all going to need that are 0 carbon or very low carbon and the way that those fuels are synthesized, we have the killer app. We're going to win. So I mean, I see 2023, we're going to take some orders. And then -- I mean, said simply, we're also hedged, right? We talked about this from marine, and Tim talked about this a little around marine. So we have a marine platform that's LNG based, natural gas based. If that becomes hydrogen, it's drop-in replacement. If that becomes ammonia, the most efficient way to make ammonia is our technology. There's a natural hedge. If it becomes methanol, the most efficient way to make methanol is with our technology for the hydrogen and capturing carbon off the back of a fuel cell to make 0 carbon methanol.

Green steel, green steel.

Yes, precisely.

Yes, right. So you just take the same hydrogen, if you can produce the world's earliest green steel that the boutique producers can build out of green steel and sell at a premium, there's a market model. We go after models where in the market, you can capture value, you can offer value and you can do it at scale. Anything else, that's how we let somebody else do it.

Yes. And then maybe one more just spur of thought. Why do we like renewable fuels? Why do we like SAF and why do we like renewable diesel? If you run barrels of renewable diesel compared to running barrel of conventional distillate from crude, hydrogen intensity renewable diesel is 3 times. You need 3x as much hydrogen per barrel. And that product is traded on its carbon intensity, so we enable the lowest carbon intensity, and wow, they need a lot more hydrogen. So these future fuels are markets that we love, and we have a natural fit for it.

So just -- we'll get back to Julien and get him to ask another question. But if you have a question, there's mics across the room. Feel free to line up or wrestle it away from Julien here.

So KR, super quick question, if I may. Just back to Greg here, super quick. You talk about gross margins. You talk about back half of this year. It seems like that's continuing to improve sequentially. This building is going to be in service. That's going to roll into '23. Your guidance seems to imply mid to upper 20s. Your target for 2025 is reaching 30% gross margin. As I think about it, there's not as much of a gap there anymore if you're going to continue sequentially improving into '23. How do you think about that setup in the gap there?

So I would say that the momentum we will continue to have with our growth rates and margins as we move to 2025, you can see that moving sequentially each year. Within any current year or current quarter, you do have seasonality. And the other thing that you're going to have is we're going to get this line that you all walk today, installed and up and going by the end of the year. We have 2 more lines to go, so one should not expect that this won't repeat again where we have tooling online that's not 100% efficient. So we may go up, get to our 24% this year, target that to be up higher as we move to 30% by 2025. You may see a similar phenomenon within that quarter as we double our production value again, and we continue to move forward with that. So on a quarter-to-quarter basis, it may look a little bit different. But you're right, we are going to sequentially continue to grow towards the targets that we have on an annual basis.

And I think so far, the cyclicality of the business, you can clearly see the first half is not as strong as the second half, but overall, we put the numbers. And we would love to change it. We will work to change it, but that's the nature of our business, for example.

Similarly, the orders fall. Let me take one of the ones we received beforehand. It was actually to me. Can you give some examples of what you intend to do to simplify your financial reporting? I get this asked a few times. And we talked a little bit about it at our annual meeting a little while ago. What complicates, in a way, our financials is the customer financings, and we dedicate a lot of that into our Qs and Ks to make people sure -- people understand how that goes through. We also have a bit of a complication in that we used PPA structures traditionally. In some of those PPA structures early in our career, early in our life, required some amount of equity support from the company, so they're consolidated. And that's how you end up with unrestricted -- restricted cash, and that's how you end up with nonrecourse debt. One of the things that we are endeavoring to do, and if you saw it in our Q is, we bought back one of the old PPAs, so we call it PPA 3 in our financials. We are in the process of taking that entity and selling that entity. And what that's going to do is result in about $38 million of that nonrecourse debt moving off of our balance sheet, so that's one less thing we would ask you to back out of your models going forward. In doing that as well, we're going to sell that to a customer that's going to line up well with the repowerings I talked about. In the last quarter, I talked about mix. That will be about 5% of our volume that we can sell new units into that old existing PPA and repowering. It's a nice economic transaction for the company -- for the purchaser. It is going to result in a noncash charge within the quarter, call it, $40 million. It will not impact our reported gross margins or operating margins, but just want to give you that as we go through it. And then we have 2 more that we'll endeavor to look at in the future of doing similar things just to simplify our balance sheet and make -- when you look at our debt number, you know that's the debt of Bloom, not some old VIE that's existing that's secured by the assets someplace else. What other questions? Please, [ Leo ]?

