Q1 2022 Bloom Energy Corp Earnings Call
Okay.
[music].
Good afternoon, and thank you for attending today's Bloom Energy Q1, 2022 earnings conference call.
My name is Austin and I'll be your moderator for today.
All lines will be muted during the presentation portion of the call with an opportunity for question and answers at the end.
If you'd like to ask a question. Please press star one on your telephone keypad.
I would now like to pass the conference over to our host.
You may begin.
Thank you and good afternoon, everybody. Thank you for joining us for Bloom Energy's first quarter 2022 earnings call.
Supplement this conference call, we furnished our first quarter 2020 earnings press release with the SEC on form 8-K and have posted it along with supplemental financial information that we will reference throughout this call to our Investor Relations website.
During this conference call both in our prepared remarks and answers to your questions. We may make forward looking statements that represent our expectations regarding future events and our future financial performance.
These include statements about the company's business results.
The market strategy financial position liquidity and full year outlook for 2022.
These statements are predictions based upon our expectations estimates and assumptions. However, these statements.
They are subject to numerous known and unknown risks and uncertainties as discussed in detail in our documents filed with the SEC.
<unk>, our most recently filed forms 10-Q and 10-K.
We assume no obligation to revise any forward looking statements made on today's call.
During this call and in our first quarter 2022 earnings press release, we refer to GAAP and non-GAAP financial measures.
non-GAAP financial measures are not prepared in accordance with U S. Generally accepted accounting principles and are in addition to and not a substitute.
Substitute for or superior to measures of financial performance prepared in accordance with GAAP.
A reconciliation between the GAAP and non-GAAP financial measures is included in our first quarter 'twenty two earnings press release available on our Investor Relations website.
Joining me on the call today are <unk>, founder Chairman and Chief Executive Officer, and Greg covered our Chief Financial Officer, KR will begin with an overview of our business then Britt will review, the operating and financial highlights of the quarter.
After our prepared remarks, we will have time to take your questions.
I will now turn the call over to Keith.
Hello, everyone. Thank you for joining us today and for your continued interest in Bloom energy.
Very pleased with the resiliency of our operations in the face of an increasingly challenging global supply chain.
We are delivering on customer commitments, expanding our capacity and developing future products.
Greg will share our financial update in a moment.
We are confident in both the financial guidance, we provided for this year and then the outlook for growth we shared for the next 10 years.
During our Investor Conference on May 25.
We will share more details on our outlook and provide demonstrations of our products.
Let me focus on some global trends and how they are shifting the needs and expectations of large consumers of energy.
I will address how legacy solutions are not able to meet those needs and then provide real world. Examples of how Bloom Energy's unique platform is able to step in and fill the void in the marketplace by providing custom crafted value base.
<unk> distributions.
Commercial and industrial customers are seeing sharp spikes in demand for their products.
Global instability.
Steep increases in logistics costs and the push to have more domestic content is driving businesses to expand rapidly in the U S and to rely less on long supply chains.
Energy intensive businesses are not able to rely on utilities to meet their growing power needs.
Delaying them from expanding their operations and growing the revenue.
Google Energy offers such customers as rapid time to power option.
Here's one recent example.
We completed a 12.75 megawatt micro grids contract with two of six leading engineered materials company to provide mission critical power to two of their facilities in Pennsylvania.
Allowing them to deliver on their production commitments.
They're part in reducing microchip shortages and grow their business.
Investors and regulators are increasingly demanding that companies disclose the business risks.
And the financial impact that climate change poses in the short.
Medium and long term and subject those disclosures to third party artists.
Climate change and energy security risks.
Pleasingly C suite and board level issues.
In a digitally transformed world.
Energy is the lifeline for businesses to operate.
Hence corporate risk assessment now in-laws energy security.
Resiliency.
And de Carbonization in addition to cyber security.
More than ever businesses are recognizing and need to take to control of their energy future.
Bloom empower customers to choose the degree of power reliability.
Cost predictability.
And decarbonization that suits their needs.
It offers them solutions.
Implementable today.
And gives them the flexibility to upgrade in the future.
