AT&T became fuel cell maker Bloom Energy’s largest corporate client today as it now has a deal in place to install 17.1 MW of power. AT&T will use some of the power to support its data centers and some for its general operations. This is a good win for Bloom as it aggressively courts the data center market and trudges toward profitability. It’s nearing $800 million in money raised, assuming it can close its most recent $150 million round, and if Bloom doesn’t make it, it’ll be among the top ten VC disasters in history.
What I like about the AT&T deal is that AT&T opted out of buying the fuel cells outright and instead chose a power purchase agreement as part of Bloom’s energy-as-a-service product where customers can just buy the power from the fuel cells over a ten year contract. This is mimicking what we’re seeing in solar where companies like SolarCity are offering free installation in exchange for a long term power purchase contract.
I’m curious if Bloom will eventually try to repackage some of these contract deals as securities paying coupons, as Wall Street has indicated its going to do with solar contracts. This would allow Bloom to eliminate the short term resistance from customers over paying the hefty up front capital costs of the fuel cells themselves, while also allowing Bloom not to have to carry so much debt and deferred revenue on its books inherent in long term contracts. Fuel cell backed securities, anyone?