I guess I'll stand here for this one. So maybe just to follow up a little bit on margins. You guys clearly talked about, Greg, I think I heard you mention the second quarter margins to be pretty similar the first quarter. Obviously, first quarter was a fair bit weaker than it was last year. I'm assuming some of this is some seasonality in the business, but also just some of the supply chain issues with the higher costs on your products here. So I guess what I'm really getting at here is, you talked about a changing revenue mix in the second half starting to help your margin. But presumably, some of these supply chain issues are going to push into the second half. It seems like there could be a potential challenge on the positive cash flow target of some of these costs for some of the products you're buying stay high during the second half.

Yes, yes. And it clearly -- that was what took us off our numbers last year. Listen, in the early part of the year, our margins are pressurized not by sale price. We are selling at the same selling price that we sold on average last year. Historically, there's volatility in our margins. In the first quarter of 2021, we had 30% non-GAAP gross margins. In the second quarter, we had 18%. It's part of the things as we move ourselves towards scale, any mix of particular deals or costs within the quarter so it can create some volatility. What's going to help our margins as we move from the first half to the second half really isn't selling price at all, it's really going to be around us generating a lot more output in the second half in getting all the cost that we've been building into this building allocated to a lot more units and taking our unit cost down. I would say any supply chain pressure to date, we've kept our cost, and material costs are about 75% of our product cost. We've kept that relatively flat over the last 4 or 5 quarters. And that's not -- and that's done -- Satish's team is doing a great job and the engineering team of coming off offsets to the inflationary pressure -- to the pressure. As we go into the second half, if that creates some additional pressure, we'll continue to look for ways to offset that. One of the things that we talked about with the repowering, we mixed -- we gave ourselves a little bit of better mix within 2022 with that, and again, it's less than 5% of our overall acceptances. That's going to handle a little bit of that cost pressure that you talked about. We think that maintains us on our 24% non-GAAP gross margin target for the year, and we think we accelerate from that point on. I mean you can see it here, right? The equipment here is not running as efficiently yet. It will be running much more efficiently in the second half. Sure. Next question. Yes. Can I ask you to take the mic? Yes, please.

Thank you. Really amazing day. I wanted to ask, Greg, you speak a lot about working the inflation through the cost side. But can you do something on the revenue side? Because inflation isn't just component cost, it's also labor, cost escalating and whatnot.

Yes. So we have a $2 billion backlog, right, and -- on product, and that is -- those prices are locked in. I would say, and I'll actually turn this over to Sharelynn on the time to power and what your team and Billy's team is seeing around that from a pricing power standpoint as we move forward.

Well, one of the things that's implied in the move from when I talked about the pivot from a state-based strategy to value selling is we genuinely can price to value for our customers. And the reality of it is resiliency and predictability and sustainability drive more value. Stated another way, we're not competing at the lowest cost to the extent we were in the past. So time to power is a great example. We will never price gouge. We will never look to capitalize on a bad situation that -- would never allow that to happen, would you, KR? But we certainly don't get pulled to the bottom in those situations. So it does dovetail together. We certainly see over a long term that our best margin improvement does come from our cost down, but we also don't see this dramatic cliff of pulling -- being pulled down based on price.

So I think if you just combine the two, you're getting your answer, Ameet, is, look, the first and foremost thing is -- the good news about this company, as you all see it, is there's a $2 billion backlog out there that we're building to, right? It's a long cycle to sell. And how many companies can say, we know where we're going to put our units for the next 1.5 years? Whatever it is, that's a great thing to have. The bad thing about it is you can't renegotiate pricing like in your gas pump. By the hour, you can't change the dialogue how much you're going to charge by the gallon, right? So that's your issue that you have. However, the dynamics of value creation for us are the 3 analogs that Sharelynn talked about again, right? There, clearly, the alternative that the customer has is marching up. So any opportunity we have to sell, especially time to power when somebody is struggling for it, gives us margin expansion opportunity, right? And for this company, for the foreseeable future, we don't have to think about price suppression as time goes on. That's a great benefit.