In all cases, it's about giving the customer the ability to take control of their present and future energy security and carbon footprint needs, thereby protecting their businesses.
And major contributor to de Carbonization in the short and midterm.
We'll be the switch from coal to natural gas.
It will create demand growth for natural gas.
However.
V at Bloom energy fully recognize that this increase in demand must be matched by efforts to abate methane leaks.
To that end, we recently announced a certificate trade agreement.
Cta for certified responsibly sourced natural gas in partnership with EQT.
The largest producer of natural gas in America.
The use of certified natural gas is gaining interest among major corporations such as T mobile.
Who value the benefits of clean reliable and resilient energy and the cost savings that come from reducing their electricity costs.
Bloom energy servers little power approximately 20 T mobile data centers across multiple states with responsibly sourced natural gas.
Now.
We have taken an industry leading step.
To pledge that our entire U S energy server fleet.
It will be 100%.
Powered by responsibly sourced guests.
We encourage the rest of the industry to follow our lead.
As this will be a major step to decarbonization of the energy sector.
Reducing methane emissions from oil and gas production by 75%.
It technically proven.
And economically viable option today.
We will have the same impact as replacing 60% of the world's coal power plants with renewable electricity.
Another de carbonization solution that Bloom offers.
Is waste to energy.
As organizations and community seek to Decarbonize there is growing interest in localized on site waste to energy solutions.
Just today.
We announced a unique one.
One five megawatt project in collaboration with the public works Commission of Fayetteville, North Carolina.
To generate renewable electricity.
From a mix of landfill.
<unk> water.
And swine gases as input fuel.
This innovative collaboration <unk>.
Emmons straight how municipalities can repurpose their waste abate methane emissions and provide clean and resilient electricity to their communities.
We applaud Fayetteville for.
For leading the way with the innovative waste to energy project and are confident that other communities will follow Fayetteville fleet.
The quest for a decarbonize future hinge.
Hinges on the ability to produce green hydrogen economically.
Blue.
Has the world's most energy efficient hydrogen electrolyzed water technology.
This January .
We successfully completed our first international deployment.
Of the Bloom Electrolyze Theyre in Gumi, South Korea.
Since then.
We are supportive of Socal gas is plan for the Angeles link.
Green hydrogen transport system that delivers hydrogen.
Produced from 100% clean energy and Electrolyze theirs to the Los Angeles Basin.
We are excited to collaborate with them.
And look forward to accelerating the hydrogen economy.
These examples.
Illustrate how bloom energy's value proposition.
Is getting more compelling by the day.
Customers are increasingly procuring bloom energy servers to not only save money.
But also too.
Secure clean power and Decarbonize.
After all Bloom energy solutions enable customers to take control of their energy Destiny.
I'm very excited about our future.
We are seeing our vision and mission become a reality.
Ill close now by saying that I look forward to seeing you all at our Investor Conference on May 25th hopefully in person.
If not virtually.
With that let me turn it over to Greg.
Thanks, KR it clear Bloom is meeting the challenges of today as we build a long term high growth company.
Like previous quarters, we've included our financial performance in our earnings release and are posted additional information to our supplemental financial package to our corporate webpage.
This quarter based on your feedback we've adopted a simplified format for the presentation of our non-GAAP reconciliations.
Let me point your attention to a few key highlights.
We had a record first quarter revenue of $201 million in line with our expectations.
At nearly $500 million in cash we maintain ample levels of liquidity to fund our near term investments.
This positioning is attractive as it moves the commercial discussion from cost to value.
It's no longer simply a customer asking how much can I say.
But more importantly, how quickly can you be operational.
We expect these opportunities to continue to grow, especially with the resurgence of U S manufacturing, increasing electrification and an.
<unk> of the digital economy.
Our record first quarter acceptances and revenue were driven by strong deliveries to our partners in South Korea.
As we discussed in February our first half of 2022 deliveries are limited as we replenish inventories from our record fourth quarter 2021 shipments and increase our stack manufacturing capacity as we were constrained in the units that we could provide an <unk>, we prioritize south Korea deliveries.
To ensure we meet our full year commitments JFK eco plant.
As we proceed through the year, we expect to increase our builds and acceptances each quarter with our second half volumes more in line with our historical U S to international mix.
