Bloom Energy Corporation (BE) Earnings Call Transcript & Summary

Welcome everyone to Bloom Energy's 2023 Investor Conference. Before we begin, please note our safe harbor notice on the screen. Our presentations today and our answers to your questions may contain forward-looking statements, including expectations, projections and other potential future events. Our actual results may vary and may differ materially from these forward-looking statements, and we undertake no obligation to update them after today. Please refer to the company's annual report on Form 10-K and recent 10-Q filings for more information on factors that can impact our business. Now let's start today's presentations. Please welcome Bloom Energy Founder, Chairman and CEO, K.R. Sridhar to the stage.

Good afternoon to all of you gathered here at the New York Stock Exchange and a good day to all of you joining us by live stream. So much has changed in the energy world since I was last here in this building to ring the bell almost 5 years ago. That got me thinking. Some people try to predict the future, some attempt to invent the future. Very few predict and then embark on a journey to invent the future. Of those very few, a very tiny fraction actually successfully predict and invent the future. I'm proud to stand here in front of you and say, a company that we founded 20 years ago, Bloom Energy has successfully predicted and invented the future of energy. So our thesis was the following: we said the future of energy, and this is in 2001, distributed on-site generation of electricity will be a key part of the energy transformation. Reliability and resiliency of electricity will command a premium in a 24/7 digital world. We said energy security, energy access and clean energy will become major global needs. So based on this thesis, we dedicated ourselves to creating a solution that would perfectly be suited for a world where our predictions will ring true. A box that would provide clean, reliable on-site energy with multiple and flexible inputs. Multiple and flexible outputs. Obviously, no single product could do the job of this magic box. It would require a platform that had multifunctional capability. We had to create the equivalent of an Intel Microchip. For the energy world, a versatile device that could be adopted for multiple users with relative ease. Today, we all understand the power of the platform, the smartphone. And guess what? I didn't refer to that when I was talking about starting the company because if you all remember, when we started the company, the smartphone did not exist. The Intel platform, so the platform technology and the power of the platform and that journey. So make no mistake, no one in the world had or since has built a platform technology for energy. But that is what we set out to do, innovate and commercialize an energy platform. This is the genesis of our Power of And, a philosophy that's pervasive in our Bloom culture. That And is in our DNA. Foundational to our platform is solid oxide technology. A technology that large multinationals and national labs across the world have worked on for a large part of the last century and try to make successful without any luck. The science itself was discovered in the 1800s, late 1800s. So I think we can forgive the pundits. When they said when we started this technology will not work. And if the technology works, it will not be durable. And if it became durable, it can't be scaled up. And if it is scaled up, it will be too expensive and we cannot sell. And if it's sold, it will not be profitable. Luckily for us, we didn't get those memos from the pundits. As pioneers, we didn't have maps nor could anybody else give us maps. We had the focus, we persevered. We discovered, we invented, and we innovated our way out of many a hurdle. And while we were doing that, something else interesting happened in the world. Our predictions of where the future of energy will go have all now come true. And the world has arrived at a place where the energy attributes that we predicted 20 years ago are indeed the solutions the world says they need today. So they are -- it needs to be reliable and resilient. It needs to be sustainable and secure. It needs to be accessible and affordable. So the world agrees today that our past energy predictions are right now. And the time to transition is right now. To meet those energy needs, our platform solution is right now. And in deploying it -- and we are deploying that solution at scale right now. That confluence of all these forces is creating a special inflection for our company, a new chapter, and we call this Bloom 2.0. So we now have two product lines using the same single platform. Both are based on our solid oxide platform technology. Our Bloom Energy Servers convert fuel to electricity using the SOFC or the product line that you're familiar as our fuel cells Bloom Energy Servers. That's one product like, same Bloom Energy server. We also take the electricity and convert that to hydrogen using SOEC or solid oxide electrolyzer cells using the same Bloom Energy server. What do they have in common? That Power of And using the solid oxide technology. And we lovingly call it the, soxy. It is the X factor for our company. what's there not to love about soxy, right? So with the same underlying technology, know-how, supply chain, manufacturing equipment and field deployment. We at Bloom Energy make better electricity that will be clean, accessible and always on. And bottled energy. Yes, bottled energy because mother nature gives you that energy when she wants and where she wants. And humans want our energy whenever we want, wherever we want. So we need to be able to bottle up that energy and be able to do that. So what does the switch to 2.0 mean for us? So it means zero change in our choice of technology. everything we have learned in the last 15 years, the millions of digital twins from which we get billions of data every single day applies from our fuel cell to our electrolyzers. We have zero concern about our relevance, our relevance during the transition, however, short or long it is to provide resiliency and our relevance in a fully decarbonized energy world with our hydrogen products. What does it mean for our customers? It means zero delays in getting power. You don't have to call the utility and figure out how many years or decades it's going to be before you get your next shot of juice. Zero outages, no matter what's happening in the world in terms of natural disasters. And zero obsolescence risk and zero transition timing risk because of taking away that obsolescence risk. So that's the 2, the two product lines, and that's the 0, 2.0 Okay. How does all this translate to the two metrics that matter to you all, our investors, growth and profitability. Just like our technology and product lines, we are building a business that is reliable, that is resilient, and that's predictable. We are executing to a business plan that has robust future growth and profits. We are diversifying both our product lines and the market sectors and the geographies where we serve. You will hear a lot more about this from Greg and our team in the next few minutes. For now, let me take a few minutes to provide you with some predictions of where the future is going to go from here to where it's going to go. And hopefully, we have some credibility having predicted that 20 years ago. Number one, the world is on a trajectory to exceed the 1.5 degree warming threshold by the end of this decade. Doesn't matter what we do. What does that mean? Natural disasters caused by climate are going to be more severe. They're going to be more frequent, they're going to last longer in duration, and they're going to create more damage than we have seen so far. The grid is completely incapable of handling this. Critical infrastructure and communities are going to rely on on-site power and microgrids to secure people and property. Dirty backup diesels, cannot operate for long periods of time under this scenario and our systems operating in microgrids, have proven track record of operating through floods, hurricanes, wildfires, extreme heat and even earthquakes. Number two, the 1.5 degree will overshoot and then the world will fast-track the need to remove that carbon dioxide out of the atmosphere and sequester it. Carbon capture and sequestration will become extremely important for the world to bring that to where it needs to. And we have a unique technology, where concentrated carbon dioxide comes out in our tail pipes, and we see this as a tremendous opportunity. and it will accelerate because of that future happening. In our plans, we have modest numbers for CCS right now, potential for huge opportunities in large scale there, should companies and nations work with us on the sequestration part. We are ready with our technology. Number three, just in the last year, we have seen more and more the weaponization of energy and the impact it has on energy security for regions like the European Union as well as Asia. Those nations looking to go to an energy transition are going to speed up. And I think we are going to see our global business in these areas grow very robustly because of that. Number four, if you look at the demonstration of our large-scale electrolyzer, we got exciting stuff to show you. And you look at, again, the energy security, the lack of energy fuel access and the price volatility. More and more nations are going to push for hydrogen. And you can already see that trend based on the incentives that various regions are offering for hydrogen. We are just beginning to see the start of this hydrogen revolution that's only going to speed up as we go, and we are super excited about that. Electrification of transportation again, offers a phenomenal opportunity for us because we can be providing the power for the charging stations in the most efficient manner, right where you need it, reliably and resiliently. And then if we just look at one area that's very dear to me. Most of the energy need is going to come from the emerging nations. That's where energy growth is going to be. And I believe the future of energy is one of energy abundance, one of energy affordability and one of energy sustainability. It's an and, and, end. And our technologies becoming the baseload for a micro grid with all the other technologies combined together. The abundance of renewable power, the abundance of baseload bloom, the abundance of hydrogen, all this is going to create for the emerging economies and opportunity to bloom their nations sustainably and securely. Given all this, there's plenty of opportunity for growth. Now let me go from the 2 growth to the second one, profitability. The power we generate is reliable and clean and can be deployed very quickly and rapidly in places where the grid cannot provide power. These attributes allow us to command a premium on our grid power, number one. Number two, the cost of the grid is going up, grid power is going up. Why? Transmission and distribution costs are becoming the dominant part of the total electricity cost. And that transmission distribution cost is steeply increasing as we put more renewable intermittence into the grid. And every time the grid has more rinse and repeat emergency repairs that are done after every single climate cost natural disaster. While our competition, the grid is becoming more expensive. -- our product costs are coming down and therein comes the profits. So you got those two. And now the question is, what is the 0. Than it? But what is the 0 for you. Hold that thought for a second. Before that, if you sense confidence about Bloom's future and my voice. It is real. It is real because this confidence is based on where I see the future going in energy, about the opportunity for growth and about the opportunity for commanding a price and a profit. It bodes well for us to meet our growth plans and our margin plans that Greg is going to talk to you about. But several of these scenarios that I've talked to you can create -- can very well create opportunities for us to be more aggressive with our growth than what's in our current plan. Should that happen, I want you to know, we are ready and able and nimble to seize those opportunities as they present themselves to us. Okay. So how about the 0. You got the 2, growth and profitability, how about the 0. After the team finishes, you all have zero excuses. zero excuses do not make Bloom your top pick for an energy company and double down on your investments okay? That's the 0 for you. So with all these tailwinds in the market, and with the rapid maturing platform, I'm convinced that the vision we painted in the year 2000 will come into focus and become a huge reality in the 2020s this is our decade. I'm so excited that we will build this company into a dominant, high-growth high profitable energy solutions provider for the world. Thank you.

