Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 2: tim Stenoveek on Bloomberg Radio.
Speaker 1: One thing we like to watch is what's going on
Speaker 1: in the green space. Green firms, by the way, in
Speaker 1: the US have found something of a lifeline in artificial
Speaker 1: intelligence after being bogged down by high interest rates, shrinking
Speaker 1: funding and more recently President trump sharp rollback of support,
Speaker 1: and our own Bloomberg New Energy Finance team. They have
Speaker 1: recently pointed out that clean tech companies that have INK
Speaker 1: deals to support data centers have seen their stocks sore
Speaker 1: this year, outperforming the S and P five hundred, and
Speaker 1: that includes the share price of our next guest. We're
Speaker 1: talking about fuel sale provider bloom Energy. It is up
Speaker 1: seventy six percent year to date today trading at an
Speaker 1: all time high, rising another eight point six percent. Jon't
Speaker 1: ne us to talk about the impact of AI and
Speaker 1: just the business overall. Is doctor K. R. Schreider, Founder, chairman,
Speaker 1: and chief executive officer of Blue Energy. It's a nine
Speaker 1: and a half billion dollar market cap company. By the way,
Speaker 1: he was a former advisor to NASA and so much more.
Speaker 1: He joins us from San Jose. We could go on
Speaker 1: and on about your background, but we really want to
Speaker 1: talk to you. Good to have you here, it's been
Speaker 1: a while. Talk to us about how AI is specifically
Speaker 1: impacting and driving growth at your business.
Speaker 3: Carol, it is such a pleasure to join you.
Speaker 4: So this is an amazing time ya, in human history
Speaker 4: where we have not seen the need for power growth
Speaker 4: anywhere close to what we're seeing today. Let me put
Speaker 4: it in perspective, the amount of power that the big
Speaker 4: hyperscalers are saying they need between now and twenty thirty
Speaker 4: is equal to all the power every single family home
Speaker 4: in the US put together would need about eighty five
Speaker 4: million single family homes give or day. All the power
Speaker 4: that they use is going to be needed in addition
Speaker 4: to the power we have today to just power the
Speaker 4: AI data service. That's how large this opportunity is. And
Speaker 4: very clearly the old model of centralized power plants with
Speaker 4: transmission distribution simply cannot meet that demand in a timely fashion.
Speaker 4: That is the opportunity, and Bloom was purpose built to
Speaker 4: provide on site power for the digital revolution, and we
Speaker 4: are so happy to be in the right place at
Speaker 4: the right time well.
Speaker 2: Help us understand how the company works. And you mentioned
Speaker 2: that on site power, so what that looks like. Of course,
Speaker 2: there's been so much conversation recent months about perhaps the
Speaker 2: need to invest more in nuclear power or fortify the grid,
Speaker 2: bring more power plants online. How do you see your
Speaker 2: company as maybe not a substitution for that, but a
Speaker 2: compliment to the kind of growth and develop we're likely
Speaker 2: to see here in the power grid going forward.
Speaker 4: I think we're going to need all forms of power
Speaker 4: in very large quantities going forward to meet our ratios,
Speaker 4: you know, like energy needs. However, in the short term,
Speaker 4: if you take five to ten years, natural gas to
Speaker 4: electricity is going to be the single largest contributor to
Speaker 4: this additionality what Bloom does. It takes natural gas without
Speaker 4: burning it, without combustin. We extract the chemical energy in
Speaker 4: it using a fuel cell and make electricity at the
Speaker 4: highest efficiency without air pollution, without noise in our generators
Speaker 4: because they have quiet, solid state and a very high reliability.
Speaker 4: For those reasons, if you are in a neighborhood that
Speaker 4: is going to have a data center, we are your
Speaker 4: best choice because we don't pollute your air, we don't
Speaker 4: use water, and we don't make any noise as we.
Speaker 3: Generate this reliable power, so you.
Speaker 4: Can have the economic advantage that a data center brings
Speaker 4: to the local community. At the same time, you're not
Speaker 4: compromising on your health.
Speaker 1: So one thing I want to ask you, actually, our
Speaker 1: Will Wade does who really covers this space, and we
Speaker 1: were talking about you coming on and he said, well,
Speaker 1: wait a minute, let's talk about these fuel seals for
Speaker 1: data centers. Can fuel cells really work for this? What
Speaker 1: evidence have you guys seen that it does really work?
Speaker 3: So, yeah, that's a great question. And this is really
Speaker 3: smart dude.
Speaker 1: I'm just going to put it out there. He's amazing.