We continue to invest in our manufacturing capacity research and development and our commercial resources.
We ended the quarter with $494 million in total cash.
This year, we plan to invest $150 million to increase our fuel cell stack manufacturing capacity from 280 megawatts to 580 megawatts by year end 2022, and over one gigawatt by the end of 'twenty three.
These are attractive investments.
Because as they reach full utilization the payback on our investment is less than one year.
Our.
First quarter non-GAAP gross margins of roughly 16% or below our 2021 exit point.
While our average unit selling price was roughly in line with the prior year average.
Our unit product costs relevant.
Material costs, which accounts for roughly 75% of our product costs were roughly flat versus prior year, while our non material cost increased.
Material costs, such as labor facilities logistics increase as we've begun to absorb the expense of our capacity investments.
We also had 30% fewer builds in the first quarter versus the fourth quarter of 2021, as we needed to replenish materials from Q4 boats.
The combination of increased cost on fewer build is temporarily elevated our unit product cost.
As our volumes increase throughout the year, our non material cost per kilowatt will decrease.
Like all power generation equipment, our suppliers utilized commodities, such as copper aluminum steel and nickel.
Historically, we've been able to achieve supplier price reductions through design optimization simplification and leveraging volumes, but recent inflationary pressures have made this difficult.
However, our supply chain team has been proactive and so far it's been able to offset inflationary pressures keeping our material cost relatively flat over the past four quarters.
This is not only a testament to our team's performance, but to the design of our product and the ample headroom we have in our cost down learning curves.
Given the current environment, we now expect to reduce product cost by low single digits versus our 10% target.
We plan to offset the resulting margin pressure by prioritizing higher margin acceptances in maintaining our targeted non-GAAP gross margin for the year.
We are reaffirming our 2022 guidance for revenue margins and cash.
With our strong backlog, we remain confident that we will deliver 240 to 250 megawatts of acceptances this year.
Based upon these acceptances, we should achieve the one one to 115 billion of revenue with roughly 24% non-GAAP gross margin.
Should deliver non-GAAP operating margin and positive cash flow from operations a first for blue.
These are strong results that coupled with the manufacturing capacity expansion will put us on a firm trajectory to grow revenues and margins in 2023 and beyond as.
As we look toward the second quarter, we expect to increase in our builds and acceptances versus the first quarter I.
I would expect revenues roughly flat to the second quarter of 2021 with margins improving versus the first quarter of 2022.
As in previous years, our second half revenue is planned to be greater than our first half.
We're excited about our Investor Conference on May 25, which will be held at our Fremont, California manufacturing facility under our theme mission to Decarbonize will provide a strategic update on how our technologies facilitate customers achieving their net zero emission goals.
We'll also give a more detailed update on the long term outlook summary, we provided at the beginning of the year.
As were planning this to be in an in person event. We're excited to share demonstrations of our technology provide tours of our newest facilities.
There'll be a great opportunity to see our progress firsthand and meet the people who are building the future of energy.
We've included the participation information as part of today's earnings release.
In summary, we're off to a strong start to the year like other global Industrial company. We are navigating challenges in our supply chain, but we have significant tailwind with the push for abundant clean resilient energy.
Had a very strong backlog to deliver on our 2022 targets.
We believe the company is at an inflection point to build upon our mature technology platform.
Solid record of accomplishment and robust growth roadmap, we're extremely excited about our future.
With that operator, please open up the line for questions.
Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad.
If for any reason you would like to remove that question. Please press star followed that too.
Again to ask a question press star one.
If you are using a speaker phone. Please remember to pick up your handset before asking your question.
We will pause here briefly ask questions on Russia.
Our first question is from Michael Blum of Wells Fargo. Michael Your line is open.
Thanks, Good afternoon, everyone. Thanks for taking my questions.
I wanted to ask a little bit about this partnership with EQT on responsibly sourced gas.
The question is do you think until now.
Not having that offering has somehow hindered your penetration of selling energy service to certain customers and do you think now with this partnership that will open up.
New front thanks.
That's a great question, Michael and so.
Here's the way to think about it.
