What happened
Shares of Bloom Energy (BE 2.10%) shot up this morning and were 6.3% higher as of 11 a.m. ET. The hydrogen fuel-cell maker bagged a new deal, refueling investor interest in the stock that has dropped sharply since early April.
So what
Bloom Energy has received an order from industrial and agricultural chemicals producer LSB Industries (LXU 0.74%) for a 10-megawatt electrolyzing device, which produces hydrogen by splitting water into hydrogen and oxygen with electricity.
LSB plans to install the device at its Oklahoma facility to produce green hydrogen that can synthesize roughly 13,000 metric tons of zero-carbon ammonia per year. Production is expected to start in 2023.
Image source: Getty Images.
Ammonia is an essential nutrient for nitrogen (one of the most widely used fertilizers in the world) and is produced by synthesizing hydrogen and nitrogen. Bloom Energy says its electrolyzing devices are 30% to 40% more efficient than competing devices and can therefore produce hydrogen for LSB at a lower cost. Importantly, it's clean hydrogen, which could also help LSB qualify for federal incentives.
In fact, LSB's Oklahoma facility will be the largest green ammonia plant in the U.S.
Now what
Investors in companies in young industries like green hydrogen must be accustomed to hearing them bag new orders, but there's more to Bloom Energy's deal than meets the eye. It reflects the potential of renewables, particularly green hydrogen, in a crucial industry like fertilizers. The traditional ammonia synthesis process emits high amounts of greenhouse gas, and the fertilizer industry has often been called out for it and urged to decarbonize.
NYSE: BE
Key Data Points
With Bloom Energy shares also dropping alongside the broader markets yesterday and shedding 19% in the month of May through Tuesday's closing price, today's deal with LSB acted as the perfect catalyst for the stock to rebound.
