FuelCell Energy (FCEL) signed a 75 MW data center deal in Texas, and its first AI order cost it a $17 million charge
Key points
- First capacity reservation agreement covers a planned 75 MW Texas project
- Revenue fell 29% to $33 million
- $17 million charge tied to the first 30 MW Fit Energy phase
On Wednesday, September 2, FuelCell Energy (FCEL) reported results for its fiscal third quarter, which ended July 31, and said that after the quarter closed it had signed its first Capacity Reservation Agreement, with a major data center operator, for a planned 75 MW project in Texas.
The operator was not named. The planned deployment is six 12.5 MW FuelCell Energy Block systems, and the agreement carries an upfront reservation payment that "provides the operator with priority access to FuelCell Energy's manufacturing capacity while the parties finalize definitive project agreements." Financial terms were not disclosed. Under the agreement the company reserves manufacturing capacity and starts buying long-lead components. This is a separate deal from the Fit Energy contract signed during the quarter, and it is that earlier contract, not the Texas project, that produced the quarter's $17.0 million charge.
Onsite generation is a workaround for data centers that cannot get a grid connection on their own schedule. Turbine delivery slots are filled years in advance, and buyers who cannot wait have been paying for onsite fuel cells and engines instead. In Texas, regulators froze new data center grid connections in August pending an audit of 474 gigawatts of interconnection requests.
Shares fell after the report. FuelCell had closed Tuesday at $17.08 and finished Wednesday at $14.40, down about 16%. The rest of the group went the other way, with Bloom Energy (BE) closing up about 1.7% and Plug Power (PLUG) little changed.
Revenue was $33.0 million, down 29% from $46.7 million a year earlier. Three analysts surveyed by Zacks had expected $39.1 million, according to the Associated Press. The company said the decline came mostly from fewer module deliveries to customers in Korea and lower output from the plants in its generation portfolio.
| Segment revenue | Q3 FY2026 | Q3 FY2025 | Change |
|---|
| Product | $18.0M | $26.0M | -31% |
| Generation | $8.8M | $12.4M | -29% |
| Advanced Technologies | $3.8M | $5.3M | -28% |
| Service | $2.4M | $3.1M | -22% |
| Total | $33.0M | $46.7M | -29% |
The loss came to $0.64 per share, against $3.78 a year ago. Net loss attributable to common stockholders was $45.3 million, down from $92.5 million, and the weighted average share count went from 24.4 million to 70.4 million. On last year's share count, this quarter's loss would have worked out to about $1.85 per share. The year-ago quarter carried impairment and restructuring charges that this one did not.
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The order that widened the loss
During the quarter, FuelCell Energy and Fit Energy entered a capital equipment purchase agreement, or CEPA, covering carbonate fuel cell block systems with a total generation capacity of up to 380 MW across four phases, intended to supply baseload electricity for data centers. Phase 0 is 30 MW, with deliveries expected in the fourth quarter of fiscal 2026. The other 350 MW sits in three phases that Fit Energy may elect at its sole option, 100 MW, then 125 MW, then 125 MW, each with a deposit due on election.
Those optional phases are what moved the backlog. Committed Backlog was $1.30 billion at July 31, up 4.1% from $1.24 billion a year earlier. Awarded Capacity Backlog, a line that stood at zero a year ago, was $2.35 billion, and it represents the phases Fit Energy has not elected. Added together they produce the $3.6 billion figure the company led with.
"The expansion of our Committed and Awarded Capacity Backlog to $3.6 billion reflects increasing customer demand for reliable, scalable infrastructure that reduces dependence on constrained transmission systems, simplifies permitting, and enables AI driven compute to be deployed faster," said Jason Few, president and chief executive officer of FuelCell Energy.
The gross loss widened to $24.5 million from $5.1 million a year earlier, and the company recorded charges of $17.0 million that "reflect the impact of contractual pricing provisions associated with specific inventory and firm purchase commitments arising as a result of Phase 0 of the CEPA as of July 31, 2026." The product gross loss, FuelCell Energy said, "reflects product costs and manufacturing overhead that currently exceed the contractual pricing established under the CEPA with Fit Energy."
FuelCell Energy tied that to volume, saying its per-unit costs reflect "the annualized production rate of approximately 37.1 MW at which we operated during the quarter, which remains below the production volume at which we expect our cost structure to align with market-based pricing for orders of this scale."
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The ramp and the cash behind it
FuelCell Energy is targeting an annualized production rate of 100 MW in October 2026, and an expansion of its Torrington, Connecticut plant to 500 MW annualized by June 2028. It expects positive adjusted EBITDA in the fourth quarter of fiscal 2027, subject to backlog conversion and execution. Adjusted EBITDA for the third quarter was negative $36.7 million, against negative $16.4 million a year earlier.
Cash and restricted cash stood at $737.3 million at July 31, of which $658.1 million was unrestricted. A large portion was raised during the quarter. The company sold 12,321,429 shares at $21.00 in a July public offering for net proceeds of $245.5 million, and sold about 4.1 million more shares through its at-the-market program at an average price of $13.31 for net proceeds of $52.9 million, which left about $0.5 million of that program available.
FuelCell Energy signed a memorandum of understanding with Siemens in July to design and supply electrical balance of plant systems, aimed at faster and lower-cost deployment on commercial projects of 100 MW and larger. It also delivered the first two carbonate fuel cell carbon capture modules to Esso Nederland's Rotterdam manufacturing complex, part of its work with ExxonMobil.
"Demand for electricity is accelerating, driven by AI, data centers, and the broader electrification of the economy," Few said. "With a growing commercial pipeline, expanding manufacturing capacity, and differentiated technology, we believe FuelCell Energy is well positioned to capitalize on these long-term market tailwinds."
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