ICYMI: AI Powers Green-Tech Surge

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1:29Visit VitalProteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease. A big part of parenting today is figuring out which technology will help your kid and which might hurt them, especially when it comes to learning. Brilliant is the online math tutor that's visual and interactive. Unlike other tools, it never hands your kid the answer. It helps them think for themselves with personalized support when they need it. It's helped millions of students excel in math from fractions to calculus.

1:58Sign up today at brilliant.org slash tutor and get 20 % off for back to school. That's brilliant.org slash tutor. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. One thing we like to watch is what's going on in the green space. Green firms, by the way, in the U.S. have found something of a lifeline in artificial intelligence after being bogged down by high interest rates, shrinking funding, and more recently, President Trump's sharp rollback of support. And our own Bloomberg New Energy finance team, they have recently pointed out that clean tech companies that have inked deals to support data centers have seen their stocks soar this year, outperforming the S &P 500.

2:47And that includes the share price of our next guest. We're talking about fuel cell provider Bloom Energy. It is up 76 % year-to-date, today trading at an all-time high, rising another 8.6%. Joining us to talk about the impact of AI and just the business overall is Dr. K.R. Schreeder, founder, chairman, and chief executive officer of Bloom Energy. It's a$9.5 billion market cap company. By the way, he was a former advisor to NASA and so much more. He joins us from San Jose. We could go on and on about your background, but we really want to talk to you. Good to have you here. It's been a while. Talk to us about how AI is specifically impacting and driving growth at your business.

3:27Carol, it's such a pleasure to join you. So, this is an amazing time in human history where we have not seen the need for power growth anywhere close to what we are seeing today. Let me put it in perspective. The amount of power that the big hyperscalers are saying they need between now and 2030 is equal to all the power every single family home in the U.S. put together would need. There are about 85 million single family homes, give or take. All the power that they use is going to be needed in addition to the power we have today to just power the AI data service. That's how large this opportunity is.

4:12And very clearly, the old model of centralized power plants with transmission distribution simply cannot meet that demand in a timely fashion. That is the opportunity. And Bloom was purpose built to provide on-site power for the digital revolution. And we are so happy to be in the right place at the right time. Well, help us understand how the company works. And you mentioned that on-site power, sort of what that looks like. Of course, there's been so much conversation in recent months about perhaps the need to invest more in nuclear power or fortify the grid, bring more power plants online. How do you see your company as maybe not a substitution for that, but a complement to the kind of growth and development we're likely to see here in the power grid going forward?

4:59I think we're going to need all forms of power in very large quantities going forward to meet our voracious energy needs. However, in the short term, if you take five to 10 years, natural gas to electricity is going to be the single largest contributor to this additionality. What Bloom does is takes natural gas without burning it, without combustion. We extract the chemical energy unit using a fuel cell and make electricity at the highest efficiency without air pollution, without noise in our generators because they're quiet, solid state and a very high reliability. For those reasons, if you are in a neighborhood that is going to have a data center, we are your best choice because we don't pollute your air, we don't use water, and we don't make any noise as we generate this reliable power.

6:00So you can have the economic advantage that a data center brings to the local community. at the same time, you're not compromising on your health. So one thing I want to ask you, actually, our Will Wade does, who really covers this space. And we were talking about you coming on and he said, well, wait a minute, let's talk about these fuel cells for data centers. Can fuel cells really work for this? What evidence have you guys seen that it does really work? So, yeah, that's a great question. And this is a really smart dude. I'm just going to put it out there. He's amazing. But anyway, go ahead.

6:38Absolutely. Look, the issue is we are progressing so fast in our technology at AI speed that some people that have looked at fuel cells 10 years ago and have that notion of who we are don't understand where we are today as a company. We already are powering more than half a gigawatt worth of data center because, you know, our total install capacity for data centers is more than half a gigawatt. So we're not a concept. We are not a PowerPoint. We're actually producing power for these data centers. And this year alone, we have increased our capacity to one gigawatt a year. And we announced in our earnings call that by end of next year, we can do two gigawatts a year.

7:23That's two nuclear power plants worth of power coming out of our factory next year. And you know how long it takes to build a nuclear power plant and actually commission it. So we are no longer a concept. We are a mature technology that is affordable and can compete with other technologies that don't have as good attributes as we do. Sreed, I wonder if you could talk a bit about your business model. I know that you've announced deals with other companies, most recently with Oracle, of course, a company that I know is building, investing a lot in its data center infrastructure. Could you, Karras, just give us a sense here of what those deals look like, what that deal with Oracle is like in particular?

8:08Yeah, David. So our customers, here's what happens. Once we sign a deal with a customer, they either buy the capital equipment from us and then they also sign up for a service contract. It's a 100 % attached rate because we run those units for them and we maintain that and we offer them the promise guarantee of performance. Now, if they don't buy the equipment as CapEx, We create a special purpose vehicle using financing and we simply sell them power just like the utility would, except this is on site and highly reliable and clean. So either way, when we create a special purpose vehicle, that financial investor in that vehicle gives us the upfront money for our capital.

