Bloom Energy has filed for an Initial Public Offering (IPO). Documents filed reveal an interesting look into the business.
Bloom Energy’s primary play in the data center industry is its fuel cells. Solid oxide fuel cells convert natural gas or biogas to electricity and are in use at various enterprise and colocation data centers.
The sell for Bloom is two pronged: it’s cleaner and more reliable. It’s expensive to initially deploy, but the company argues it provides a worthy trade off of lower carbon emissions and resiliency. The company’s focus will be getting the economics right through optimizing design.
The latest generation Energy Server delivers five times the energy output in a constant footprint. It’s capable of delivering 250kW in a footprint the size of half a shipping container.
Bloom sales were $276M in 2017, up from $209M in 2016. However, the company hasn’t turned a profit. This is not unusual for a company going public, particularly if it’s going public to raise capital for R&D. The S-1’s job is to describe the potential and pitfalls going forward, making a case for folks to invest. It plans to raise $100M in the offering, which is really sort of a placeholder benchmark to assess if the IPO goes well.
Bloom is currently reliant on government subsidies like renewable energy rebates and tax credits – which is nice, but government subsidies aren’t written in stone.
The company has 300MW of generation capacity installed as of March. The largest data center deployment is 10MW – an Apple data center in North Carolina. eBay’s Utah data center is entirely reliant on Bloom fuel cells, eschewing traditional redundancy like UPS and generators and using the utility grid as its backup power. Bloom argues in the prospectus that the topology of centralized grids makes it more prone to cascading failures. Its fuel cells provide resiliency.
Bloom’s largest customers are AT&T, Caltech, Delmarva Power & Light, Equinix, Home Depot, Kaiser Permanente and the Wonderful Company.
Bloom has a play with healthcare and microgrids in addition to data centers. However, it’s the explosive growth in data, and subsequent growth in electricity consumption, that presents the true opportunity. Bloom cited Technavio’s stat in the prospectus to illustrate that growth. Data center operators spent $17.4B on power in 2016, and this is expected to grow at a 13% CAGR over 5 years.