And now Greg Cameron, President and Chief Financial Officer.

Good afternoon. Welcome. It's great to be together for our third investor conference. We have over 70 people here in attendance and hundreds more streaming this event online. Thank you for your interest and support of our company. Today, we'll share how Bloom is uniquely positioned to be an energy leader in the transition to Net Zero. You'll hear about our superior technology platform, the robustness of our operations, our ability to scale and how we deliver profitable growth. As K.R. just laid out, the mission of Bloom has remained constant since our founding. The company was designed and developed to beat this moment. He said, this is our time. We have the solutions, the maturity, the manufacturing readiness and the financial capacity. Over the next couple of hours, we're going to share our perspectives, plans and targets, but you're also going to hear from industry leaders, partners, customers on how Bloom's unique solution is addressing the most pressing energy issues of our time. Let me just start with a couple of financial highlights. We just -- we are reaffirming our 2023 framework as we did on the earnings call 2 weeks ago. We are maintaining our 2025 guidance for gross margins, operating margins and service gross margins, and we are confident in our long-term forecasted revenue growth. Now there'll always be movement in the numbers as -- around segments as markets develop, but we are well positioned to deliver through 2031. We begin with that revenue framework and how we're growing our top line 30% to 35% over the next decade. We set the target that by the end of Bloom would achieve an annual revenue of $15 billion to $20 billion a year. The projection was built on delivering on our historical growth rates in power generation, which has been 25% to 30% and as we grow in our current markets and add new geographies. We're on track to meet these growth targets. In 2022, we achieved $1.2 billion in total revenue with our product and services revenue up nearly 28%. This year, we're targeting $1.4 billion to $1.5 billion in total revenue, with product and service revenue up 26% at that midpoint. This has been all power generation business. The need for our product is growing. Our commercial positioning is improving. The geographies we're in are expanding, and we have the capacity to meet this demand. You'll hear from Tim today on the progress that we're making in our power generation business in our international markets. Over the course of the last year, we moved very quickly from landing our first servers in Europe in June to securing five new countries. The themes of needing sustainable, resilient, predictable power are resonating with even a greater focus on energy security. We see opportunity to accelerate both in Europe and in Asia. In addition, we see tremendous opportunities for our decarbonizing technologies. As proven in our electrolyzer demonstrations, we have developed the most efficient electrolyzer on the market in converting kilowatt hours into kilograms of hydrogen. We have a 15-year proven track record, proven -- operating this platform is a fuel cell. And we have the operational readiness to deliver over 2 gigawatts electrolyzers annually. Hydrogen is an undeniable reality. You can see with this momentum, the capital and stimulus going into this market. To us, it's always been a question of when, not if. The Inflation Reduction Act's hydrogen $3/kg PTC is driving increased commercial interest in the United States and setting the bar high in other economies like Canada, Japan, Korea and the European Union. You'll hear a lot more today on why we're so excited about this opportunity. In addition, as the world secures the zero carbon energy needed to produce clean hydrogen we have a technology to enable efficient carbon capture. Given that we don't combust, there's no particulates, no SOx, no NOx in our exhaust. We are 95% pure CO2 from our anode exhaust when the waters are moved. There is a huge opportunity for us to partner with players from multiple industries to provide 24/7 baseload zero carbon energy at very attractive economics. Economics made more attractive with the $85 a ton incentive from the Inflation reduction Act. In addition, we're seeing strong industries strong interest from industries that utilize CO2, like SAF in their production process. And as K.R. said, should the pace of the adoption accelerate, our carbon capture application could provide a significant upside to our current projections. On transportation, specifically marine, we're developing the technologies to grow in this market. There's a tremendous need to decarbonize with clean fuels. And while there's a longer development cycle for this product, we see this market significantly contributing later in our 10-year framework. These additional applications should add at least another 5 points of growth, bringing our overall revenue growth to 30% to 35%. And if the world moves more quickly, we'll be ready with product, increasing these rates. Our total addressable market is measured in trillions. Trillions with the T. And you'll hear from today, those global markets are trending in our favor. There's a growing need for resilient available power that reduces carbon intensity today while providing the optionality to move to on-site Net Zero -- to on-site Net Zero solutions like hydrogen in the future. The effects of climate change will increasingly impact the aging electricity grid with outages, while utilities lack the power generation, and the transmission resources to meet the needs of a growing global population and economic growth. The gap is going to increase additionally with the needs of a digitized economy, electrification, electric vehicles and a warming planet. What's unique about Bloom is the product as a platform. Specifically designed for multiple applications across the same core platform. It's incredibly important as you think about the prioritization of our investments. As we invest in growth, we're not dependent upon a specific fuel, an application or geography. In addition, leveraging the core platform is incredibly important when you think about our cost down like learning curves. But our story is not about growth alone. It's about profitable growth. We have targeted to get to a 30% non-GAAP gross margins and 15% non-GAAP operating margins by 2025. That's just 2.5 years away. I'll walk you through how we intend to get there momentarily, but at its core, it's about leveraging the power of a common platform to drive down product costs combined with OpEx discipline and leverage across the platform. We are committed to achieving this target, and you should see steady improvement towards this over the next few years. This year's guidance has a commitment for us to be non-GAAP from operating income positive. Last year, we were within $30 million of hitting that target. We took all of that frustration from the team and the whole business and doubled our efforts to make the business profitable this year. We've made it a goal of the entire company, and every Bloom employee has an incentive to help meet this goal. We understand that in a high-growth company, once you get to profitability, you unlock tremendous operating and value leverage. We're also committed to being cash flow from operations positive this year. As I detailed out in our earnings call, we used $315 million in cash from operating activities in the first quarter, primarily driven by investments in inventory. The time to power value proposition in leveling the build plan resulted in a net increase in inventories. We also had an increase in our receivables as our EPC partner finalized their project financing. We are on track to collect the receivables and ship our inventories, and we fully expect to recover that working capital as we move into the second half of the year. 2 weeks ago, we secured $560 million in net proceeds of additional capital at very attractive terms. We did this to ensure the company is well positioned for the future. We're going to pay off debt, and it's going to provide us the capital to drive our growth, especially as you see more and more large-scale projects, that work require greater and longer investment cycles that are going to have movements in our working capital. We raised this capital with an instrument that has an exercise price above $26 a share. Let me go through the numbers here. So at the end of the first quarter, we had $320 million in unrestricted cash. The convert proceeds add $560 million to that balance. We're going to use $200 million of it for debt repayment. When you get the $315 million back to get us -- back to CFOA positive over the next three quarters, and we're going to use roughly about $95 million in CapEx for the remaining part of the year. That should give us a pro forma balance targeted at about $900 million by the end of the year. On the debt repayment. We're currently evaluating repowering our one and only remaining consolidated PPA. If we choose to do it, PPA five 40 megawatts and we'd expect similar outcomes and benefits to the 30 megawatts of repowerings we completed in 2022. For completeness, I've included that $120 million in this debt schedule. Cash schedule. Throughout the company's history, we've consistently achieved an annual cost down reduction in our product cost, 10% to 15% a year. As a world experienced the aftermath, of the COVID pandemic, the impacts of inefficiencies, inflation, shipping costs and capacity investments resulted in a unit cost increase, product cost of 7% last year, hadn't happened in our history. Now we weren't unique in this regard, and the aftermath, COVID had similar effects on other companies. However, we used it as a rallying cry for the whole business. We reinvigorated our efforts on engineering cost out of the product, increasing power densities, driving automation in the factories and reducing costs in