New Fuel Cell Plant in Connecticut Would Likely Triple Market Value of FuelCell Energy


The Connecticut Sitting Council just approved a draft proposal for 63-megawatt plant

The Beacon Falls Energy Park project will use fuel cell technology to produce electricity and FCEL will provide the equipment

The revenue from the Beacon Falls Energy Park project would likely triple the market value of FCEL

Based on current stock price, this new project offers a 300% upside potential for FCEL stock price

The Connecticut Sitting Council just approved the proposed construction, operation, and maintenance of a 63.3 Megawatt AC fuel cell facility located on Lopus Road, Beacon Falls, Connecticut. The 63.3 Megawatt Beacon Falls fuel cell plant will be the largest in the world and it will be built using equipment from FuelCell Energy Inc. (NASDAQ:FCEL).

Beacon Falls Energy Park, the limited company managing the project stated in a press release that on January 7, 2016, Connecticut Siting Council voted to approve their petition for a Declaratory Ruling that no Certificate of Environmental Compatibility and Public Need is Required for the proposed fuel cell plant.

It is one of the major milestones in the permitting process of the largest renewable, clean energy facility in the Connecticut that will provide energy to around 60,000 residents in the state.

Brief History of the Fuel Cell

The fuel cell technology by pumps Hydrogen into a stack of various metals in the form of gas, where the Hydrogen acts as the fuel and the metal elements act as cells. Hence, the fuel cell, as you can imagine.

This process creates a chemical reaction that ends up producing water, heat, and electricity. Although it produces some carbon dioxide, the amount is very negligible compared to methods of producing electricity, such as burning coal.

The technology is so old that even car companies like Chevrolet had a model called the Electrovan in the 1960’s.

Although fuel cell technology has been around since the early 19th century and it enables us to produce clean energy in an efficient way, none of the fuel cell companies in the history has ever made any profits.

Yes, you are reading it right, not a single fuel cell company has ever made any profit. Partly because electricity produced by the fuel cell is expensive compared to traditional methods. Especially, when global petroleum energy prices are low, the margin becomes too big to consider fuel cell as a viable option.

Price of energy is the most important aspects of proposed new power projects in the developing world. Consumers in places like China and India can hardly afford “clean” and “expensive” electricity.

FuelCell Energy Inc. Lost 64% Market Cap Over the Last Two Years

The last two years proved to be one of the difficult periods for FuelCell Energy Inc., as the company has lost around 64.4% market capitalization since the start of 2014.


Figure 1: FuelCell Energy Inc. Has Gone Up by 80% in the Last Two Quarters

This drop in market cap happened regardless of the fact that since May 2015, FuelCell Energy Inc.’s quarterly revenue has practically doubled from $27.5 million to $51.45 million, representing a 79.9% increase in just two quarters.

Upside Potential of FuelCell Energy Inc.

While we are excited that the fuel cell plant will provide clean energy for residents in Connecticut, we are more excited about the upside potential this news has for FuelCell Energy Inc.

The world’s largest fuel cell power plant will likely bring in more revenue for FuelCell Energy Inc. than its current market value!

In fact, according to Cowen & Co. analyst Jeffrey Osborne, the Beacon Falls Energy Park project will bring three times the revenue compared to FuelCell Energy Inc.’s current market value. As of January 8, 2016, FuelCell Energy Inc.’s market capitalization is $139.38 million, which means the it would likely become a $500 million company with the aid of this single project!

Commenting on the approval of the Beacon Falls Energy Park project, Mr. Osborne told Bloomberg that “We [Cowen & Co.] see this project as a huge win for the company.”


Figure 2: FuelCell Energy Inc. Price Spike Since the Approval of Beacon Falls Energy Park Project

Since the news became public, FuelCell Energy Inc.’s stock price has surged by around 31.57% as it stock price climbed from $5.32 per share to $7 overnight.


Based on the revenue predictions from the Beacon Falls Energy Park project, if the market cap has the potential to reach as high as $500 million, then based on today’s $6.16 per share price of FuelCell Energy Inc., it has the potential to reach as high as $18.48 per share. It translates into almost 300% upside potential for secondary investors.