Sinolink: Power shortage drives the rise of solid oxide fuel cells (SOFC) as the new standard for power supply in AI data centers.

Sinolink released a research report stating that the solid oxide fuel cell (SOFC) industry has entered a large-scale volume expansion cycle from 1 to 10. The AI data center scenario provides a clear growth path and performance realization capability for the industry chain. The company is optimistic about the development prospects of the SOFC industry chain, with investment focusing on two main directions: 1. Bloom Energy's core supply chain: BE, as a global leader in commercializing SOFC, has a backlog of orders of around $6 billion in Q1 2026 (up 140% year-on-year) and service backlog of around $14 billion, with plans for a 5GW production capacity plant. Companies deeply embedded in BE's supply chain in China will directly benefit from the increase in BE orders. 2. Domestic leading companies with independent system capabilities: As the SOFC industry expands domestically, system-level manufacturers that have entered the demonstration verification or small-scale production stage and have clear expansion plans towards AI data center scenarios will benefit. Sinolink's main points are as follows: The power demand for AI data centers is increasing rapidly, creating a rigid power gap due to the lag in grid expansion. AI capital expenditure is growing rapidly in the United States, with chip power consumption continuously increasing and data center power demand rising. According to BlackRock, the U.S. will need to add approximately 148GW of generation capacity by 2030 to meet data center demand. However, the expansion pace of the power grid infrastructure severely lags behind: data centers can be built in as fast as 8 months, while the construction period for substations and transmission lines is as long as 5 to 13 years. Power "availability" has become the primary bottleneck restricting the deployment of computing power, and self-owned distributed power sources have become a rigid threshold rather than a commercial option. Significant supply bottlenecks in traditional power solutions, providing an opportunity for SOFC differentiation. In terms of heavy-duty gas turbines, GE's Nova gas power generation has orders of 100GW on hand, with Siemens Energy's backlog rising to 154 billion, and delivery time already scheduled for 2029 to 2030. With only 60 to 70GW of global annual production capacity, some regions have delivery cycles as long as 8 years. The construction period for small modular nuclear reactors (SMR) is 3 to 5 years, making it difficult to meet short-term power demand. However, with modular design, SOFC systems can be delivered rapidly, with a 50MW system in 90 days and a 100MW system in 120 days (Oracle deployed in just 55 days), filling the urgent gap in power supply. Significant advantages of SOFC technology: high efficiency, DC architecture saving BOS, outstanding environmental performance. SOFC has a pure power generation efficiency of 65%, with a combined heat and power efficiency of 85% to 95%, surpassing traditional gas turbines. Its native output of 800V DC eliminates the need for multiple AC/DC conversion steps, saving approximately $1.35 to $1.5 billion in capital expenditure for power distribution and conversion equipment for a single GW AI data center. In addition, SOFC operates with zero water consumption, near-zero NOx emissions, and noise levels of only about 65 decibels, suitable for community deployment. With continued repeat purchases from top customers, SOFC is transitioning from an "optional solution" to an "industry standard." ITC subsidies coupled with scale reduction costs, economic turning point driving industry acceleration. Under the ITC framework, SOFC can enjoy a 30% basic offset, which can go up to 50% when combined with local manufacturing, energy communities, and other conditions. The current cost of SOFC systems is around $2075 per kW, with the U.S. Department of Energy setting a target to reduce system costs to below $900 per kW by 2030. With gas turbine prices continually rising due to supply shortages, the total power generation cost after SOFC subsidies has become close to parity. As the industry expands, the economic benefits will continue to improve, driving SOFC to be competitive in a wider range of industrial and commercial markets. Risk factors include: AI data center power demand falling short of expectations, intensification of competition in SOFC technology routes, execution risks in doubling Bloom Energy's production capacity, low proportion of SOFC business income for some domestic companies and a long period of commercial verification, and potential disruption to the Sino-US SOFC supply chain due to geopolitical risks.