our supply chain. While costs were up year-over-year in 2022, each quarter, we had a small decrease as these initiatives started to take hold. I was really encouraged by the first quarter this year when we were down 10% versus the first quarter last year. We're on our way to a 12% cost reduction target for the full year 2023 and reducing product costs is key to us to continue improving our margins. We firmly believe we can continue to leverage these efforts further and drive down this cost curve to return to that 10% to 15% annual reductions. It's important to remember that the benefits of a common platform is these cost savings translate in reductions to all our applications, including electrolyzers. While we optimize the application, it remains the same basic design and this then allows us to use the same supply chain, manufacturing capacity, logistics, engineering teams and learnings across the entire platform. We are building manufacturing capacity to meet demand. Last year, we were excited to have you all at our new manufacturing facility in Fremont for the investor conference. Over the course of 2022, we increased our stack manufacturing capacity in California from 300 megawatts to 660 megawatts. You'll see in Jose's video later during the roundtable. This year, we wouldn't have been able to hold this crowd in that facility. It's filled up with tooling. We can add at least another 700 megawatts in that facility, and we can do that as we need additional capacity. And our projected growth rates -- that should be enough capacity to meet demand for the next 3 years. In the near term, that focus -- that team is focused on automating and optimizing our manufacturing processes so we can reduce costs. We'll talk about this more during the roundtable. Another encouraging data trend is we've been able to maintain price. The need for our product, especially with our time to power value proposition and the improved ITC benefits have allowed us to capture more value. Clearly, the price utilities are charging is increasing significantly with many territories up double digits. While we always will ensure that we're selling our product to our customers at a competitive solution, the drivers for value of resiliency, sustainability and predictability of receiving power is increasing. Sharelynn will speak more about this. It's not solely cost savings versus a local utility, but rather our solution versus a lost opportunity of not having the required power or certainty of power. We'll retain our strong pricing discipline as we evaluate new markets and we're always going to allocate units where we get the best combination of margin and growth. In addition to reducing our product costs, we expect additional operating leverage in our operating costs. Over the past few years, our operating expenses have remained about 26% of revenue as we invested in R&D, increased our commercial resources and ensured we had the control environment to scale. While expenses in the first quarter were elevated by some very specific program spend for the year, we expect to be 200 to 300 basis points lower to about 23% for this year. As the development of our platform matures and our commercial investment scale, we are seeing enhanced operating leverage. For example, we expect to grow our operating expenses less than 12% in 2023, about half the rate that we've seen in the past. Going forward, we will maintain similar levels of annual growth. Now when you combine that with our expected revenue growth, this should allow us to achieve our operating -- targeted operating levels of 15% of revenue. This should give us the appropriate level of investment in R&D and commercial and when combined with our expected gross margin expansion, ensure we get to that targeted 15% non-GAAP operating margins in '25. It's key to that. Let me spend this few minutes on the service business. I know that there's -- you guys have some areas of questions around here. There's incredible value in that recurring revenue stream. It's each one of our servers has a service contracted -- service contract attached to it. We have over $7 billion of service revenue in our backlog at the end of last year. Now we price each service contract to a targeted minimum 20% return. Over the last couple of years, we haven't gotten there. The business has been impacted by negative timings on some commission cycles, on product cost and most recently on performance payments. For the service revenue, we've had a greater mix of Korean acceptances. Unlike our historical U.S. business that you'd be entering service margin -- service revenue very close to acceptance. There's about a 12- or 18-month delay for our Korea acceptances. These projects, though, are now coming online and they're going to contribute to our -- in service revenues as they do. Second, we talked about product cost before. Not having the cost down there, impacts our replacement module costs. Now that we're seeing, again, to be driving down our product cost, that's going to translate into the service business and help improving margins here. Lastly, I explained this on the first quarter call. The end of last year and through last year, we made a call to ship more units for revenue than for service, and that had a negative impact on our power output, which has caused us to make some performance payments to our investors. We're now quickly shipping those units in the beginning part of this year. At the same time, we're making performance payments. As the power output increases, those payments will reduce and that should improve our overall service margins. We remain committed to a 20% non-GAAP gross margin in service by 2025, and we see a path to get there. In addition to just the financial return that we see in the service business, we collect over 1 billion data points every day. The data is used to monitor output, identify service needs or adjust performance. We utilize this data to model changes in our operating variables on efficiency, power output and stack life. The knowledge that can be applied to the specific system can be -- it can either apply to a specific system or leverage across the entire fleet. The concept of digital twin, machine learning and AI are not new to us. We've been leveraging data to improve our product and performance since our inception. These insights have been incredibly valuable as we've matured our technology, our manufacturing and service. We leverage these learnings. We will leverage these learnings as we move into more applications in the future such as electrolyzers and marine. To scale our revenue targets, we're going to need to continue to leverage partners. We really want to focus on our core competencies and for example, we need to partner to deploy our technologies for electrolyzers and carbon capture. There are proven technology partners out there that we can line up with and scale quickly with them rather than compete with them. We're taking similar approaches for installation financing, analytics and IT. Our best example of a beneficial partnership is SK ecoplant. K.R. talked about this last year. But began in 2018 with energy servers in Korea has matured in leveraging our EPC expertise in fuel cells in the United States and global large-scale hydrogen development projects. To date, we sold $1.2 billion of fuel cells in Korea and have partnered on over $400 million in the United States. On the slide here, we show a picture of our joint venture with SK Eco plant in Korea. We're utilizing this facility for final assembly for our Korea acceptances this year. Korea is a key market for us. The Korean government and the power generation companies value fuel cells as a key component in their energy transition and we are well positioned to provide both natural gas fuel cells and hydrogen fuel cells as we go forward. We are in the second year of a 3-year volume agreement and look forward to working closely with KI Park and the entire SK eco team to secure additional commercial wins post that take-or-pay contract. Global government incentives are positively impacting our business. specifically the inflation Reduction Act. I talked about the benefits of an increase in the investment tax credit and the hydrogen production tax credit and changes made in carbon capture. We see these as tremendous tailwinds in the U.S. as well as driving additional incentives in other geographies. To give you a cent for the agenda and who will follow us today. So Sharelynn will come up next talk about the power generation business. then we'll have Tim Schweikert coming talking about both the international and Marine strategies. And then we'll have our new CTO, Ravi Prasher, Ravi brings incredible technical chops to the job and he's going to give us insights around the hydrogen electrolyzer demonstrations. We've got Rick Beuttel back year. Rick is a 30-year hydrogen veteran, and he's going to talk us through the efforts that we're having as well as specific insights from a market leader. Then we'll come back, and I'll lead an operational discussion with Carl Cottuli, our engineering leader, Satish Chitoori, our supply chain leader, Jose Hernandez, our manufacturing leader and our CIO, Cornelia Pool. And then K.R will be available to take some questions. Blooms at an inflection point. The grid is becoming less resilient and more expensive. The world needs to decarbonize. Solutions like clean hydrogen, renewable natural gas, carbon capture is the future. We have those solutions and they're in demand. We will continue to invest, reduce our costs and build capacity. Our mature technology platform can be leveraged across multiple applications. We have the balance sheet strength to deliver and we're at a very attractive valuation. We are extremely focused on execution. We plan to deliver robust growth at attractive returns and generate cash. We have a clarity in our mission. We're extremely excited about our future. Thank you. [Presentation]