Yes. Sure. Noel?

It's Noel Parks from Tuohy Brothers. In the first part of the tour, where we got to see inside the box, that was really informative. I was wondering, could you just highlight which of the technology that we saw is specifically proprietary to Bloom? I think as an example, in the past, you talked about your thermal management technology being proprietary, for example.

So that's a great question. Let me address this in the following way, okay? When we started Bloom initially, the Head of IP for Intel who had retired became our consultant to strategize the IP strategy. So we broke it down into 3 parts. Anything that people once they see can write -- just copy it, write their own invention disclosure and put it out. If we didn't do it and they did it and they put a patent, that's a blocking on us. So for defensive purposes, we put patents out on things of that nature. That's a few hundred -- Shawn, how many patents do we have? 362 patents, many more filed, okay, to be issued. The next part is Coke is able to do what it do -- what it does because of process secrets, trade secrets. There are hundreds of trade secrets through this entire process. They're balkanized. They've kept in very different ways. If I told you, you're either a dead person or you're working at Bloom and you've signed the confidentiality. There are only 2 kinds of people that know that, right? So that's that second part. And the third part comes from when you take wet chemistry, you take solid-state mechanics, you take all these moving parts, you need to operate them in the field in various ways, the know-how. The know-how in each of these steps, hundreds and hundreds of them. That combination of these 3 things pervade all the way from the raw material in the ceramic to the metal plate, all the way to how we manage the system in the field with everything in between. So the secrets are all over the place. So if somebody, God forbid, got their hands on our system, reengineering it, if they were smart enough to do that, they should be doing something else.

Thank, Noel. Good. Questions? Yes, come on up.

Great. Maybe first question for Greg. Can you think about, as you're expanding and growing over the next 10 years, what like a good capital cost, CapEx, that the number might end up being for that type of expansion? Just as a rule of thumb as a percentage of revenues or something like that for us to think about cash needs?

Yes. The easiest way for me to think about it is a gigawatt of capacity costs about $200 million, and we're going to grow 8 to 10 gigawatts over that decade -- over the next decade. So how that comes in, and you can break that out over the course of the years.

Great. And then maybe just a question on hydrogen. Thinking first about the electrolyzer, thinking about pricing and talking about pricing to value. So I think the thought process is that because of the efficiency, there's a little headroom on the capital cost. When you think about pricing then, are you keeping that in mind when we're seeing in the market PEM electrolyzers, I guess, selling at $500 a kilowatt, you can go for a higher price than that? Is that kind of what's the driver here? And is there a kind of adequate headroom as you're seeing what the market is selling right now?

Rick, do you want me to start and then you can...

Yes, if you want to. Absolutely.

So every study, whether it's a McKinsey study, whether it's a DOE study, whether it's our own studies, at scale with hydrogen, which is when it matters, large, large deployments. We don't think of hydrogen as small deployments, right? Refinery, scale, hydrogen cloud. This is how we think about our system that you saw, right? More than 80%, somewhere in the 80% range is energy input costs, okay? Let's take a simple math of saying we are 30% better in energy efficiency coming in on that 80% cost. 80 times 0.3, that's 2.4. Let our competition provide those boxes for free, we still win. So they should be buying from us because we have a better mousetrap, right?

And I think, as a lifelong seller of hydrogen, every time you go and gauge a prospect and you talk to them about, okay, what it is they need it for, what volume, what pressure, blah, blah, blah, before you give them a proposal, always the next thing you look at is, well, what's the next best alternative, right? And you let that really foundationally shape your thinking. And I think that the job that supply chain is doing, engineering is doing, manufacturing is doing, taking cost out, with time, as we continue to drive cost out of the base platform, that's going to result in more margin in our pocket, right? So compete and win on our efficiency, grow margin with cost down.

And I don't think anyone that's looking at doing these projects isn't looking equally at the CapEx as they do the OpEx.

Yes, right.

So we build those models day in, day out and provide that in. And no, $500 an electrolyzer by competitors does not scare us to the point that...

Absolutely doesn't scare us. Because it's -- hydrogen, the procurer of hydrogen is buying a commodity. They shouldn't care about the little bits and what they cost, they should care about the cost per kilogram of hydrogen. We can compete with anybody even with our current price structure, let alone where our cost structure will go down in the future.