8:57And we also have an annuity revenue coming out of service. So we have two streams of revenue, if you want to think about it. Installed capital equipment that gets paid to us when we ship the equipment, a continuous service annuity over the tenure of the contract. That's how we make our money, irrespective of whether the customer actually buys the capital equipment or a third party buys the capital equipment and then charges the monthly rate from the customer. Hey, KR, I'm curious. I'm looking at one of my favorite functions on the Bloomberg. It's a supply chain function. And I'm looking at your customers.

9:37Your biggest is, I think, American Electric Power Company. But I'm also looking at Alphabet, Microsoft. Yep, sound familiar. These are some of the hyperscalers. Tell me how they are amping up their business. Because they're the ones who are doing the massive, massive AI spend. But it looks like they're a very small part of your business. I'm just curious about what's the conversations you're having with them? Are they ramping up to do more with you? That would be very telling. Yes. The answer to your question is very simple. In the past, these hyperscalers would spend all their capital equipment just on building the data centers, and they could simply pick up the phone and call the utility company, and they would provide the power.

10:22No longer is that a reality because the utility does not have the amounts of power that these hyperscalers need. So now, electricity, power, which is what ultimately the data center needs to monetize the data center, is a supply chain that comes from the common good called the utility. So they have to own that supply chain or they have to procure from that supply chain. We are very much an integral part of that supply chain. And we are having conversations with all the hyperscalers today. And you have seen the announcement at Oracle. Expect to see similar things coming soon. Our American electric power contract was actually for AWS, which is another hyperscaler.

11:08I wonder if you could situate your company and this industry in the moment that we're in. So we're coming out of an administration that was doing a lot to support or encourage the adoption of alternative energy. if I say this as an administration, that's not doing that. There's much less impulse to do that going forward here. What do you see here as the ideal role of government in encouraging the adoption of technologies like yours? In other words, if you'd like to see fuel cell technology take off, be more widely adopted, what is the role of government in making that happen, if any? I think a simple role that they can play going forward is the U.S.

11:49government, between the various government functions, the military and the intelligence, is the largest procurer of electricity. To be able to purchase electricity from technologies that are made in America, we are a made in America technology. No other country in the world has the technology that we have. So they should embrace us and they should give us an opportunity to serve the U.S. government, the U.S. military and U.S. intelligence and make us a really strong country. One thing I was also curious about, and I'm looking at your market cap, it's almost about$9.6 billion. And it is this excitement over AI.

12:30You know, there's all the money that's being spent, Kara, on the build-out, and I get that. But I'm just curious, then there's going to be the maintenance and we might not need as many workers. And, you know, we're all trying to get our head around whether, you know, the boom, the bust part of maybe AI. After the build-out, what is the business for you? Is it maintenance? Is it replacement values? I'm just curious. Oh, thank you for asking that question, Carol. The build-out is just the tip of the iceberg. Why would these large hyperscalers spend close to a trillion dollars worth of CapEx just this year alone if all that they're going to do is that build-out?

13:11That's the training data centers. The inference data centers will be at least an order of magnitude larger than these training data centers, which are the foundation building blocks. Every factory, every bank, every law firm, they're going to have inference data centers close to the edge. And these edge data centers are going to be located where you all live, where people are, where equipment is. And in those congested cities, getting the additional power needed, 10 to 20 megawatts in every edge data center, which is an inference data center, we are ideally suited not just for the large data centers, but for these edge data centers because we are non-polluting, we are quiet, we are reliable, and we can provide it on-site very quickly.

14:00So we are super excited about what we think is a really secular phenomenon that's happening here that's going to last for a very long time to come. This is not just a build and bust cycle at all, as far as we see. So when you say long time, are you saying decades or? I'm just curious. At least a couple of decades. At least a couple of decades. All right. Good to know. Well, stay in touch. Love to hear, because you certainly have a front row seat in terms of this spend and what is going on, certainly all the power that's needed. It's just kind of astounding. Dr. K.R. Schreeder, he is founder, chairman and chief executive officer of Bloom Energy.

14:38The stock, David, up another 9 % in today's session. And it's really been on a tear this year, up about 84%. So interesting to talk about these companies, because we focus so much on the AI providers, those who are making these chatbots and all the developments there. But as we were just discussing, the apparatus that you need to make all of that work so huge, so sprawling. And I'm just fascinated every time I kind of learn what goes into that, making all of this stuff run. Right, right. We just hear about that kind of the big hyperscalers and their spend. But there's a lot of stuff that needs to be done.

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15:47and a lot of that stress comes from learning at the wrong pace. That's why I want to tell you about Brilliant. Brilliant is the online math tutor that's visual and interactive. It helps students actually understand math step by step and gives them guidance when they need it. Brilliant was built by experts from MIT and Harvard and is trusted by millions of teachers and parents. Sign up at brilliant.org slash tutor and get 20 % off for back to school. That's brilliant.org slash tutor. This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other.

16:25One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR. Fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at O-D-O-O dot com. That's Odoo dot com.

17:16Stay you. Visit VitalProteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.