Please welcome Sharelynn Moore, Executive Vice President, Chief Business Development and Marketing Officer.

Good afternoon. It is really nice to be here with all of you. Welcome. Well, we have real positive, solid momentum building in our Power business. I'm pleased to be able to share with you a bit of our progress as well as the drivers that are going to continue to fuel our engine, which is our Power business, our core business. So with that, I'm going to start with some business highlights. These are the few of the things that we've accomplished since we were together just last year, which almost feels like yesterday, if you ask me, but there's a lot of things moving. And again, these are indicative of where we're also going to continue to see this kind of growth. First of all, in data centers. Data centers is not new to us. In fact, data centers were some of our very first early adopters as customers. What we're seeing today is quite an industry shift where data centers are not getting access to the power they need to expand or build when they need to. You're seeing some of this with the successful wins as you see our business in Oregon. That same large data center customer we're working with in other parts of the nation as well as around the world. We see this only continuing. We've hired a dedicated data center focused team that's been busy out there building pipeline. They're at a data center conference every day, every week, working with customers, and that pipeline is building. So we see a huge pull across segments. This is one of the top segments that we're seeing demand generating out of. The second business highlight is our Korea business. And Greg did a great job walking through the strength of that partnership that's been building. We are the preeminent fuel cell leader for utility scale power in South Korea. Through our partnership, with SK. We will continue to retain that dominance as that industry, that market shifts from a portfolio standard renewable portfolio standard, which was our natural gas fuel cells as they shift into hydrogen. We're well poised to take advantage of that shift with them as our fuel cells can easily transition into hydrogen as well, including we can also help support new hydrogen generation, such as a project SK announced with us for a nuclear project using our electrolyzers. SK ecoplant also provides synergy in our business and our go-to-market. We found really great success when they're out moving in the market as such a big organization and they bring us in as well as when we are working on really large complicated projects, and we can bring them in early. But we're finding as this better together of wrapping our solutions together has been very successful in a lot of key areas. And so you'll probably see some continued opportunities where we've been able to work with each other and provide additional value to that synergy with our customers. By no means are we only working with SK. But when those conditions all come together, it's a real advantage that we have such a strong partner to work with. The third business highlight is in our waste-to-energy business. So if you think about waste to energy, it's really two segments for us. So I'll cover the first one. The first segment in waste-to-energy is renewable fuels or sustainable aviation fuels or biodiesel. In this segment, we essentially are the primary power that can help those developers provide their product at a lower carbon intensity or a lower CI score. One such example is a customer named Hobo Renewable. We're working with them on a large development in the Midwestern United States where we're the primary power to their large renewable fuel biodiesel project. Our power offsets their carbon intensity score, which more than offsets any difference in cost of what would have been just electron to electron. In addition, they're taking advantage of our ability to take the carbon, the CO2, that peer stream that Greg mentioned, of 95%, and they're going to be able to sequester that in a CO2 pipeline that's nearby. That only dramatically amplifies that business case for them in choosing Bloom to power that big important project. These are the kind of projects that we see only continuing with so much demand going into renewable fuels. So we're looking forward to being active in this market. We were just at the biogas conference 2 weeks ago as a premier sponsor and this is really a growing market. The second part of the waste-to-energy business is our ability to take biodiesel and create on-site power. The picture you see there is actually a dairy called Bar 20 in California, one of the largest dairy farms in the Western region. They're essentially taking their digested biogas and fuel -- and empowering Blooms energy fuel cells that's providing resilient power. They're at the end of a transmission line. They've increased the resiliency while they've been able to take advantage of that methane and be able to do something productive with it. This is becoming a lighthouse project. I mentioned being at the biogas event, it's won three industry awards so far. And in fact, BBC has featured this project on a very special documentary, and we revealed it, pre-released it with our annual report, but BBC will be launching at mid-June. So we're really looking forward to being a leader in this area as well. So those are three business segments that kind of give you a hint of how things are going and moving and being powered in Power. Let's go forward. Let's not go backwards. So let's take a step back. When we look at the drivers for our business, we have to start here through the very best intentions through the desire to do the right thing. We have to also recognize that the energy transition, even though we brought on more renewables than we ever have, in fact, in 2022, for the first time, solar eclipsed coal in centralized generation. We're not seeing the results from the energy transition you would expect. For example, our energy costs are increasing. If you're in New York, you've seen right here, 9-plus % already increase. If you're in California, you're seeing another 5% to 15% is going to increase through 2024. In addition, emissions surprisingly, are also going up, not just CO2 emissions, but the NOx and SOx harmful air particulates is also going up because more diesel is being used than ever in diesel generating backup assets. That leads to the third point, resiliency. Resiliency is not getting any better. That's why those diesel jegfets are firing up. So here at Bloom, no surprise. We think there's a better answer. We're willing to step up and meet that challenge where it is and ensure our products can be an aid or an enabler into the energy transition. Our solution is a perfect bridge to get you from what you need today to what you will need tomorrow. We can meet people's energy needs, our customers' energy needs with resiliency, with sustainability, with predictability and we can meet their power needs when they need them, not when major upgrades to the transmission of the distribution grid get made. So we call this no excuses, zero excuses. Let's dig into resiliency just a little bit more, zero outages. Imagine this, in the case of a major disaster, you get your early warning and what are you most likely to do? You're most likely you think you might be hunkered down for a few days. Most likely, you're going to go out and secure some groceries and go to the grocery store. Well, what's going to happen if that grocery store is out of power. God forbid, you're the middle of your grocery shopping and the power goes out because you're going to have to abandon that cart and leave. While our customers Stop & Shop did something about it, they partnered with us. They have 34 micro grided Stop & Shop stores now. And when the power goes out, their lights stay on, they're able to check out their customers and they don't have the waste and the spoilage. We've saved them for more than 131 outages across those systems. So again, while other people are out, Stop & Shop is still there to meet their customers' needs. AT&T, not completely dissimilar. There's a large data center that helps keep their cellular lines, mobile phones up and running on the East Coast. We withhold outages with this customer, time and time and time again, what would be worse than being in the middle of a disaster and your cell phone can't work for you to check on your loved ones. So this resiliency value, it's not only it that it sounds really good. And of course, I'm passionate that we can provide such strong solutions. But there's real demonstratable value to the business case that people are going to be willing to pay over and above the cheapest cost of power, they'll pay a premium to ensure that they have the power when they need it. Next, let's talk about zero risk. There's one thing for certain. What I can say is Bloom is absolutely has our goal to keep lowering our costs year-over-year just like Greg talked about, 10% to 15%. On the other side of the equation, we know with the investment needed in our grids, which is a good thing, it's the right thing to do. Grid costs will only go up. With Bloom costs going down and grid costs going up, if you're a customer that's highly dependent on energy is a key component of your product or your business or your profitability, then being able to secure your energy and ensure you're locked in at a price and a quality that you can expect over a period of time has tremendous value. Predictability, not just in your cost, but predictability in your power quality as well. Another area driving our business is zero carbon, sustainability. There are multiple ways we help customers in sustainability goals. One, we're lower emissions than the average grid. Two, we don't use any water, so we're not wasting any water. Three, we don't emit harmful air particulates like NOx and SOx that we've talked about. Without combustion, you don't release NOx and SOx. Four, with the beauty of having Bloom Energy servers, you can not use those diesel generator backups, and you don't fire them up when everyone else is firing up and producing horrible air quality. And last, we feel flexible. If you start with natural gas today because it's pletiful, affordable and accessible, you're cleaner but if you want to get to zero carbon, you can migrate or upgrade in your normal upgrade cycle to biogas or hydrogen or sequester or separate that carbon if there's a market for it or access to sequestration. These are the types of things that we keep adding into our product to ensure we can meet sustainability goals. We can also grab heat and take that heat and reuse it, which takes our efficiency up to 85% to 90% in power and heat or combined heat and power application. Ultimately, zero delays. So I mentioned we're working with a large customer and data centers that couldn't get access to power. This isn't a one-off. We're seeing it happen. On the other side of the country, we're seeing it happen all over the world. We're working with customers to make sure they get the power when and where they need it. This is also an opening of the door for us to work with utilities. So we're working with a handful of utilities today that are looking to us to help add or bolster their substations, add capacity where they might be shorter at the end of lines instead of adding transition they can add Bloom; and three, ultimately using us to serve their customers' needs themselves. So any which way Bloom is here, we want to aid this energy transition and be there with both our utility customers as well as our commercial customers. To sum it all up, zero compromise. We don't think anyone should have to compromise in this energy transition. Let's make the right decisions we need today. We can offer resiliency, sustainability and predictability as well as the power you need, when and where you need it. So with that, I'll maybe leave it here and have you hear from a few of my customers. [Presentation]

All right. Thank you. Sometimes a video just isn't enough. So I'd like to invite a special guest that was just on the video up to the stage.

Introducing Dean Nelson, Chairman and Founder of Infrastructure Masons and CEO of Cato Digital.

Hello. Thank you for being here. Yes, of course. Thanks for having me. Absolutely. Well, Dean, you are a bit of a guru in the data center industry. So maybe you need to tell everybody a little bit about what you do.

Yes, I've been in the industry about 33 years. So started the Sun Microsystems on my 21st birthday, ironically. Over 30 years of that one, I went from Sun to eBay to PayPal to Uber and ran global operations basically for digital infrastructure for that. And then the last 3 years, I've been doing this other fund stuff on boards as well as now the start of company Cato Digital.

Awesome. Well, you're not a stranger to Bloom. You've known Bloom for quite some time. Why don't you tell that story?

So Kara, and I was just talking earlier, it was almost 10 years ago to the day that we launched the first data center with primary power from fuel cells. Now back then, that was a big deal primarily because we said we're going to remove fuels, the generators and UPS. Okay? So this is the digital infrastructure that runs the world. And for eBay, that was $260 billion worth of commerce volume flowing through that engine every year. So when you think about that and then you're building infrastructure, what if it goes out, so we did a whole bunch of calculations on resiliency back in the day. We brought in UIUC, they did an entire study on this to go back and say, what's the probability of fault of now using fuel cells as primary power. And ironically, in that state, this is in Salt Lake City, Utah, we had 94% coal. That was the grid. It was just the nature of the beast of where we were. It was a low-cost area for us. But in the end, we put billions of dollars of infrastructure into that state. We tried to go back and change the laws, which we did. SB 12 happens so we could get more renewable energy things. But it just wasn't fast enough. And then you start to look at the efficiency. We backed up and looked at the entire system. And that was if I could go back and create the energy on site, consume it 150 feet away, all the time, the efficiency goes up. And then all of a sudden, I knocked 60% of my carbon footprint. This is in 2012. Let's think about the opportunity within that state. So that was one of those groundbreaking things that I remember the phone call, I was here in New York at a conference called Data Center Dynamics and John Donahoe, the CEO of Bank at that point, Peter Gross and KR called up. And they said, Hey, we're thinking about doing this. I'm like, way ahead of you, ready to go and it was just such an easy conversation because I've handed this to our engineering teams. And I said, we're about to design a brand-new data center, second phase, we really should be thinking about this now. I want you to take the whiteboard, wipe it clean. You have two weeks. Tell me if fuel cells would actually work. And they will -- at that point, they're like, oh, there's no way. How can we remove generators and things. And so they came back 2 weeks later and they were convincing me. And that's -- that was the key is when you get the engineering teams, all excited, you allow them to engineer, they create really, really cool things, building cut in half, cost cutting half, like everything just got better, more efficient and more resilient and more sustainable.

Well, that's incredible. So it's 10 years goes by the industry hasn't stayed stagnant. There's been some changes inside this industry, summarize what those key changes are.