Speaker 1: But anyway, go ahead.
Speaker 3: Absolutely.
Speaker 4: Look, the issue is we are progressing so fast in
Speaker 4: our technology at ai speed that some people that have
Speaker 4: looked at fuel sALS ten years ago and have that
Speaker 4: notion of who we are don't understand where we are
Speaker 4: today as a company. We already are powering more than
Speaker 4: half a gigawat worth of data center because our total
Speaker 4: installed capacity for data centers is more than half a gigawat.
Speaker 4: So we're not a concept, we are not a PowerPoint.
Speaker 4: We're actually producing power for these data centers. And this
Speaker 4: year alone, we have increased our capacity to one gigaw
Speaker 4: a year, and we announced in our earnings call that
Speaker 4: by end of next year we can do two gigawards
Speaker 4: a year. That's two nuclear power plants worth of power
Speaker 4: coming out of our factory next year. And you know
Speaker 4: how long it takes to build a nuclear power plant
Speaker 4: and actually commission it. So we are no longer a concept.
Speaker 4: We are a mature technology that is affordable and can
Speaker 4: compete with other technologies that don't have as good attributes
Speaker 4: as we do. Street.
Speaker 2: I wonder if you could talk a bit about your
Speaker 2: business model. I know that you've announced deals with with
Speaker 2: other companies, most recently with Oracle. Of course, the company
Speaker 2: that I know is building investing a lot in its
Speaker 2: data center infrastructure.
Speaker 3: Could you.
Speaker 2: Carisould you just give us a sense here sort of
Speaker 2: of what those deals look like, what that deal with
Speaker 2: like in particular.
Speaker 4: Yeah, David, So our customers, here's what happens. Once we
Speaker 4: sign a deal with the customer, they either buy the
Speaker 4: capital equipment from us, and then they also sign up
Speaker 4: for a service contract. It's one hundred percent attached rate
Speaker 4: because we run those units for them and we maintain
Speaker 4: that and we offer them the promise guarantee of performance. Now,
Speaker 4: if they don't buy the equipment as cappex, we create
Speaker 4: a special purpose vehicle using financing and we simply sell
Speaker 4: them power just like the utility would, except this is
Speaker 4: on site and highly reliable and clean. So either way,
Speaker 4: when we create a special purpose vehicle, that financial investor
Speaker 4: in that vehicle gives us the upfront money for our capital,
Speaker 4: and we also have an annuity revenue coming out of service.
Speaker 4: So we have two streams of revenue if you want
Speaker 4: to think about it. Installed capital equipment that gets paid
Speaker 4: to us when we ship the equipment, a continuous service
Speaker 4: anuality over the tenure of the contract. That's how we
Speaker 4: make our money, irrespective of whether the customer actually buys
Speaker 4: the capital equipment or a third party buys the capital
Speaker 4: equipment and then charges the monthly rate from the customer.
Speaker 1: Heay, care way, I'm curious. I'm looking at one of
Speaker 1: my favorite functions on the BLOOMBERGTS and supply chain function,
Speaker 1: and I'm looking at your customers. Your biggest is I
Speaker 1: think American Electric Power Company, but I'm also looking at
Speaker 1: Alphabet Microsoft. You know, yep, sound familiar. These are some
Speaker 1: of the hyperscalers tell me how they are amping up
Speaker 1: their business, because they're the ones who are doing the massive,
Speaker 1: massive AI spend, But it looks like they're a very
Speaker 1: small part of your business. I'm just curious about what's
Speaker 1: the conversations you're having with them. Are they ramping up
Speaker 1: to do more with you? That would be very telling.
Speaker 3: Yes, the answer to your question is very simple.
Speaker 4: In the past, these hyperscalers would spend all their capital
Speaker 4: equipment just on building the data centers and they could
Speaker 4: simply pick up the phone and call the utility company
Speaker 4: and they would provide the power. No longer is that
Speaker 4: a reality because the utility does not have the amounts
Speaker 4: of power that these hyperscalers need. So now electricity power,
Speaker 4: which is what ultimately the data center needs to monetize
Speaker 4: the data center, is a supply chain that comes from
Speaker 4: the common good called the utility. So they have to
Speaker 4: own that supply chain or they are to procure from
Speaker 4: that supply chain. We are very much an integral part
Speaker 4: of that supply chain, and we are having conversations with.
Speaker 3: All the hyperscalers today.
Speaker 4: And you've seen the announcement aetorical expect to see similar
Speaker 4: things coming soon. Our American Electric Power contract was actually
Speaker 4: for AWS, which is another high for Scaler.
