FuelCell Energy, Inc. announced a global restructuring of its operations in the U.S., Canada, and Germany that aims to significantly reduce operating costs, realign resources toward advancing the company’s core technologies, and protect the company’s competitive position amid slower-than-expected investments in clean energy.
The restructuring will allow FuelCell Energy to prioritize commercially available technologies to reflect changing market opportunities with an updated strategic plan. The plan involves further expanding the company’s Connecticut-manufactured molten carbonate technology to offer distributed power solutions. These solutions can deliver power swiftly, accelerate customer revenue, address critical grid deficiencies, and meet the increasing power demand driven by the rapid AI-fueled growth of data centers.
FuelCell Energy will also continue to pursue strategies for CO2 recovery for food and beverage and industrial uses along with its differentiated joint carbon capture platform development, including demonstrating carbon capture technology at the Port of Rotterdam.
Additionally, the company remains confident in the market potential for its solid oxide technology to deliver both electrolysis and power generation and continues to refine its differentiated product offerings. As part of its strategic realignment, the company will seek to develop additional partnerships that can meet market demand for multi-megawatt electrolyzer implementations. The company believes that the demonstration of its solid oxide electrolyzer at Idaho National Laboratory in 2025 will be pivotal to enabling that progress.
As a result of these changes, FuelCell Energy expects to reduce operating costs by approximately 15% in fiscal year 2025, compared with fiscal year 2024. These measures include a 17% reduction in FuelCell Energy’s workforce (including workforce reduction actions taken in September 2024), as well as reduced spending on product development, overhead and other costs.
This announcement by FuelCell Energy follows similar actions by other companies in the industry amid uncertainty about government policies to incentivize long-term, capital-intensive projects that are critical to the success of the clean energy transition.
“We have always known that the energy transition would not be linear, and we have built a portfolio of products and applications that allow FuelCell Energy to pivot when necessary,” said FuelCell Energy President and CEO Jason Few. “The steps announced today enable us to navigate the current market while maintaining the flexibility to capture tailwinds. These tailwinds are strengthened by power shortages in grids, high voltage transmission needs, and delays in centralized power projects due to lengthy permitting processes, which our distributed energy platforms do not experience. Additional power demand opportunities are driven by data centers, AI, cryptocurrency growth, more resilient and reliable grids, and carbon recovery and capture.”
The restructuring plan will not impact the way the company supports existing customers, and FuelCell Energy will continue to deliver replacement fuel cell modules and its service and monitoring contracts as before.
The workforce reduction does not impact FuelCell Energy’s carbonate manufacturing capabilities at its Torrington, Connecticut, facility. In fact, for fiscal year 2025 the company expects to operate at a manufacturing run-rate at or above the fiscal year 2024 level. Additionally, consistent with FuelCell Energy’s re-entry into the South Korean market, the company expects to add resources necessary to support its growing Korean customer base.
FuelCell Energy expects to book non-recurring accounting charges in the fourth quarter of fiscal year 2024 and the first quarter of fiscal year 2025 as a result of the workforce reductions. The Company has not completed its audit for the fourth quarter of fiscal year 2024, but expects to report total cash and cash equivalents, restricted cash and cash equivalents, and short-term investments in excess of $300 million as of its fiscal year end October 31, 2024. Additional details regarding the restructuring plan and financial results will be provided on the fiscal year 2024 fourth quarter earnings call currently expected to occur on December 19, 2024.
