Looking at the Bloom results and reflecting on our many recent client discussions, the low-cost providers of fuel cells and electrolyzers are going to win disproportionately in our view, but whether that is Bloom or others remains to be seen. Lower costs will come with scale, and this should allow the leaders to stay ahead, especially if they control their equipment production as Bloom does. The negative for Bloom is that its equipment production is in the US, which may add costs, but the positive is that it is on-shore and this gives the company more control over delivery in the US. Companies that can scale quickly in this space and other renewable sectors, should see the benefit of economies of scale and this should drive more wins and more economies.
There is a lot in the ESG section of today's daily report and we will elaborate more in our ESG and Climate report next week (to be found here). The Bloom Energy results were strong and the modular nature of what Bloom is offering, in our view, should only increase the level of interest going forward. SMR and ATR base blue hydrogen projects are very large, requiring billions of dollars of capital and taking years to construct. The projects are further complicated by the likely need to build dedicated CCS with each unit. The methane fuel cells that Bloom offers are modular and can be much smaller and more incremental from an investment perspective. For blue hydrogen, they will still need CCS, but they offer a lower capital-based route to hydrogen and power today. We can see an opportunity to deploy these units, or something similar, everywhere there is CCS, as either an incremental source of hydrogen and power or a large source. Bloom still has work to do on lowering costs, but much less work than green hydrogen appears to have today, in our view.