Let me start with a little baseline first, digital infrastructure. That's everything from when it leaves your phone or your device all the way through. So I'm going to go look at that YouTube video, it's going to fly over the network. It's going to hit a repeater. It's going to go back into a distribution hub and then it's going to go into a data center. Whit's going to go to a server, it's is going to go to storage. That's the chain that happens. That system -- there's 7 million data centers in the world, 7 million physically unique IDs. They have 105 gigawatts of capacity. They consume 594 terawatt hours of energy every year. That represents 2.4% of the energy draw globally. That's digital infrastructure. It's actually relatively small when you consider all the other consumers but it runs the world, and we still have 2 billion people that are not online yet, okay? We also will have 135 billion things by 2030. These are the IoT parts with 1 trillion sensors behind them. And this has nothing to do even with Generative AI yet. That 2.4% suddenly can become 8% to 10% of a global energy draw because the entire world is basically consuming the infrastructure to operate, doesn't matter if it's a utility grids to run it on your phone, everything is connected. So the problem we have -- we're facing today is that we're out of power. As you saw in some of the videos there, the largest market in the world is Loudon County, Virginia. There's over 2,000 megawatts there. And Dominion is unable to provide power for at least 5 years. That's transmission lines as Kara was talking about before. It's just difficult to get it there. They can generate, but they just can't distribute. So you have some of the biggest companies in the world, and I'm literally talking about the all the hyperscalers, 85 co-location companies, everybody in that market trying to figure out how do we solve it. Because if they can't economically development-wise, they go to other places. But guess what, the other places are running out, too. California, Arizona, Utah, they're all having these constraints. So the ability to now say, I can do a micro grid, bridge that gap, right? Increased resiliency is the only answer. So 10 years later, we've come full circle into saying "can we now use this technology to hit all the different things that we're trying to accomplish". But the number one is, if I don't have power, I can't serve the world.

What do you think the forcing functions are where -- while you were an early pioneer and early adopter, not all data centers, we've had some success, but not all data centers have adopted as their standard architecture. What do you think forcing functions are now where you see that changing?

Yes, there's actually a couple of factors here. The first one is, if I don't have access to capacity, you have to come up with another answer.

Necessity being the mother of invention?

There it is. There it is. And I really believe in forcing functions because that's when innovation happens. When you work under constraint, you come up with creative solutions. So we've seen this time and time again in history. So where we are in the industry right now is America, Europe areas and then Asia, right, the growth patterns are incredible. And so that's one factor. There's just not enough energy in the right place. The second one is that we have a climate crisis, as K.R. outlined earlier, I think the world is woken up. And to me, this comes down to the investors because follow the money, that's where things happen, period. If you don't have the money behind it, you're not going to be able to move some. Yes. So from my perspective, now you've got the biggest investors in the world saying, I am going to go focus on sustainable investments. So the money is moving in that direction. Secondly, you have the biggest companies in the world, focusing on climate goals. They're publicly stating net zero by a certain time frame. They don't know how to get there yet, but they're making that commitment. So between the investment dollars and those commitments from the largest companies in the world, that's the forcing function I think, that's going to cause us to happen because that innovation that will come out of it, and I'll give you an example, Microsoft put out a fund that said we're going to put $1 billion out there for anybody can come up with innovative solutions to help us meet our sustainability goals. We're going to open up our patents. You can use them. That drives acceleration of what we're trying to actually get done. That's what gives me a lot of hope. One other thing I want to mention is that I'm the Chairman and Founder of Infrastructure Masons. This is a professional association that is uniting the builders of the digital age. I think of all the people that build that engine and operate that around the world. AWS is Google Meta, Microsoft, Digital Realty, all those companies. We came together last year because things were not moving fast enough from a climate standpoint. So we gathered at a person's house, 40 executives and said, Let's find one thing that we can do together to address climate change for our industry. Just one. That was one of the most difficult things to do. Simplicity is. But we got it down to it and the iMasons Climate Accord was born. That accelerated really quickly. within 6 weeks, we had 73 companies signed up for it, including AWS, Google, Meta, Microsoft. Another 6 weeks after that launch, we had a -- we were over 200 companies. 200 companies represent over $6 trillion of market cap all united in one goal. That is where I see real movement. So you take the investment side, you take the capacity constraints and you take the public commitments. And everybody is aligned in to say "We're going to go achieve that goal because we have no choice not to. We must do it."

Well, it might be obvious to some. How do you see this as an opportunity for Bloom. And how does Bloom fit into this?

It's a pretty simple proposition if you think about it. And let me tell you, I'm not paid for this. I'm here because I actually have been a long-time believer in Bloom.

We did buy you dinner.

That's true. Yes. Okay. I think the key is that there's a real, I'm trying to figure out to put this. Our industry is extremely risk-aversed. They're very conservative. So they don't want to go back and try new things. When we go back and say, hey, remove your generators in UPS. Put in a fuel cell, it will be fine. Every engineer in the room goes, Oh, my god, I can't do that. Now when you say I'm out of power, we have to come up with a solution. Every engineer goes and puts on their hat and figures it out. And guess what? I can do on-site generation. The actual natural gas lines are more resilient than the electrical lines, like they start doing the math because they have to solve a problem. So I think from Bloom standpoint, the fact that we've got all these constraints in existing markets that are mature, that's one opportunity. Secondly, when you think of the emerging markets, who do not have energy resilience but also have capacity problems. That opens up the door across the board, whether it's Africa, India, anywhere across Europe, there's opportunities. So I think it is unbound when it comes to it?

Well, thank you. We've been long time committed to data centers. We know we have a great solution there, and it's leaders like you that are helping lead the way in the industry. Is there anything else that you'd like to add in closing?

I would say that #1 thing is we should be challenging the status quo. There's a lot of people that think conservatively of how we're going to approach these things. We don't have time but to -- we don't have time to actually wait. From the climate standpoint and the growth globally, that is really critical. Generative AI, I know you keep hearing these buzzwords, it is predicted now that infrastructure globally will triple in our industry. Remember that 2.4%, imagine if that goes to 8% or 10%. We have supply chain constraints right now. We have capacity problems all over the place. We must come up with ways in which we're going to serve this demand. I don't see any other answer except microgrids within our industry to solve and bridge that gap to get both sustainability, cost and capacity solved.

Excellent. We'll leave it there. Thank you, Dean. [Presentation]

Please welcome Tim Schweikert, Senior Managing Director, International Business Development.

