Shares of Bloom Energy (BE 0.62%) rose over 35% last month, according to data provided by S&P Global Market Intelligence. The solid-oxide fuel cell pioneer had a relatively uneventful month until June 29. That's when the company announced it had signed a joint development agreement (JDA) with Samsung Heavy Industries to study and design fuel-cell-powered cargo ships.
The JDA builds on the collaboration originally announced in September 2019, which signaled to investors that the duo were exploring the potential to build cargo ships capable of being powered by natural-gas-fed fuel cells. Investors are hoping the relationship can become an important driver for the growth stock, but a payoff is years away.
The existence of a JDA means Bloom Energy and Samsung Heavy Industries have hammered out an agreement concerning who owns what intellectual property heading into the collaboration, how research expenses will be paid for, and who owns any intellectual property generated from the collaboration. In other words, it demonstrates a more serious relationship. It could be further solidified in the future with a joint venture, which would be a sign to investors that the technology is closer to commercialization.
Powering marine transport could be a lucrative growth opportunity for Bloom Energy. Solid-oxide fuel cells could reduce emissions and increase efficiency compared with distillate fuels (read: diesel) that commonly move cargo ships across the world's oceans and seas. Investors could even argue that the fuel cell technology is a better fit in marine transport than in stationary power grid use, which has never proved profitable for the business and faces headwinds as investment tax credits (ITC) expire.
The JDA between Bloom Energy and Samsung Heavy Industries demonstrates progress in what could become an important growth market for the fuel cell pioneer. However, investors have to acknowledge the long road ahead. The pair have to design ships powered by the technology, then shop it around to gauge interest among shipping fleets, then build ships, and then deliver them. That process is going to take years to complete -- and there's no guarantee the collaboration results in a commercialized technology.
Long story short, marine transport is a significant shot on goal for the business, but it might not be monetized in an appreciable way until later this decade. By then, advancements in lithium-ion batteries (such as solid-state batteries) and aggressive emissions policies could make electric cargo ships the go-to hauler for fleets.