Speaker 2: I wonder if you could situate your company and this
Speaker 2: industry in the moment that we're in. So we're coming
Speaker 2: out of an administration that was doing a lot to
Speaker 2: support or encourage the adoption of alternative energy. It's way
Speaker 2: to say this administration that's not doing that, there's much
Speaker 2: less impulse to do that going forward. Here what do
Speaker 2: you see here as the ideal role of government in
Speaker 2: encouraging the adoption of technologies like yours? In other words,
Speaker 2: if you'd like to see fuel cell technology take off
Speaker 2: be more widely adopted, what is the role of government
Speaker 2: in making that happen if any.
Speaker 4: I think a simple role that they can play going
Speaker 4: forward is the US government, between the various government functions,
Speaker 4: the military, and the intelligence, is the largest procurer of
Speaker 4: electricity to be able to purchase electricity from technologies that
Speaker 4: are made in America. We are made in America technology.
Speaker 4: No other country in the world has the technology that
Speaker 4: we have. So they should embrace us, and they should
Speaker 4: give us an opportunity to serve the US government, the
Speaker 4: US military, and US intelligence and make us a really
Speaker 4: strong country.
Speaker 1: Well there, I was also curious about. And I'm looking
Speaker 1: at your market cap it's almost about nine point six
Speaker 1: billion dollars, and it is this excitement over AI. You know,
Speaker 1: there's all the money that's being spent care on the buildout,
Speaker 1: and I get that, but I'm just curious. And then
Speaker 1: there's going to be the maintenance and we might not
Speaker 1: need as many workers. And you know, we're all trying
Speaker 1: to get our head about around whether you know, the
Speaker 1: boom the bust part of maybe AI after the build out,
Speaker 1: what is the business for you? Is it maintenance? Is
Speaker 1: it replacement values? I'm just curious.
Speaker 4: Oh, thank you for asking that question, Carol. The buildout
Speaker 4: is just a tip of the iceberg. Why would these
Speaker 4: large hyperscalers spend close to a trillion dollars worth of
Speaker 4: capex just this year alone. If all that they're going
Speaker 4: to do is that build out, that's the training data centers.
Speaker 4: The inference data centers will be at least an order
Speaker 4: of magnitude larger than these training data centers, which are
Speaker 4: the foundation building blocks every factory, every bank, every law firm.
Speaker 4: They're going to have inference data centers close to the
Speaker 4: edge and these edge data centers are going to be
Speaker 4: located where you all live, where people are, where equipment is,
Speaker 4: and in those congested cities, getting the additional power needed
Speaker 4: ten to twenty megawats in every edge data center, which
Speaker 4: is an inference data center.
Speaker 3: We are ideally suited not just for the.
Speaker 4: Large data centers, but for these edge data centers because
Speaker 4: we are non polluting.
Speaker 3: We're quiet, we're reliable, and.
Speaker 4: We can provide it on site very quickly. So we're
Speaker 4: super excited about what we think is a really secular
Speaker 4: phenomenon and that's happening here that's going to last for
Speaker 4: a very long time to come. This is not just
Speaker 4: a build and bust cycle at all as far.
Speaker 3: As we see.
Speaker 1: So when you say a long time, are you saying
Speaker 1: decades or.
Speaker 3: I'm just going at least a couple of decades. At
Speaker 3: least a couple of decades.
Speaker 1: All right, Good to know. We'll stay in Touch'd love
Speaker 1: to hear because you certainly have a front row seat
Speaker 1: in terms of this spend and what is going on.
Speaker 1: Certainly all the power that's needed, it's just kind of astounding.
Speaker 1: Doctor Kerr Schweder. He is founder, chairman and chief executive
Speaker 1: officer of bloom Energy. The stock David up another nine
Speaker 1: percent in today's session, and it's really been on a
Speaker 1: tear this year, up about eighty four percent.
Speaker 2: So so interesting to talk about these companies because we
Speaker 2: focus so much on the AI providers, So as we're
Speaker 2: making these chatbots and all the developments there, but as
Speaker 2: we were just discussing the apparatus that you need to
Speaker 2: make all of that work so huge, so sprawling, and
Speaker 2: I'm just fascinating every time I kind of learn what
Speaker 2: goes into that making all of this stuff run right.
Speaker 1: Right, We just hear about that kind of the big hyperskeleton,
Speaker 1: and there's a lot of stuff that needs to be done.
Speaker 3: M hmm.