Our customers want to do good.
<unk>.
For them, if they need reliable always on operations.
Today <unk>.
<unk> <unk> seven in large quantities.
Only option for them to take control of their own power just to put bloom boxes and use natural gas.
If we can provide that natural gas without methane emissions and then able to not only secure their power.
Not only save money, but along the way save the planet Leila do not do it that's why we're doing it we want to take the lead and we want to ask everybody on the planet why wouldn't you be doing this because it's technically liable.
Economically viable is here today, it's not some future solution that may happen later.
Planet is unparallel, let's go do it so they are taking the lead on this and we feel very proud about it and the Anchorage, we urge the lunch everybody else to follow our lead.
Okay.
Great. That's very helpful color I appreciate it second question I just wanted to ask was on service margins, which obviously are dragging the overall gross margin down a bit can you just discuss what's going on there and kind of what's the outlets can prove that.
Yeah. Thanks, Michael its Greg So so kind of two things in there first is the product cost first cost of the power modules. It's the same cost as in the new so youre seeing some of that come through within the quarter that will get better as volumes increase in the second half of the year. You've also got some some timing on when we do our power modules we.
Guys doing them early in the year till we get the benefit.
We get the benefit of them over the quarter, So theres a little bit of timing in there we still expect our service margins to be profitable for the year and we're targeting a strong second half. So we are.
Still within our framework to be to be profitable there within the year.
Great. Thank you very much.
Take care.
Our next question is from Julien Dumoulin Smith from Bank of America Julien You May proceed.
Hey, good afternoon. Thanks for the time I Hope you guys are all doing well.
I'll look forward to seeing you guys.
Absolutely. Thank you.
So maybe this is a great question here, but can we talk a little bit about the gross margin trajectory and just what the uplift is because I know you alluded to the margins being kind of slightly better in Q2 here.
Can you walk through I know you've already alluded to this in part in the remarks, but maybe you can elaborate a little bit more detail what exactly is driving the big uptick because obviously you've got this average number for 'twenty two.
And you've got a week for <unk>, and then something of an uplift in <unk>, but clearly implies a very strong back half.
And Greg if you take a step further what does that say for the first 23 as well just if you have that kind of an exit run rate.
Yes, so so so Julien it's a great question. So a couple of things to think about generally we run 40 60, meaning our acceptances in the first half of the year about 40% of what we do in the second half of the year, we are bringing on manufacturing capacity in the second half of the year. So if you just run rate it out we're probably going to be 30% in the first half versus the 7%.
70%, so I have a lot more operating leverage in the second half of the year than I do in the first half. The other thing I will tell you is we are investing significantly and quickly to get our operating capacity online in our plant in Fremont, we see the demand coming that we have to meet not only this year, but into the future we are investing and youre starting to see.
Some of those investment dollars, whether they be costs in the near term coming through on our product cost and thats driving things up in the near term that will get better and abate as we go into the second half of the year. So it's both the numerator and denominator issue in the first half in the first half that gets better in the second half of the year I think as we can.
Get through this and get to our exit point at the end of the year, we're still targeting 24% for the year. So that gives you a sense of where we believe exits will be towards the end of the year and we think we'll go into 'twenty four 'twenty three 'twenty four and beyond with that momentum.
Got it excellent and just to continue to find how much more kind of cost there is weighted in the first half when you think about it just to get that ramp going et cetera that you alluded to more on the numerator side of things.
I mean, you can see it right if you take in and look at our margins this quarter versus where they expect to be it's in it's in the kind of low single digits mid single digits on a dollar range. So we only had $200 million total revenue. So you can see three or four points there what it would equate to $1. It's not a lock given the given the first quarter revenue number.
I didn't want to assume all of it there alright excellent. Thank you guys I appreciate it I'll leave it there. Thanks.
Thanks James.
Yes.
Our next question is from Leo Mariani from Keybanc Leo You May proceed.
Yes.
Hey, guys just wanted to get a little better sense on Electrolyze or sales, obviously, you have that successful demonstration.
You had in South Korea, I wanted to get a sense, whether or not you think there's going to be some sales here in.
<unk> 22, and maybe you can just talk about.