Good afternoon. Thank you. I told K.R., I said I am so looking forward to this investor meeting because we have made so much progress since our last meeting a year ago. And not only our international business but in energizing transportation. So I'm really excited to be here today with you. Before I jump into the international piece, I want to just give you a little bit of background on myself. I spent 33 years at GE. And most of that time, I was working in international markets, growing, whether it be our transportation, aviation business, places like China, I spent 6 years living in China, selling locomotives and not only in China, but Indonesia, South Korea, then I went and did the same thing in Sub-Sahara Africa. And when I looked at -- when I start the international role with Bloom, I said, this looks a lot like GE did back when it was making its big push into international markets. We've got a great mature product with a strong base in the U.S. We've got terrific world-beating technology. And we're looking at a white space that is virtually untapped. So I'm really excited today to give you an update of where we stand. And last year, when we said, hey, Europe is our -- that's our next frontier. And we said that because the need for energy security, gas is not going away, a lot of change in that market because Ukraine-Russian war, but gas is there to stay in Europe. And what it means is that Europe needs to get more energy, more electricity out of every molecule of gas. So when you look at what Bloom, how we positioned from a product standpoint with our combined heat and power product, we think that is going to be a really a super attractive world-beating product in Europe. The need for on-site power, we just heard on how it's so challenging to -- if you're a new large energy producer -- user like a data center, to get access to the grid. That is going on in many markets across Europe. And then the optionality that we bring to Europe. Europe is making a lot of investment, a lot of policies being put in place to develop hydrogen and the fact that we can run off of natural gas today and offer that optionality that [ Benedetto ] talked about in the future really positions us nicely for Europe. So let's talk a little bit about what we've accomplished in the last 12 months. We got our first system, and we had told you last year at this time that we got it in Europe, but we couldn't tell you who. You now see it was with Ferrari. We couldn't have got a better customer to launch our business in Europe. And [ Benedetto, ] as you saw this testimonial is a huge supporter of Bloom. And what we find is when we get into a market with a first system, like we did with Ferrari in Italy, that quickly attracts attention. And so quickly, shortly after we got the Ferrari order, we signed a 10-megawatt deal with an outfit called Cefla that specializes in distributed power with combined heat and power. K.R. and I are going to be in Italy next week. We are going to be attending a data center conference there and also going to be visiting a number of large companies, CEOs in Italy's hydrogen Valley. And they're -- we see Italy being a 100-megawatt market for us within the next 3 years. You may have seen or heard in the press that we announced our first order in Northern Europe last month. That was with a company called LUG that is for five data center, a combination of data centers and industrial systems in Belgium. We expect to get our first system into Belgium by the end of this year. And this is another good example of kind of our land and expand strategy in Europe. LUG is -- has a large installed base of distributed power in the Benelux region. And we think like what we're doing with Cefla in Italy, we can grow very quickly in Northern Europe with LUG. This is another example of how quickly Bloom can respond to an opportunity in the marketplace. The conversation with LUG started in November of last year. We signed the contract in the end of March of this year and we'll have a first system in country by the end of this year. Spain and Portugal are another important markets in Europe for Bloom. In January, we announced a partnership with TelEm. TelEm has got a very strong track record of doing large energy infrastructure projects on the Iberia and Peninsula. We think that we are really well positioned in Portugal and Spain because of the large renewable base of energy there and the government policy is being put in place to make Spain and Portugal large exporters of green energy. I'm going to switch focus now away from Europe to Asia, and I want to talk a little bit about Taiwan. Taiwan is a great example of how quickly an energy landscape can change. It has been -- typically Taiwan was a market that we weren't even looking at. It had typically been the grid had been very stable there and reliable but over the last 18 to 24 months, there were, because of a number of coal plants and nuclear plants being shut down. The grid has become much less reliable. There's been a number of high-profile of outages. And so the government has responded by putting tariff increases in place for heavy electricity users, 5 megawatts and above, that goes into place next month that basically doubles their tariff above 5 megawatts. If those large energy users don't invest in distributed power. So we were able to get our first deal signed in Taiwan with an outlet called Unimicron and again, this is another great example of how quickly we could respond. We got -- we first started our discussions in July of last year with Unimicron. We signed an order in December. Those first systems will be up and running commission next month in Taiwan. And again, like I talked about in Italy, we think this is going to be a catalyst for significant growth in Taiwan and we expect this market to be another 100-megawatt size market within the next 3 years. And then just to round out Asia, Singapore is another market that we are extremely interested. And we have a pipeline of over 400 megawatts of opportunities that we're working right now in Singapore, Singapore is a country that has a strategy of importing LNG, but is also looking for the cleanest power solutions to utilize that LNG and convert it into electricity. We think with our carbon capture technology that we are really well positioned to win in Singapore. Okay. I'm going to switch gears now and talk a little bit about what we've done in the marine business. Marine, I think I mentioned to all of you last year at the investor conference that that's how I initially came to Bloom. I was very intrigued by my last role at GE being in -- running their marine business and knowing the huge challenges that they had, the marine industry had to decarbonize the business and knowing the capabilities of Bloom. I thought, wow, this could be really interesting. And within a very short time, we made a lot of progress. Since our meeting last year, we installed our first system on the World Europa. You may be familiar with this vessel because it had its first protocol on his maiden voyage at Doha, we're at House France's team and other guests for the World Cup. The system is performing extremely well. We're delivering on all of our objectives relative to safety, reliability and efficiency. And the system is giving us a wealth of information and learning that is going to allow us to iterate on our initial design to really make our product even more attractive to the marine industry. We're seeing our strongest interest from the crew sector. And when you think about it, if you're investing -- if you're in the cruise industry, you're going to spend $1 billion plus on a single vessel. And the thing that is probably top of mind from a risk standpoint is where am I going to be able to sell that vessel over the lifetime of that vessel, 25 years, particularly with all the regulation and regional regulation is putting -- being put into place in terms of emissions. What they like about our product is the future-proof aspect of it. We can run on LNG today. And when green methanol, green ammonia or hydrogen becomes a more prolific or relevant fuel for marine, our systems are ready for those fuels. So the versatility of our platform has tremendous potential to energize the transportation sector, whether we're providing clean power for oceangoing vessels, whether it's for charging electric vehicles or creating sustainable aviation fuel, we think that our common platform is really positioned well to revolutionize the transportation sector. So I'm going to wrap up just by saying that, listen, I hope I've left you with some real proof points that we are moving very fast, particularly in the international markets. And with real wins in new markets and getting substantial traction and interest in what we're doing, I believe it's going to be our biggest growth area for the company. And I can't wait to come back and talk to you next year. And you're probably going to see a couple of more announcements this year in new countries. And so looking forward to keeping you up to date and seeing you next year. Thank you very much. [Presentation]

Next, welcome Ravi Prasher, Chief Technology Officer.

Good afternoon, everyone. One of the main reasons I'm standing in front of you as a CTO of Bloom, which I joined 7 months ago, today what you just saw in that video, the performance of our electrolyzer. The best, most efficient electrolyzer technology in the market. But before I talk about our electrolyzers, let me give you a little bit of background on me. So I finished my PhD almost 25 years ago. And at that time, I joined Intel, the chip-making company. But that was the era of information technology. That was the hottest thing. And so I joined Intel, spent almost 10 years there, more than 10 years. And then in 2010, I had a massive calling. I wanted to do something seriously on climate change. So I quit my job at Intel, took a massive pay cut and joined the U.S. government. And because they were just starting a brand-new agency called ARPA-E, which is like a DARPA, if you had -- most of you have heard of DARPA. And that agency was -- we started under Department of Energy, and I joined as a founding member of the team to fund very high-risk, high-reward energy technology projects. So I myself funded more than 15 companies, both large and small, on this plated with various energy technologies. And I witnessed more than 100 companies being funded by my other colleagues with different aspects of energy technologies. So that experience, quite frankly, one of the best experiences of my life. It really gave me a panoramic view of what was happening at the energy field. And then after that, I got an offer to run the Energy Technologies division of Berkeley National Lab, which is the oldest national lab in the country. Since we are here in Manhattan, I want to point out that Lab has played instrumental role in the Manhattan project, the first nuclear bomb project. And it has produced more than 15 Noble prize winners. So I'm very fortunate that I was offered this position to run the Energy Technology division, which have 400 scientists and engineers working at all aspects of energy that you can think of, including hydrogen and fuel cell. And when we're working on fuel cell or electrolyzer, it's an national lab, so it's working on solid oxide, it's working on PEM, it's working alkaline, all technologies. I'm very fortunate to really see firsthand which technology of us making more sense. And then now in this decade, now we are in the era of energy technology deployment because energy transition is finally happening. So the question came to me that, okay, which technology is going to dominate hydrogen market. And then fortunately for me, this opportunity from Bloom came. And I had already seen the performance in the press about the performance of electrolyzer from Idaho National Lab, which was a no-brainer for me to jump on this opportunity and join Bloom as the CTO. And the very first task that I undertook at Bloom was to show that can we repeat the performance of 1 box, that you saw on that video, on multiple boxes with multiple megawatts electricity going in and multiple tons of hydrogen coming out. Same performance so that we can show that we are ready for commercial deployment. And that is a project I ran. And as KR pointed out, from outside, you cannot differentiate between our fuel cell box and the hydrogen box. Because of that modularity and all the learning that we have, we were managed to finish the projects, start to finish within 2 months. And that project is now -- the demonstration project is operational at our office site in the Bay Area. And I would like to share a video to show you that it is producing hydrogen and what the team has done there. [Presentation]

Thank you for this opportunity to invite all of you to visit this site yourself and dig it to her and see how the system is working and hydrogen coming out. And by the way, we are using some of that hydrogen to run our fuel cells as well, the blended fuel cell. With that, thank you very much.

Welcome, Rick Beuttel, Vice President, Business Development.

