Bloom Energy made a big media splash back in February, with a segment on 60 Minutes and a coming-out event at Ebay headquarters in San Jose attended by California Gov. Arnold Schwarzenegger, former Secretary of State Colin Powell, and senior executives from some of the fuel cell company’s early customers, including Google, Ebay, Coca-Cola and Fedex.
Now, a research report from NeXt Up released Tuesday morning on privately-held Bloom values the company at between $936 million and $1.034 billion if it were to go public. The valuation is based on a multiple of estimated revenues “achievable in the next 3-4 years;” by 2016, Bloom revenues could approach $686 million, the report says. This year Bloom will have an estimated $35 million in revenues, according to the report.
NeXt Up Research of Woodside, Calif., distributes its research through SharesPost, one of the leading platforms for buying and selling shares of private companies. NeXt Up analyst Suresh Balaraman says that Bloom Energy did not speak with NeXt Up, but that the analysts consulted many fuel cell experts. “We don’t have any insider information,” says Balaraman.
NeXt Up identifies data centers as an attractive use for Bloom’s fuel cells, because the Bloom boxes, which sell for $700,000 and produce 100 kilowatts of electricity, offer a cost-effective option for data centers that need uninterrupted power 24/7. After factoring in federal and state incentives, NeXt Up says Bloom’s solid oxide fuel cells can produce electricity at prices competitive with the grid.
There are still plenty of questions. The reliability of the technology is not yet proven, though the company is offering a 10-year warranty, NeXt Up points out. Early customers are using the Bloom boxes to power offices, which are more tolerant of power failures than data centers. My colleague Jonathan Fahay raised some good questions with his piece What Bloom Energy Needs To Prove as well. And there’s competition. Competitors in the solid oxide fuel cell technology include Siemens and Westinghouse Power; companies such as Hitachi, Fuji Electric and Ballard Power Systems make other types of fuel cells, according to the report.
In addition, Bloom has not publicly discussed in detail how the fuel cell works, says Balaraman. At the launch event in February, Bloom Chief Executive KR Sridhar kept emphasizing how his solid oxide fuel cells will lead to “clean, reliable power affordable for everyone in the world.” The road to that vision is a long one, since initially the cost is high for each fuel cell.
Bloom Energy, headquartered in Sunnyvale, Calif., was founded in 2002 and has raised $580 million from the likes of venture capital firms Kleiner Perkins Caufield & Byers and New Enterprise Associates in six rounds of funding, says the NeXt Up report. It has 240 employees.
There’s no indication when Bloom might go public, but the report does estimate that revenues will start to really pick up in 2013. Previous iterations of solid oxide fuel cells from other companies degraded quickly due to high operating temperatures, says Balaraman. If Bloom can bring down the price of its boxes and prove the reliability over the long term, it will likely create a nice market for itself. Whether the company goes public with a $1 billion valuation will be a matter of timing and luck.
By KERRY DOLAN/Forbes