Broad marketing step inside of Europe .
Product there given that domestic tissue behind the market.
That's a great question there so look.
For us when we look at hydrogen.
The only way we think about hydrogen.
He is scale.
Scale hydrogen doesn't hunt.
Okay. So look at what we are focused on in the.
In the projects we have.
We have partnered with silica gas to produce hydrogen and inject that into the pipeline.
We see that and they have announced the annulus link right. It is 4700 standard cubic feet per day of hydrogen is what theyre looking for that's larger than any project announced.
Partner, there why do you want to prove it out and I'll, let them, we want to grow with them. We believe in this huge market.
Look at what Youre doing on the nuclear side, working with Idaho National Laboratory, and demonstrating the ability to do what we need to do because again.
If you just look at the renewable penetration the nuclear industry today has gigawatts in gigawatts of curtailed power.
And they have the heat being able to combine those two and get hydrogen and it is going to happen faster than.
Any renewable excess capacity being available for hydrogen after taking care of the needs of everything you need to do when we look at scale right. So we are focused on.
The areas and the partnerships.
They're the can make impact on scale. That's all we are focused on as you know and as you should know we have the most efficient electrolyze around the planet.
You put that together with the scale that we're going after.
As is our tradition, we'll announce about sales orders when we close them.
Okay, and I guess could you maybe just talk about any progress in the European market. Obviously as a result of the Ukraine tragedy Europe is certainly taking some aggressive moves on the angi side, including some specific.
Hydrogen mandate that they got over there can you maybe just talk about how the sales pipeline in Europe has evolved in MDC situation, Ukraine, lean just saying any more significant orders in say 'twenty three 'twenty four.
Yes.
Great question again look.
There are two different things happening number one the insecurity that this entire.
Innovation is cost in the minds of culprits of having energy security and wanting to take control of their energy destiny in their own hence the play right into that.
If there's a cyber attack on the grid again, a distributed system is going to help.
It plays very well as a tailwind for us.
You look at.
European Union seeing natural gas based investments can be clean investments.
That plays right into our.
Into our sweet spot.
<unk> definitely expect in that timeframe that you are talking about for us to be very engaged and I can tell you that our European team right now feels like they have very strong momentum that customer inquiries and the funnel.
Okay. Thank you guys.
Thanks, Dave.
Question is from from Collyn roof from Oppenheimer Colin Your line is open.
Hey, guys can you talk a little bit about the efforts that you've made so far in terms of procuring renewable natural gas are certainly a lot of money pieces in that market. Just curious about the opportunities you have to lock in some of that.
And their customers.
Gordon.
Again.
Big area for us.
What we can what we can tell you is that entire industry players for us in two different ways.
The first way it place for us.
Is <unk>.
Are customers more and more asking us even if they start with natural gas today RSC today, they're legal.
In terms of that next step many of them are looking for LNG as a fuel source. So they can get to net zero carbon as opposed to the credits, which more and more people believe are not going to be sufficient for them to meet their goals and targets the.
The second place that it plays in for US is the producers of R&D use a lot of electricity and when they use bloom instead of a much higher carbon footprint utility electricity.
Their carbon intensity score lowers and the value of the Bloom system powering those R&D plans.
Is significantly greater than.
<unk>.
If they just use <unk>, so we see the R&D producers of the customer.
And we feel that the R&D day produced will be used by our customers. So it plays in both sides and our biogas team will tell you again, they're seeing a very robust funnel and interest in the sector.
Alright. Thanks, so much and then in terms of the dynamics that you're talking about in terms of migrating towards the deployments for higher price zones relative to some of those costs and some of the things that you guys have done a lot of work on in terms of moving the sales funnel towards some larger customers.
Trying to kind.
Square some of the commentary around the larger installations in pricing.
Relative to those announced you're talking about.
Higher costs.
Cost yes.
Yes.
Yes, sure Collin, it's Greg so the way to think about it is we are blessed by having a $2 billion backlog here right. So as we looked at the year and looked at where we were with cost and where we wanted to be on our targets.