Good afternoon. Thank you, everyone. Good afternoon. It's a pleasure to be back here speaking to you all again this year. I'm Rick Beuttel. I look after the hydrogen business here at Bloom. My Bloom journey began at the beginning of 2022, when I left a 31-year career at Air Products and Chemicals, the world leader in hydrogen, where I developed double-digit billions of dollars' worth of hydrogen and its derivatives, like ammonia, renewable fuels, projects. And that insight of 3 decades of hydrogen business development gave me a real appreciation for Bloom's technology and it's fit for these markets of fuels of the future and other decarbonization applications for hydrogen. So I'm very excited to be here at Bloom. First of all, I'd like you to take that away. Second of all, let's talk about some other exciting things. The last 12 months in hydrogen have been truly remarkable. Let's start with a lot of the changes in policy. Of course, everyone is aware of the Inflation Reduction Act here in the United States. The policy and support for clean hydrogen, however, is not just limited to here. Similar legislation in economies like Japan, of course, the EU, our neighbors to the north and Canada and other sophisticated economies have really cemented hydrogen's place and set it as a key tool in the decarbonization toolkit. We're very excited about that. Accordingly, industry groups and pundits like the IEA, the Hydrogen Council, Bloomberg and many other experts have raised their forecast for gigawatts of electrolyzers deployment by 2030 into hundreds of gigawatts deployed. We're tremendously excited about that market here at Bloom. And now I'd like to just take a moment and talk -- that was the grand scale. Let's talk about what we've been doing. So we, in the business development side, have been spending a tremendous amount of time talking to customers, whether that's oil and gas companies, project developers, industrial gas companies, et cetera, supporting their developments and supporting their efforts to put projects together. We have, as Ravi laid out, and I'd like to thank Ravi and thank our engineering and supply chain teams as well for building our 4-megawatt demonstration facility in Northern California, which is really impressive to have customers come through and visit. I'm actually leaving here this evening to go out there for later this week and next week to host customers coming through. Sort of every morning and every afternoon, people are clamoring to see it and see that the technology is real, see that the efficiency is real and see that it's operational. Further, and you'll hear a little bit more about this from Jose, we have completed expanding our manufacturing capability. We now have over 2 gigawatts per year of solid oxide electrolysis manufacturing capability. That's more than any other electrolyzer company has irrespective of technology, solid oxide, PEM, any of the other technologies. We have a factory that is complete. It's in the ground. It's operational. Many of you were there last year. There's no space this year. And then we fully intend to cram more into that building. So it's a very exciting time to be here at Bloom and be leading the hydrogen business. While some of these very large complex projects, and you'll hear a little bit more about one later today that we're very excited about, are taking a little bit more time than we had hoped to come together. We firmly believe that we have the right product, we have the right team, we have the right manufacturing platform and we have the right business model at the right time to be successful in the hydrogen space, and I could not be more excited to be here. Let's talk for a moment about markets, and in particular, the markets that we're very excited about. So why I came to Bloom again, where large project opportunities, the generalizing are exothermic processes. And so what that means is what the customer is doing with our hydrogen is going into some sort of a chemical process, a synthesis process that gives off heat. Because of Bloom's high-temperature technology, we're able to integrate with the customers' process, take that excess heat and supercharge the already market-leading efficiency of our electrolyzer. By feeding that electrolyzer not with water as a liquid like that's in the glass bottle in front of you, but water is low-grade steam. And what that does is give the owner, give the project developer, give the project operator a tremendous efficiency benefit, and 25% to 30% more hydrogen for a given amount of renewable electricity coming in. That's tremendously powerful. The second attribute, the second market that we're very excited about are the sort of hard-to-decarbonize applications, right? And everybody has talked about them. I sold to these industries when I was in industrial gases for many years. These are industries that use oxygen, nitrogen, hydrogen, of course already. But the idea is to decarbonize by changing the fuel going into these processes from natural gas and air or natural gas and oxygen to pure hydrogen and to pure low-carbon hydrogen. Here, we're talking about hot processes like steelmaking, glassmaking, cement making, where the same attributes that we spoke of in terms of chemical synthesis processes, we can take the waste heat from these processes, again, make low-grade steam integrate 1 plus 1 is 3, and we have market-leading efficiency and the right solution for the owners. Finally, and we have a video that talks to this a bit later. We are really excited about the work we've done so far with the nuclear industry, whether that's the demonstration that Ravi spoke of at IML. Whether that's the facility we're building for Xcel Energy for their Prairie Island nuclear facility right now. And much of the business development work we're doing focused on the nuclear industry because the nuclear industry is tremendously attractive for us as a host. Why? Because it has low carbon electricity available around the clock. And it's also a hot process, right? Somebody once said that a nuclear reactor is really your boiling water to make electricity with the nuclear reactor. Well, we can take it in, it's about residual heat energy as well, and supercharge the efficiency, and make clean hydrogen by partnering with nuclear and supply customers that are in an amenable radius of the very large number of nuclear facilities, both here in the U.S. and around the world. So why are we so excited about this? Of the hundreds of gigawatts of opportunities that all these pundits are talking about for electrolysis deployment by 2030, roughly 2/3 of the opportunities fall into one of these buckets. And make no mistake, from a cost of hydrogen perspective and driven by our efficiency, Bloom's technology is the way that any owner who's making an economic decision would preferentially decide. And I'll reiterate, why did I come here? I came here because of green ammonia, but they're so much more than green ammonia that this technology unlocks. Some other interesting things. So Ravi spoke about his project management of our 4-megawatt deployment. That 4-megawatt deployment is really a remarkable thing to come see. And I wish you all could come see it or at least take a look at it online because it is tremendously powerful. We're calling it sort of jokingly internally at tourist attraction. And as I mentioned, I'll be there later this week. I'll be there next week because the whole industry, whether it's industrial gases, oil and gas project development, pure technology organizations and influencers want to come see this installation. I know we're in the northeast, but trust me, I'm going to say that this really is better than the Hampton. So you have to come see it. I'm glad you're all awake. I was starting to get a little concerned. It really does make a great impression. It reinforces the technology readiness, and as people say, a picture is worth a thousand words. Walking around and seeing this unit and seeing what people have put together in an incredible 2-month period of time, seeing, touching, and believing is worth 1,000 pictures. So again, it's really an incredible thing to go see. A further point, both the demonstration at Idaho National Labs, which has been running for nearly 5,000 hours now, and this installation at our facility at Market Field are producing at better than what we expected from an efficiency standpoint. So I'll let that sink in for a moment. Why I'm really excited about that, is that means that the lowest levelized cost of hydrogen, we already compared favorably to PEM and alkaline with what we expected. But what we're seeing, and actually, these deployments and these demonstrations is even better efficiency. So we're able to bring that as value to our customers and our partners. And we're able to also play that value trade-off with how much of that efficiency benefit do we want to keep in Bloom's pocket as we go and price new opportunities, let the customer take the benefit in a better efficiency, and we can charge a little bit more. And that's okay because everybody wins. This is the best technology for this application. Finally, I wanted to make the point about business model. Bloom's business model is that of we are providing equipment on a capital sale basis, and then we are providing ongoing service. To be very clear, we're not getting into the hydrogen business. I came from the hydrogen business. We don't want to get into the hydrogen business. As investors, you don't want us getting into the hydrogen business. And we're getting a very clear message from our customers. They don't want us doing that. They don't want us to become a potential competitor of theirs. That's not at all our aim. Instead and using the California analogy here, if you'll indulge me for a moment, California is known for the gold rush in the 1800s. And the people that got rich in the gold rush, right? Certainly, some of the miners got rich, not all of them, just because I think we suspect that some of the people in this hydrogen space are going to do tremendously well with well thought out with well-backed projects. Perhaps some of them won't. But the one person that did get rich for sure in the gold rush was the person that made the best shovel and sold the best shovel. So I postulate to you all that our best place in the value chain here is to have absolutely the best ashtar and shovel that we can engineer, we can design, we can for every bit of effort in lifting that shovel up, we forget more dirt out of the way to get to those gold bars. And that's what we're going to help our customers do. Very excited. So even more exciting, we're on track despite the fact that some of these projects are taking a little bit longer than we all thought they would and then I think mankind hopefully would and that to try and hold our global climate increase to 1.5 degrees C, we really need them to. We're on track with what we've told you. We developed our product. We launched our product before I even got to Bloom. That's the nice thing. We know what it is. We know how it's going to perform. We know what it's going to cost. We've done our small-scale demonstration, be that in Korea, be that here in the U.S. or other places. Last year, right before Investor Day, we talked about LSB, the LSB project is going well. It's on schedule. We'll be running in the first half of next year. As a refresher, that's green ammonia. We didn't want to wait that long. We wanted to show customers today that this solution is real and ready to go. That's why we invested the money in building a 4-megawatt facility that's world scale, the world's largest solid oxide electrolyzer running at NASA. But the 10-megawatt product is going to be complete first half of next year. And large orders, what we said to you 12 months ago, what I think we've been saying for some time, 2024, 2025 and beyond. We have some exciting news, and we fully expect that we'll see some traction before them, and we'll speak about that a little bit later today when we invite a valued customer and partner up to have a bit of a fireside chat, as Sharelynn and Dean did earlier. But just really excited to leave you with, we are on track, we are walking the talk. So I'll just take a moment. We talked about nuclear earlier as an ideal host for solid oxide. I'd like to show a short video on the nuclear industry perspective on solid oxide, please. [Presentation]

Okay. Really neat video. There's a common misperception though, and look, I may be fueling it up here as I talk about these exothermic applications and people that have steam and nuclear power plants. There's a misperception perhaps that we only work when the customer has steam. But I'd like to show just 1 more snippet, 1 more testimonial video for Heliogen. And Heliogen is a CSP, a concentrated solar provider, one of our very early deployments of our electrolysis technology with which we've done the demonstration, and actually, we're doing some more work with them to scale up and do some larger projects in the Southwest of the United States in the future. But here's another testimony where the technology just pairs so well with CSP as the steam source to make low carbon intensity clean hydrogen. [Presentation]

Okay. And finally, one more short video is an introduction on a project that we're extremely excited about and have been working on since last summer. We'll have the video play, and then we'll bring a special guest up onto the stage for a discussion, please. [Presentation]

Introducing Gene Gebolys, President and CEO of World Energy.

Thank you. That was pretty cool. I've never seen it before. It's pretty impressive. You got to be a little bit crazy to be pulling this. Yes. So maybe just by way of introduction for the audience. Could you share a little bit about World Energy's background and maybe just tackle them at the very end, a little bit more some subsidence, easy for me to say, around the project in Newfoundland and Labrador.

