Despite lower-than-expected revenue and a net loss of approximately $29 million in the first three months of the year, Fluence Energy executives touted master supply agreements with two ‘major’ hyperscalers on a May 7 earnings call.
The agreements signaled strong demand for the Arlington, Virginia-based company’s energy storage and inverter products after rising lithium prices “temporarily slowed some customer decisions” earlier this year, said Julian Nebreda, company’s president and CEO.
Fluence reported a total contracted backlog of 10.1 GW in the latest quarter, up 11% from the previous one, the company said in an SEC filing.
Nebreda said the master supply agreements positioned Fluence as a “qualified supplier” for the two hyperscalers, which he did not name. The company will still have to compete with others for actual orders, but Nebreda said he expects positive news on that front soon, adding that the company is in talks with other hyperscalers as well.
Fluence’s data center-related order pipeline grew about 30% during the quarter that ended March 31, the company said in its earnings presentation.
Fluence booked orders worth about $574 million in its second quarter, pushing its total backlog to a record $5.6 billion. In the first half of its fiscal year, the company booked 1.6 GW/6.2 GWh of energy storage orders, roughly double the pace of the previous year, Fluence said.
Market, analysts respond positively
The data center news helped investors look past the company’s revenue that fell well short of analysts’ expectations. Ahmed Pasha, Fluence’s chief financial officer, blamed the revenue miss on shipping delays that have since been resolved.
In an investor note titled “The 'BESS Case' Scenario,” Jefferies analyst Julien Dumoulin-Smith said Fluence’s master supply agreements came earlier than expected and represented “significant progress on its emerging data center thesis.”
Fluence did not disclose the potential scale of the orders that might result from the agreement last week, but “given hyperscaler load profiles, we believe the MSAs represent a significant portion of [its approximately] 12 GWh pipeline,” Dumoulin-Smith said.
Fluence’s stock price doubled over the three trading days following its earnings announced after market close on May 6. It reached a peak of $27.19/share but has since dropped to about $20.70/share in mid-day trading on Tuesday.
Data center demand drivers
Battery demand from data center companies and the utilities that serve them is boosting the fortunes of U.S. energy storage firms like Fluence. Domestic battery deployments could reach 35 GW/70 GWh in 2026 on the way to more than 600 GWh of cumulative deployments in 2030, Benchmark Mineral Intelligence said in February.
Though much of the demand has flown through to manufacturers of traditional lithium-ion energy storage systems, experts interviewed by Utility Dive also expect it to benefit alternative battery chemistries that can discharge at full power for longer durations.
“Battery chemistry decisions are increasingly use-case driven … [f]or example, when energy storage is deployed to displace traditional generators or extend backup capabilities, we’re seeing a growing interest in long-duration chemistries,” Jason Abiecunas, executive vice president of business development at FlexGen, a Fluence competitor, told Utility Dive last year.
While customers’ specific needs vary, “speed to power” is a widely held goal, Nebreda said. The two hyperscalers Fluence is working with now are also interested in “quality of power,” he added.
AI-induced power fluctuations can cause data centers’ power demand to ramp up and down by as much as 50% in a matter of minutes, Fluence said in its investor presentation last week. Those fluctuations can accelerate wear on expensive electrical and computing equipment, and — per a North American Electric Reliability Corp. warning earlier this month — may increase the risk of sudden load shedding that threatens bulk power stability.
Nebreda said Fluence systems’ response times were proprietary but assured investors they were “significantly shorter” than the 100 milliseconds required by some transmission operators.
