Explainer-Why AI data centers are powering a boom in fuel-cell demand

Fuel cells are gaining popularity among major US data center operators as they seek to meet the growing demand for power while grappling with grid constraints, according to a report by energy research firm Rystad Energy. Investments in fuel cells for data centers are projected to soar to approximately $30 billion by 2030 from $2.8 billion in 2025.

Unlike traditional power generation, fuel cells produce electricity through a chemical reaction involving fuel and oxygen, resulting in direct conversion of the fuel's energy into electricity. Two prominent companies, Bloom Energy and FuelCell Energy, are at the forefront of this technology, employing solid-oxide and molten carbonate fuel cell technologies, respectively, which are adaptable to various hydrogen blends.

The surge in demand for fuel cells is driven by the immense electricity requirements of data centers, which need reliable power 24/7. Connecting these massive loads to the US grid can take three to six years, prompting developers to consider on-site power sources. Bloom Energy CEO KR Sridhar announced a project with Oracle, delivering power to their Utah site in less than two months, and another project in New Jersey with Nebius, where planning board approvals were obtained within three months of signing the contract.

Rystad predicts that about 40% of the projected US data center capacity in 2030 might opt for dedicated on-site power rather than solely relying on the grid. Additionally, fuel cells emit lower local pollutants compared to conventional gas-fired generation due to their efficient combustion process.

Several companies stand to benefit from this trend. Bloom Energy's third-quarter revenue jumped 138% to $1.24 billion, with a net profit of $250.3 million, up from a $23.1 million loss a year earlier. The company has increased its 2026 revenue forecast to $4.4 billion to $4.6 billion. Oracle, a leading cloud computing giant, plans to procure up to 2.8 gigawatts (GW) of Bloom fuel-cell systems, with 1.2 GW already contracted.

FuelCell Energy is also targeting the data center sector, with CEO Jason Few stating that the time required to power up is now as crucial as the cost of power. The company anticipates that data centers and related businesses will account for 75% to 85% of its business within two to three years, up from 25% to 30% currently. Rystad estimates the industry's order book at around 9 GW, including framework agreements with companies like Oracle, AEP, Equinix, and Brookfield, though these do not guarantee firm orders for the entire capacity.

However, the industry's capacity to scale rapidly is uncertain, as annual fuel-cell manufacturing capacity is expected to rise to 4 GW by 2030 from 1.8 GW currently. The main factors influencing timelines for 100 MW-plus projects are site readiness, permitting, and supporting infrastructure, not the fuel-cell technology itself.