Will K.R. Sridhar’s Bloom Energy Benefit from a Power Shortage in the U.S.
President Trump will likely abolish financial incentives for renewable energy which could hurt Bloom Energy among others
(Photo: K.R. Sridhar, founder, CEO Bloom Energy.)
January 18, 2025
Since November 5, after Donald Trump’s election as the next U.S. President, most U.S. renewable energy stocks have been hit hard. His administration, which takes office on Monday, is expected to end most of the financial incentives for solar, wind, biofuels, and other renewable energy producers..
One exception is Bloom Energy, a San Jose, California based solid oxide fuel-cell company founded by K.R. Sridhar. Since mid-November, its market value has spiked by roughly 150%, to $5.5 billion. This was after Bloom received an order from electric utility American Electric Power (AEP), to supply fuel cells which can generate 100 megawatts of electricity. The order could potentially rise a thousand-fold to one gigawatt, “the largest commercial procurement of fuel cells in the world to date,” Bloom said in a statement.
“I am delighted that there is strong market recognition that the Bloom Energy platform is the ideal choice for powering AI data centers,” K.R. Sridhar, founder and Chief Executive of Bloom said in a statement. American Electric, which has a market value of $52 billion, needs additional sources of power to meet the surging demand from data centers, which house artificial intelligence applications.
Bloom’s fuel cell systems, called servers, provide 1.3 gigawatt of power to major companies, mainly in the U.S., including Google, FedEx, and IBM.
Bloom’s servers have several advantages over conventional power producers. The servers can be deployed in six to nine months. In comparison, it takes a minimum three years for a new natural gas plant to produce and distribute power. Also, as electricity demand rises, Bloom can add more servers, all of which can be based on a customer’s site. For dense, urban locations, Bloom offers a tower structure, with servers stacked vertically, similar to a garage for parking cars.
The electrical output of a Bloom server can be connected to a customer’s main electrical feed, thereby avoiding the transmission and distribution losses and other problems associated with a centralized grid system of the conventional power producers.
Bloom’s electro-chemical servers are steel boxes which convert natural gas into electricity, with high heat but no combustion. A server’s emissions of nitrous oxide, sulfur di oxide and other harmful smog particulates are negligible, since there is no combustion.
Bloom’s servers, which use natural gas, do emit carbon di oxide, compared to zero emissions from wind, solar, water, and nuclear power plants. A server’s emission of the pollutant is a third lower than a conventional natural gas power plant, according to Bloom. The servers can also operate with biogas and hydrogen, if such clean fuels are available.
Under President Biden, customers of Bloom, and other renewable energy producers in the U.S., received rebates, tax credits, and other financial incentives from the federal government. In fiscal year 2022, for instance, such incentives totaled $16 billion. Most, if not all, of these incentives for renewable energy will likely be abolished by Trump, raising the cost of buying a Bloom server. So, during the second Trump administration, U.S. customers will likely decide whether or not to buy Bloom servers based more on costs than on environmental benefits.
As it is, the cost of power generated by Bloom’s servers is typically more expensive than that of solar, nuclear, wind or natural gas plants. “We need to reduce the manufacturing costs for our products to expand our markets,” Bloom states in a regulatory filing.
(Photo: Bloom Energy Servers.)
Bloom’s technology evolved from work performed by Sridhar for a National Aviation and Space Agency (NASA) Mars Exploration program. His team built a fuel cell capable of producing air and fuel from electricity generated by a solar panel, with the vision of one day being able to support life on Mars.
Sridhar realized that the technology could be used to efficiently and cheaply produce electricity on earth with lower carbon dioxide emissions; such emissions are the major cause of climate change. So, in 2001, he founded Bloom Energy, with venture funding. In all, Bloom raised a total of $826 million in various venture funding rounds, according to Crunchbase; including from Khosla Ventures, run by Vinod Khosla.
Prior to founding Bloom, Sridhar was Director of the Space Technologies Laboratory at the University of Arizona, where he was also a professor of Aerospace and Mechanical Engineering. Under him, the lab won several U.S. Government contracts to conduct research and development for exploration and flight experiments to Mars.
Sridhar received his bachelor’s degree in Mechanical Engineering from the University of Madras, now called NIT, Trichy, India; a master’s degree in Nuclear Engineering and a Ph.D. in Mechanical Engineering, both from the University of Illinois, Urbana-Champaign.
In 2023, Sridhar earned a total $1.7 million, in salary, bonus and Bloom stock as compensation; in 2021 he earned a total $34 million. Sridhar owns Bloom shares valued at roughly $110 million.
Bloom has been losing money. It had a net loss of $134 million on $902 million in revenues, during the first three quarters of 2024. The company has been funding operations by borrowing money and issuing stock. Bloom’s long-term debt and liabilities total about $1 billion.
Like American Electric, conventional electricity companies benefit from sharply rising demand. But on the supply side, it takes them years to build a new plant. They also face other challenges, including threats to their operations from fires and floods and aging generation, transmission, and distribution systems. So, Bloom can potentially benefit from rising demand for power, even under a Trump administration which may end financial incentives for renewable energy.
Speaking of American Electric’s order for Bloom Energy’s servers, Sridhar said in a statement, that “With our proven track record…and a fully functional factory that can deliver GWs of products per year, we are ready and able to meet this rapid electricity demand growth.”
But the question is: can Bloom quickly reduce the cost of its servers, and that too by an amount which offsets Trump’s likely cuts in financial incentives for using renewable energy? Otherwise, Bloom may only have a three year window before major new natural gas and other power generation capacity comes online, spurred by rising demand and Trump’s energy policies.