FuelCell Energy FCEL helps customers produce electricity directly at the place where it will be used, rather than depending entirely on power supplied from distant generating stations. Its fuel cell systems can provide steady, round-the-clock electricity to data centers, factories, utilities and commercial buildings. This on-site approach can help customers reduce their reliance on crowded transmission networks, avoid some grid-connection delays and maintain a more dependable power supply for operations that cannot afford lengthy outages.
FuelCell Energy’s systems generate electricity through a chemical reaction instead of burning fuel in the way conventional generators do. They can operate using natural gas, biogas or blends containing hydrogen while releasing very small amounts of common air pollutants. The systems can work alongside the main electricity grid or operate independently when grid power is disrupted. They also produce useful heat, which customers can reuse for heating, steam generation or cooling. This allows facilities to obtain both electricity and usable heat from the same fuel, improving overall energy efficiency.
FuelCell Energy sees growing interest in its power-generation systems, particularly from AI data centers that consume large amounts of electricity and must remain operational around the clock. The company offers modular units that can be installed in stages, allowing customers to begin with a certain level of power and add more blocks as their needs increase. FuelCell Energy is also expanding its manufacturing capacity and working with partners and customers on larger on-site projects. Rising demand for reliable, locally generated and lower-emission electricity could therefore support the long-term growth of this business.
FuelCell Energy is one of several companies seeking to meet the rising electricity needs of data centers. The rapid growth of AI is increasing pressure on utility grids, which may not always be able to provide new power connections quickly. Energy companies are therefore offering different types of on-site and backup power solutions. While their technologies vary, each aims to give data-center operators a reliable electricity supply that can support future expansion.
Different Approaches to Data-Center Power Demand
Bloom Energy BE could benefit as AI and data centers create stronger demand for dependable on-site power. Bloom Energy supplies fuel cell systems that generate electricity where it is used, helping customers avoid grid delays and connection bottlenecks. Bloom Energy has also pointed to healthy commercial interest and a growing pipeline of projects, suggesting that demand for distributed power solutions may remain strong as data-center electricity needs continue to rise.
Enphase Energy ENPH is not directly focused on data centers, but it may still benefit as businesses seek more reliable and flexible power systems. Enphase Energy offers commercial microinverters designed for three-phase electrical setups commonly used in larger facilities. Enphase Energy also provides battery storage and energy-management tools that can support backup power, control electricity use and allow customers to expand their energy systems as their needs grow.
The Zacks Rundown on FCEL
Shares of FuelCell Energy have surged more than 180% over the past six months, breezing past the industry's growth.
FCEL currently has an average brokerage recommendation (ABR) of 2.78 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by nine brokerage firms.
The chart below shows FCEL’s earnings over the past four quarters.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).