Great. And maybe last one, if I could add. You've given kind of split the long-term view of the company. And thinking about how much focus really is on hydrogen, Rick, you probably think of this even more. But why -- how do you think about those relative splits, and hydrogen might be bigger than power gen? I just think about kind of these long projections about this, and why wouldn't hydrogen be a bigger split than power gen, for example?

Well, I will say -- I will start with this. So if you just look at the sizes of the markets we're playing in, we see by 2026 power generation 2x to 3x the size of the business it is today, and that is the company today, power generation. By 2031, we're projecting that 10x the size of what it is today. So we took a conservative view at that market. And in our model today, it is bigger than our net 0 businesses. That said, when I say -- you know what, there's a lot more accelerators and policy outliers that aren't factored in. We absolutely can see hockey stick differences. But what we love about our model is we'll win either way because if you look at the world's quest to decarbonization out to 2050, it's really just a mix of how you get there. And whether you're offsetting more coal with natural gas, we win on power gen or whether you accelerate to decarbonization via carbon capture or green hydrogen, we win. Whether you see a lot more blue hydrogen, we'll play there, too. So for us, there's a built-in hedge. So yes, right now, our model is bigger in power gen out to 2031. But it wouldn't surprise any of us if the mix and how we get there doesn't change.

Alex, also, having walked the line, I think this should be a lot more clearer, right? That line you see behind you printing cells, that line doesn't care on any shift, whether it's building fuel cells or electrolyzer cells. Our supply chain team doesn't care whether we're doing this or that because they're buying the same substrate, the same boxes, the same factories. Every megawatt of fuel cell is the equivalent of 2.4 megawatts of electrolyzers, just the nameplate, okay? Little changes here and there. So think of this being an automotive line and it being a flexible automotive line that can produce SUVs, it can produce trucks. Depending on what that order book is, it's going to flow the right number of parts. That's the way we think about it. We are supplying the shovels. We are supplying shovels for power production. We are supplying shovels for hydrogen production. You tell us what color shovels you want, we'll ship it to you. So to some extent, of all the energy companies that are out there, we are agnostic and we like both. You just tell us what you want, that's what we're going to give you. We are taking the market risk out of our investments.

Thanks, Alex. Probably have time for one more question. Please.

Thanks for having us. When you talk about efficiency and relative to the competition, I get confused sometimes between like the PEM and SOFC stationery mobile. And then it's not necessarily on yours, but like what is -- are you talking about something that's operating at peak capacity on your equipment? And then you kind of have to make an assumption about how the customer would use a PEM electrical -- or fuel cell.

Yes. For electrolyzers or fuel cells or for either?

I was thinking fuel cells, but how it's different for...

Okay. I might give that one to KR.

So when you look at fuel cells, it's a baseload power generator, right? Baseload power generation, average life over the entire life of the contract, that's what generates megawatt hours. At the end of the day, the customer is not buying a fuel cell, they're not buying a technology, they're buying megawatt hours. So those many megawatt hours, how much fuel does it take to give at the meter those many megawatt hours? That's the true efficiency because one is value, the other one is cost to produce that value. You put one on the numerator, you put one on the denominator, that is all in efficiency. That's also cash efficiency. That's the way we show our numbers. If you want to exactly know the lower heating value of the fuel is what we take, the power as it comes into your socket, not generated miles away, is the other number. So this is about as real as it gets. That's our efficiency. When we compare it to anybody else, that's the exact same efficiency we use.

Great. Thanks, [ Eugene ]. Hey, listen. I hope you guys had as much fun as we had last night and today. We really enjoyed it. I know this is a big time commitment, and we thank you for your time, especially for that in travel, and we thank you for your interest in Bloom. And we appreciated everybody's great questions today. We had a ball, so thank you.

Yes. It just occurred to me, as we're sitting here, so that's why it was not on the script. You all started off the morning marveling at the technology, looking at what's feasible, the innovation. As you leave this afternoon, I hope you appreciate the people behind it. Nothing here happens without our great employees, without our great leadership. At the end of the day, somebody asked us about what is our secret, what's our trade secret. All those, yes, but our real secret is our team, and they're amazing. So thank you all.