Both at the gross margin line and at the operating income line. We saw it was clear that we were going to prioritize some of the higher margin things I think we're probably going to do a few more repowering than we would have done before we're going to prioritize them in the middle part of the year.
And we are going to take a few of the deals where we were.
Little bit more strategic maybe I'm, a little bit larger side, we were pulling those in for the year and noted is secure that commercial relationship with the customer we're going to delay those a quarter or two it's not going to impact the strategic relationship at all doing that gets me the mix I need to cover off this little bit of headwind may have on on the cost here in the near term as we build out capacity.
So we're blessed by having Optionality here I think it's a more of a short term movement of long term move.
Okay. Thanks, so much guys.
Yes.
Our next question is from Alex Kania from Wolfe Research.
Alex Your line is open.
Great. Thanks very much.
Two questions.
At least the first one is could you talk a little bit about what your customer new customer discussions just in terms of.
Kind of economics.
And the current natural gas price environment.
Kind of what does that mean for your questions. There and then also.
That is that kind of affecting any any kind of sense about customers really trying to accelerate towards your kind of like hydrogen solution or something like that sooner rather than later.
Yes.
Yeah, Hey, Alex it's Craig So I meant on the natural gas side right, we use it obviously and generating electricity here, but so doesn't the grid <unk>.
Producing the electricity so when we talk to a customer you've almost got that inherent natural hedge right, where the best alternative on a cost basis would be them versus us. So our expectation is those two things offset each other and you still get the benefits of the sustainability of the predictability and the resiliency on it so it hasnt really changed a lot.
A lot of the discussions.
I would point to is the time to power discussion is becoming more and more relevant for our customers, meaning it's less about and I think I said this in the script, but lot less discussions around can you save me a penny or two it's more around hey, how do you get your product here quickly. So I can operationalize because we can save a lot more money by creating product.
In revenue.
For the company then they would save a little bit on the electric Bill. So in some ways. It's just I'm not saying that you still have a commercial relationship there, but it is definitely a different dynamic than we've had before.
Great and then.
Yeah.
That's helpful. And then maybe just in terms of kind of.
Customer interest on the hydrogen side, if there's kind of any right now or is it more still theoretical.
And then kind of on a related question I guess related to hydrogen intellectual lasers.
What sort of kind of you mentioned nuclear but are there any other kind of interesting industrial customers that would really kind of be most interested in this from a scale perspective.
Yes so.
It is it is our strong belief based on our conversations that we're having is the hard to decarbonize industries such as steel.
Such as chemical refining.
On your production.
Becomes extremely extremely interesting.
And.
They are they are talking to us, but at the same time I think it is going to take a little bit of luck a little bit of market.
Them, knowing the pricing of carbon and the marks.
Market acceptance, but very strong interest.
That's where the interest is there.
Probably most probably be the first places that youre going to see the adoption of these technologies.
Great. Thank you very much within a couple of weeks.
Great looking forward to it.
Our next question is from Mohit <unk> from Credit Suisse Rohit. Your line is open.
Hey, Thanks for taking my questions.
Just on the previous question around natural gas.
Could you just talk about Macau.
Customers generally.
Either hedged gas prices or look at gas prices.
Especially with gas growing to $90.
I understand it's probably natural hedge again utilities.
But also like in terms of yes.
So I didn't see any gas prices how do they.
The deal with us.
Yes, it's Greg so so each customer has a little bit different view on what risk they want to take.
I would say some of our customers the gas risk is all within the customer we don't take that risk.
But as we look at it with them. There are some that really don't want to take much risk at all and they will lock in either through pre purchase or a hedge to make sure that they don't have price volatility other ones, especially large purchasers will use spot markets more because they can get some benefits on that price or a combination thereof.
So it's really around how that customer decides how they want to procure that.
Got you.
Good.
Can you check the mix of the new driver.
Okay.
Design.
The thing with <unk>.
So some news around Youre getting some.
Got an approval is around that.
Sounds like something flawed recorded in market or U S. Silica, how do you think about that product and its ability to.
Yes.
The power tower market is extremely interesting to us okay and the reason is extremely interesting to us is.
As electrification happens.
Off lease vehicles.
Automotive.
As more energy is needed.
