Carbon Capture and Hydrogen Could Reshape FuelCell Energy

FuelCell Energy FCEL is positioning itself where distributed power, carbon capture and hydrogen production converge, as stricter emissions rules and rising electricity demand reshape the energy market. Its carbonate fuel cell platform produces continuous baseload power through a combustion-free electrochemical process, supporting high efficiency and low emissions. Building on this core technology, FCEL and oil supermajor ExxonMobil XOM have worked together to enhance the system so it can capture carbon dioxide directly from industrial exhaust streams while generating lower-carbon electricity, heat and hydrogen.

Laboratory testing conducted with ExxonMobil has shown carbon capture rates above 90%, and a pilot project is planned for 2026 at ExxonMobil’s Rotterdam manufacturing complex to test the system under real operating conditions. If successful, the ExxonMobil partnership could demonstrate a scalable pathway for industrial decarbonization.

Compared with conventional post-combustion technologies that require large amounts of additional energy, FuelCell Energy’s integrated approach captures carbon dioxide as part of the electrochemical process itself. This improves efficiency and allows the system to generate several potential revenue streams at once. When treating industrial exhaust (or ‘flue’) gas, it can also cut nitrogen oxide emissions by about 70%, further improving its environmental performance.

The ongoing collaboration with ExxonMobil highlights how the technology could help reduce emissions in carbon-intensive industries without sacrificing steady power output. At the same time, FuelCell Energy is developing internal carbon recovery solutions that can be built into new installations or added during scheduled module replacements, allowing existing systems to gradually lower their carbon intensity.

Hydrogen is another major growth opportunity. In 2025, FuelCell Energy expanded solid oxide electrolysis testing at Idaho National Laboratory, where its system became the largest electrolyzer tested at the site and the first fully integrated solid oxide platform evaluated there. When combined with nuclear-generated heat and power, efficiency could approach the equivalent of 100% on an electrical basis.

The company’s Tri-gen project with carmaker Toyota Motor TM at the Port of Long Beach further demonstrates its hydrogen capabilities, producing electricity, hydrogen and usable water from a single installation. As projects with ExxonMobil and Toyota progress, broader deployment across carbon capture and hydrogen markets could significantly diversify FCEL’s long-term revenue base.

The Zacks Rundown on FCEL

Shares of FuelCell Energy have surged more than 100% over the past six months, breezing past the industry's growth.

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FCEL currently has an average brokerage recommendation (ABR) of 3.44 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. 

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The chart below shows FCEL’s earnings over the past four quarters.

Image Source: Zacks Investment Research

The stock currently carries a Zacks Rank #3 (Hold). 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).

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