Sure. So as you know, Rick, we're a 25-year-old biofuels business starting out in biodiesel a long time ago than going to renewable diesel. We were the first producer of sustainable aviation fuel in the world. We're in the midst of a $2.5 billion sustainable aviation fuel expansion that you're very familiar with from your previous career. We are a big short for hydrogen, where as a user of hydrogen, that kind of puts us in a mindset of how can we source hydrogen more effectively. And then we're also -- we've also triggered a second facility in the Houston Ship Channel also to produce sustainable aviation fuel. But as part of our journey, we were trying to figure out how we could source green hydrogen from wherever it's best going to be produced in the world. And that led us into a project to try to figure out, well, maybe we need to produce it ourselves. So with [ Karen ] last night, we were talking about the journey, and I think we share a lot of DNA. The journey is don't be afraid of where you need to go, just go there and figure it out. And so the reason we've been working so closely with Bloom is we really share the DNA of learning together. And it's been -- I didn't know the first thing about producing hydrogen a 1.5 years ago, and I'm really pleased to say just last week, in large part from the introductions made by Bloom, we secured a $50 million investment on the $250 million valuation from SK ecoplant, who's played very prominent in this discussion. So anyway, I'll stop with the soliloquy and turn it back over to you.

No, it's a great soliloquy. It's a great story. And just the journey of World Energy is so inspiring to identify the need to be harmonized transportation 25 years ago. I think you must have been a proud of -- well, probably one at the time.

Well, I think I heard a similar story earlier at the beginning of the day.

So I guess, Gene, so why are you here today? And I guess really what I'm asking is like why do you see Bloom solid oxide technology like a good fit and adding value for your steam [indiscernible] project?

Well, I think you -- first of all, by the way, I'm a miner, and you're a shovel seller and I was sitting here thinking, why don't I go on the shovel selling side. I'm the fool that's going handy for gold. But the reason that we are -- the reason I am here and it's because of the relationship that we got with Bloom. And this is a relationship that's really been built over the last year, and it's a relationship that's built for the long haul. We can't possibly do -- this video showed almost our first generation of ambition in the West Coast of Newfoundland. But the reason that, that site is so fantastic. It's pretty much a binary situation there. If this project goes at 3 gigs, it wants to go at 4 and 5 and 6, it's an extremely sparsely populated area. And this is a generational project. This is not 3 years or 5 years or 8 years. We need to partner with the most promising electrolyzer technology in the world. And obviously, you have to get these things built and you have to get them financed and that's going to require a diversified strategy as it relates to technology, but there's just so much promise and so much fit with solid oxide as a technology and so much promise and so much fit with Bloom as a company.

We appreciate that. Thank you for your confidence. I guess what I ask next is as we're all well aware, some of these very large green projects, whether it's ammonia or any other derivative, are taking some time to get to that point of FID and squeezing the trigger and off to the races and we got to get to the onstream date and commission. Any particular lessons that you've learned on this one so far, you'd share? I'm sure the audience would find that interesting.

Well, the lesson I would say, I haven't prepped these answers, but is a combination of intense commitment and patience at the same time. And so the IRA produced a lot of probably the law of unintended consequences. It shook everything. And I think we all know that. But one of the things it did was put every other developed country on notice in the world that if you want to be a part of this hydrogen transition, you better compete with the United States. And we're an American-based company, based in Boston, a big operations in Texas and in California. What the heck are we doing in Canada? Well, Canada is choosing to compete. They can read when we were with the Chancellor of Germany. And as you know, because you were there, the Chancellor of Germany and the Prime Minister of Canada last summer, just a couple of weeks after the IRA was passed. We talked with both of them quite a bit about competing as a decision. And your countries are going to have to make a decision if they're going to compete. Obviously, Europe is going to be massively short hydrogen for as far out on the horizon. As you can see, they're not in a position to produce it the best for themselves. But Canada is incredibly well positioned for it. And so the reason these projects are taking so long ironically, is because buyers want to see the rules before they commit. And that's not an unreasonable thing to have happened. We haven't had the final rules as we've done on the IRA here in the States. The Canadians are going crazy to catch up. I think actually may well pass the States in terms of speed. The Europeans are very much on their heels trying to figure out what to do with all of this. But it's clear that there's a societal benefit to the use of hydrogen. And so society is going to participate in the economics. So if you're a large industrial in Europe and you're trying to make sense of all of this, you want to get it right. You don't want to get it right now. And so just like the relationship that I think we've established in our building, those are happening on the offtake side as well. These aren't going to be arm's length transactions. These are going to be highly embedded relationships not only at the company to the company levels but at the nation to nation levels, and there are going to be bilateral agreements that they get these big projects off the ground. But these are massive projects that are going to establish who is most competitive in the world. And I think the fact that it's taking a little longer shouldn't be read as a negative. I actually think it's probably for companies like yours, it's probably a positive over the long haul. This is -- the front end of this is going to take a bit, but the roots of competitive advantage are being established now.

So you said earlier and we've discussed this, that this is a generational project. And one of the ways I really like that you portrayed that it's a generational project is, I think we had a discussion around never stop building, right? And the ability to just keep scaling the wind resource. And can you just say a little bit about what you see as the end game in Stephenville? Is there an end game? I mean...

Yes, there's not a person in this room that's ever heard of Stephenville and I hadn't either about a few months ago. But the reason you haven't heard of it, is because with all due respect to whoever might be listening to this in Newfoundland. It's in the middle of nowhere. It is a very sparsely populated area. The people that are -- that do the live there are extremely connected to the land and are very committed to generations of sustainable growth there. But the real attractiveness is the massive potential for growth and expansion there. So if the first gig works, the second gig works, the third gig works, there's almost my partner, John Risley and I were flying over this area probably 6 months ago when we were looking down, and we both fish up there at his fishing camp as well. There is endless expansion capacity. So in many ways, what this looks like over time, is we've got this very large site in Stephenville, at a port that was established by the U.S. Military in World War II. It becomes like a utility offtake. And the destination, the product will go wherever it needs to go in the world. It will go to the best markets in the world. As you know, molecules move pretty well by water. And you just -- as that market grows, we can continue to bring more and more renewable resource to making more and more green hydrogen into more and more green ammonia. And so there's really no -- obviously, there's some limit, but there's among the best expansion capacity in the world. These are very land-intensive endeavors. And you -- anything that's this land-intensive, you need buy-in from the local community, and we've got that, and we're working very close with the community to be able to continue to make this really one of the great centers of green ammonia in the world.

Outstanding. Very cool. Very neat stuff. Maybe one more quick question, and then we'll move on to the next phase. So at Bloom, we've made a lot of moves in the last 12 months to be ready for this sort of project, whether it's augmenting manufacturing, hiring some more professional resources in certain areas for this type of project, strengthening our balance sheet very recently, et cetera. Maybe if you could just react to that from a customer perspective for a moment. Would have these moves say to you on Bloom's readiness to take on projects like this, and execute?

Yes, it's interesting. If you just Google electrolyzers for green hydrogen, first of all, it's an industry that doesn't exist. So it's all kind of speculative at this point. But solid oxide doesn't really show up very often in the debate. You see PEM and alkaline, and then PEM and alkaline, and there's all these comparisons and why. And certainly, the handful of projects that have been moving forward so far are largely PEM and alkaline projects. That's largely because these projects have so much other risk based in them that going -- taking an early-stage, raise your hand, first mover on your electrolyzer technology isn't a particularly attractive thing when you're trying to get the things financed. Having them be a component of the growth strategy because of the efficiencies, because of the close integration with steam, I think it's a competitive disadvantage if you don't have that. If you're marrying yourself to, pardon me, kind of today's technology or even yesterday's technology without a foot in tomorrow's technology, I don't know how you catch up. Once this clicks, a lot of -- I think Bloom should be credited for this. Once this becomes obvious, it's too late. And so you're being -- you're preparing for the -- what's obvious to you and what's obvious to me before it's obvious to the world. And so the work that you've been doing over the last 12 months to get ready for that, I think, is going to serve you very well over time.

Well, thank you, Gene, and we're here to support your incredible efforts and the project going forward, so thank you very much for the time.

Happy to be here. [Presentation]

Please welcome Greg Cameron back to the stage with Satish Chitoori, Senior Vice President, Global Procurement & Supply Chain; Carl Cottuli, Senior Vice President, Global Engineering; Jose Hernandez Lopez, Senior Vice President, Manufacturing; and Cornelia Pool, Chief Information Officer.

Thank you all. Thanks for coming up to this stage here, and we've talked a lot about growth today and a lot about scale, and this is the team, whose teams, it's really going to be part -- a big part of that solution for Bloom going forward. So I thought it would be worth having just a few minutes to get their insights and how they see us operationally performing. But before I do that, Satish, I want to start with you. A year ago, we talked about a challenged supply chain. I thought we'd start with getting an update from you on how it looks today versus a year ago.

I think a lot changed. Supply chain has become more stable. My happy [ fact ] is back. I'm happy. I'm [indiscernible]. I think the lead times have reduced quite significantly. We also have pricing coming down. The semiconductor supply has improved, though the pricing is not where we would like it to be. Logistics is the biggest price driver. Logistics costs have come down almost by 20%, and also, the lead times for shipping parts out of Asia has reduced quite significantly. Granted, the new geopolitical situation has taken central stage. Be it Taiwan-China conflict or the Ukraine war, what we notice is it's a new opportunity to get into new countries, which will align very well with Tim's international plan, and also an opportunity to do nearshore. So we are working on all the activities [indiscernible]. In summary, actually, it's in a very good place, and we intend to take advantage of this better situation.