Then we go to this digital transformation large concentrated cities that real estate is very expensive.
Putting that last mile of grid upgrade is going to be difficult, bringing that resiliency is going to be difficult.
So just like we see in fill and we have done it.
Done a similar Tyler in long island.
And the.
We want to we think.
In major cities, the Atlantis of premium it.
It will be a bloom Tyler.
And an additional benefit of the Bloom pillar in addition to saving.
Savings space and.
<unk> location is that not only can even contemplate some of that heat and provide hot water to the customers, thereby giving an additional benefit and further de carbonization. So we're fairly bullish about that concept, but it is it is more applicable to places that space as a premium.
Got you.
What are you hearing more on balance sheet.
Great.
Preferred senior.
Our next question is from Graham price of Raymond James.
Your line is open.
Hi, good afternoon, thanks for taking the question.
Just following up quickly.
Quickly on kind of green hydrogen in Europe .
Really appreciate the comments there.
Just wanted to see is there any.
Opportunity to kind of accelerated the timetable for starting that production.
Given all the tailwind that we've seen or is that pretty much flat.
Yes.
I think when we look at the market in Europe is interesting for sure. There is some incentives there that make the market attractive there is a lot of interest in that space and given the what's happening with Ukraine is bringing a lot more interest into it. These are projects that are going to take time in order to build out and deliver.
And we are in conversations with folks to use our technology to help them build out their space.
But youre definitely seeing the continued tailwind and movement based on what's happening here today.
Got it.
And then for.
For my second one.
Thinking about the infrastructure Bill.
We set aside funds from the Doe to create hydrogen hubs across the U S.
Wanted to see.
What progress there and then from what you've seen.
Our teams are engaged and hubs.
No matter, where it is in the country and <unk>.
Clearly there are integrators and those integrators ultimately for them to be competitive have to pick the most competitive technology. So you shouldn't be surprised that they are all coming to us for the Elektra laser.
And so we are very engaged with many of these teams.
And we'll be happy to support any and all of the ones that win.
Got it.
Thank you very much.
Our next question is from Jeff Osborne of Cowen <unk> Company, Jeff Your line is open.
Hey, good afternoon, two quick ones and then a housekeeping question on the quick ones when will the Idaho National Lab report around third party validation of the authorized.
Again, a dose those units.
And they will conduct the test and we like to give them the independents and when they are ready we will do it.
In our system to work.
It's damn auditing validating and feeling comfortable with it.
And we don't like the restaurant, so, but but sometime sometime in the near future you should be expecting that everything is going well.
Great to hear and then Karen can you just touch on the China situation or any supply chain for Enbridge stacks play, it's anything else that you need in the event that the Shanghai cohorts in other areas of China shut down how should we think about the risk to production.
Yes, like those other technologies, we don't use membranes, but.
No look China, China as a rule.
Okay.
By the time, you get to tier two tier three tier four suppliers the entire planet I don't carry the lowest dependent in one way or another on China. So China is doing well is important for all of the world and we hope those situations for the sake of the Chinese people as well as the global economy improve very fast.
Our teams are extremely resilient.
<unk> managed through everything and the good news that you need to know is.
Knock on wood, we have met every single customer shipment and expectation on schedule and that speaks volumes to our teams.
Absolutely great to hear and Greg just a quick housekeeping one you mentioned Repowering a couple of times the $2 40 to $2 50 acceptances relative to your capacity can you just touch on how many megawatts will be re powered this year.
It'll be in this low it'll be in the single digits it won't be large.
It won't be a big number but it is there enough that they can help balance out a little bit of cost we're seeing.
Makes sense. Thank you that's all I had.
Alright, Jeff.
Our next question is from Noel Parks of Tuohy brothers.
Your line is open.
Hi, good afternoon.
And Amit.
I really want to pivot back to the EQT transaction.
And at the time, it was announced I remember thinking to myself.
At last it seems kind of obvious to me that.
An agreement like this is.
Exactly where gas producers should be heading and but it's been very striking to me that.
And pretty familiar with EQT.
Seems like there hasnt been much initiative, even from those who put together good volumes of certified gas.
To look for applications like like fuel cells. So I wonder if you could just talk a little bit about how that came together and.
