After years of struggling to show expected growth and profitability, renewable energy stocks are among the hottest on the market in 2020. Investors have started to believe in the future of not only wind and solar energy, but also new technologies like hydrogen that could change how the world views energy long term.
There’s one company that I think has a better chance than the others to revolutionize energy and provide investors with multibagger potential. That’s Bloom Energy (NYSE:BE), the fuel cell company that’s making innovative moves to build a hydrogen economy.
What Bloom Energy is today
The foundation for Bloom Energy is its fuel cell server modules, which are pre-packaged fuel cells built into a modular platform. These modules can then be stacked together to make what the company calls a system or power center.
Strictly speaking, fuel cells operate by turning hydrogen into electricity, but that’s not the direct energy flow Bloom Energy was built on. Since hydrogen isn’t abundantly available today, the company built the business on servers that could use natural gas, biogas, or hydrogen as fuel inputs, so this hasn’t been a pure hydrogen business as might be implied by its fuel cell focus.
The markets that Bloom Energy serves are local power systems, like microgrids, or backups for large buildings like hospitals or data centers that value avoiding power outages. These markets have been a big source of demand, as you can see by the revenue chart below. But the company is still burning cash as it grows, so it’s not on solid footing quite yet.
With the backdrop of Bloom Energy’s history, let’s look at its future. Because it’s not the natural gas or biogas fuel cells that I’m excited about for Bloom Energy. It’s the company’s announcement earlier this year that it’s investing in the hydrogen market.
Where Bloom Energy is going
Anyone buying shares of Bloom Energy today should be doing so because of its bright future. The company has gone all-in on renewable hydrogen as its area of growth, and that makes sense in today’s market.
Bloom Energy can add value to the power market in a few ways by making and using hydrogen. It recently announced an industrial electrolyzer that will turn excess wind and solar power along with water into hydrogen fuel. This fuel can then be used in a Bloom Energy fuel cell at a later time to produce electricity, fuel a hydrogen vehicle, or be transported elsewhere through pipelines. In effect, the combination of electrolyzers and fuel cells makes Bloom Energy an energy storage company, but potentially on a much larger scale than batteries could ever reach.
Traditional power consumers could find a lot of value in this renewable hydrogen approach….
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