I was wondering is there anything analogous maybe as far as your Baker Hughes relationship.
Maybe.
Some are coming together of legacy hedge their generation in transportation and.
And what fuel cells can enable.
Look in the very let's say good.
Good question, you're asking for the roots of this happened right.
Bloom, we're always asking.
What is the most responsible right thing to do.
And for Us.
It seems very obvious.
That methane emissions.
Something we should not accept then it is very easily possible to prevent those submissions.
The history of this company comes from Us, putting rollers on Mars, and making them do what they need to do.
For having to take we should not stop and molecule methane from 75.
Okay.
So it's so yes, Toby rice and EQT, we found a great partner, who said we are willing to do this.
In <unk>, we found a great partner that said, we are willing to independently audited.
And then we found this report that said.
75% of methane leaks from oil and gas.
Which is technology exists today to prevent that youre talking about.
Pennies on a gallon or attorneys on MVP or to be able to provide the premium to do this that.
That would be the equivalent of retiring 60% of global coal power plants, and replacing them with renewable can you imagine how long thats going to think we.
We can do this today.
When we saw that we said we have to be the leader and we have to do it and similar to the first person buying.
Fair trade coffee.
Our organic vegetables somebody has to start at the moment and everybody will follow so we wanted to be the leaders and EQT LMI Q wanted to be leaders with us and we found a tremendous partner in T. Mobile that came and said can we be the first corporate customer that can do this so that's how it happened.
And now we have placed our entire fleet.
Blooms and kind of fleet in the U S.
We'll run only on responsibly sourced gas, whether our customer base for it or not.
Okay.
That's terrific.
By next stock goes to having done the first to achieve an agreement like this.
Can you talk at all about.
How is it is helpful for your your sales effort because I imagine it gives us another whole dimension to the story you can tell when your sales people are pitching.
Argue proposition overall.
It is it is it.
It is definitely of great interest because today, when we sell to any of our corporate customers.
That is definitely a sustainability and ESG discussion that goes on along with it.
And the fact that.
We are able to tell them that you will be able to take the best available technology today with the lowest carbon footprint, while at the same time protecting and securing your business 24, seven that's a very compelling argument and it is it is definitely helping this as one great case of.
Do good and make good.
Great that's very helpful. Because it does sort of.
Just to illustrate how in a way this is such a low hanging fruit, what youre talking about with methane.
Commission, so you're right Mitch.
Mitigated.
Okay.
Thank you thanks a lot.
Okay.
Yeah.
That concludes our question and answer session I will hand, the conference back to management team for any final remarks.
Thank you operator.
Again, everyone. This is K R. I want to thank you all for your questions and interest in Bloom.
Let me leave you now with these three fundamental thoughts about bloom energy and our position.
As a leader in this energy transformation.
The first thing is our business has really matured over the last several years.
And you can see how we are executing on our business plan.
How we are resilient and managing to this global turmoil that youre seeing around us.
Exceptionally proud of our team.
That is handled all of these broader global supply chain challenges and macros.
And continue to execute execute execute so.
<unk>.
Of all the trends that we've been talking about for years.
Whether its resiliency with its decarbonization, whether it is the predictability of price of power.
Whether companies needing to take control.
Which one of those have become less relevant today.
Which ones have become more relevant to all become more relevant.
This digital transformation.
Is making companies understand.
That is they don't take care of their own energy.
They are putting their business at risk.
The legacy solutions like the grid are not able to meet this goal.
And.
On the other hand.
Have solutions.
And the C suite.
And the board and the governments that are finally, beginning to listen to us.
The third part.
As we have a platform energy platform with fuel flexibility incredibly high efficiency.
And adaptability to a variety of applications in the marketplace.
It provides our company Bloom energy.
With a degree of Optionality that no other company in this.
Area can claim.
So all of these combined you can very clearly tell makes me very excited optimistic and enthusiastic.
I look forward to seeing you are seeing many of you in the coming weeks during our Investor day, and look forward to showing in discussing with you and lot greater detail. Thank you for your time today.
Okay.
Thank you for your participation you may now disconnect your lines.
[music].