Ladies and gentlemen, thank you for standing by, and welcome to the Bloom Energy Corporation's 2020 Annual Meeting of Stockholders' Conference Call. I would now like to hand the conference to our speaker today, KR Sridhar. Please go ahead.
Good morning, ladies and gentlemen. I'm KR Sridhar, Chairman of the Board of Directors and CEO of Bloom Energy. It's my pleasure to welcome you to the 2020 Annual Meeting of Stockholders of Bloom Energy Corporation. We appreciate your attendance, your interest, and more importantly, your support of Bloom Energy. It is now 9:00 A.M., and I would like to call this meeting to order. In light of the COVID-19 pandemic, and for the safety of our employees, directors, and stockholders, this year's annual meeting is being conducted in a virtual-only format. We designed the format of this year's meeting to ensure that our stockholders who have logged into today's meeting using the 16-digit control number will be afforded similar rights and opportunities to participate as they would at an in-person meeting. The meeting format will follow the agenda displayed on the virtual meeting website.
We will first conduct the formal business portion of the meeting. During the meeting, questions from stockholders should pertain to the proposals being considered at that particular time. After the formal part of the meeting, we will adjourn, and I will review the company's recent business activities. Please reserve any questions pertaining to the business until this time. In order to ensure an orderly meeting, we ask that everyone follow the meeting rules of conduct and procedures posted on the virtual meeting website. If you experience any technical difficulties during the meeting, please call the technical support number posted on the virtual meeting website. With me today is Shawn Soderberg, Bloom's Executive Vice President, General Counsel, and Secretary. Ms. Soderberg will act as the Secretary of this meeting. Also present at the meeting today are members of our Board of Directors, whom I would like to introduce.
I will first introduce our lead independent director and director nominees, and then introduce the board members present in the order of tenure. However, before doing that, I would like to take a moment to recognize Peter Teti, who is not standing for reelection this year. Peter has made significant contributions to the company and board, and we will miss his insight and counsel going forward. Now, I would like to introduce our lead independent director, John Doerr. Our Class 2 Director Nominees are Mary Bush, Eddy Zervigon, and Jeff Immelt. Our other directors in attendance today, in order of board tenure, are Scott Sandell, Colin Powell, John Chambers, and Professor Michael Boskin. I would like to take this opportunity to introduce our executives with us today. I will introduce the executives in order of tenure. Venkat Venkataraman, Executive Vice President, Engineering and Chief Technology Officer.
Susan Brennan, Executive Vice President and Chief Operations Officer. Glenn Griffiths, Executive Vice President for Service, Quality, Reliability, and Environmental Health and Safety. Arif Kalai, Executive Vice President, Customer Installations Group. Tanya Wilkerson, Executive Vice President and Chief People Officer. Chris White, Executive Vice President and Head of Sales. Finally, I'm pleased to introduce our new CFO, Greg Cameron. We have also present today David Humphries and Eddie Jackson from PricewaterhouseCoopers LLP, the company's independent registered public accounting firm. And our Inspector of Elections is Ms. Kris Veaco, a representative of Broadridge Financial Solutions, who has been appointed as the Inspector of Elections for this meeting. At this time, I would like to ask our Corporate Secretary, Shawn Soderberg, to remind you of the ground rules for the meeting.
Thank you, KR The rules of conduct and procedure are set forth on the virtual meeting website, and we ask that they be followed throughout this meeting. This meeting is being recorded, and no one attending is permitted to use any audio recording device. As set forth in the meeting conduct and procedures, a stockholder can ask a question at any time during the meeting by typing the question into the Ask a Question field on the virtual meeting website and clicking Submit. Only appropriate questions relevant to the purposes of the meeting and the company's business will be addressed. In fairness to everyone who may ask a question, we will limit each stockholder to two questions. The representatives of PwC are also available to answer any audit-related questions from stockholders.
KR's remarks today or our answers to questions may contain forward-looking statements, including expectations, projections, or other potential future events. The actual results may vary and may differ materially from these forward-looking statements, so please refer to our proxy, our annual report on Form 10-K, and other filings. Finally, if a stockholder would like to review the list of stockholders eligible to vote at this meeting for any purpose relevant to the meeting, it is accessible on the meeting website.
At this time, I would like to ask Shawn to confirm that notice for the meeting was properly provided and that there are sufficient shares represented at this meeting, either virtually or by proxy, to constitute a quorum for the purpose of transacting business.
KR, I can report that notice of this meeting was duly given and that an affidavit of distribution has been provided. I have an affidavit of distribution certifying that notices of the annual meeting were mailed commencing on April 1, 2020. A copy of the notice of meeting and the affidavit of distribution will be incorporated into the minutes of this meeting. All stockholders of record at the close of business on the record date of March 16, 2020, are entitled to vote at the meeting. As of the record date, there were 90,231,067 shares of Class A Common Stock and 34,872,888 shares of Class B Common Stock outstanding and entitled to vote. Each share of Class A Common Stock is entitled to one vote per share, and each share of Class B Common Stock is entitled to 10 votes per share.
The holders of the Class A Common Stock and the Class B Common Stock will vote together on each matter presented at this meeting. Our bylaws provide that a quorum will be present if a majority of the voting power of all shares outstanding on the record date are represented at the meeting. We are informed by the Inspector of Elections that they are represented at this meeting virtually or by proxy, more than 50% of the voting power of all shares outstanding on the record date, and therefore a quorum is present today.
Thank you. The meeting is now duly convened for purposes of transacting such business as may properly come before it. The next order of business is a description of the matters to be voted on at today's meeting. We have two proposals to be voted on at this meeting by stockholders of the company. Voting will commence after both proposals have been presented. If you have a question regarding either of these proposals, please submit your question through the virtual meeting website at this time. The first proposal is the election of three Class 2 directors to serve a three-year term expiring at the 2023 Annual Meeting of Stockholders and until their successors are duly elected and qualified. The Board of Directors of the company has nominated the following individuals for election as Class 2 directors: Mary Bush, Eddy Zervigon, and Jeff Immelt.
The company has an advance notice provision in the bylaws. Accordingly, all nominations are closed. Proposal two. The second proposal is the ratification of appointment of the independent registered public accounting firm. The Audit Committee of the Board of Directors has appointed PricewaterhouseCoopers as the independent registered public accounting firm to audit the company's consolidated financial statements for the year ending December 31, 2020, and we are asking our stockholders to ratify this appointment as a matter of good corporate practice. We have not received any questions pertaining to either of these two proposals. So it is now 9:10 A.M., and the polls are now open. I would now like to turn the meeting over to Shawn to handle the voting process.
Thank you, KR Stockholders attending this meeting can vote their shares online by clicking the Vote Here button on their screen. Stockholders who have voted their proxies by internet or by phone or who have sent in their proxy cards by mail do not need to vote again at this time unless they wish to change their earlier vote. If you would like to submit your vote at this time, please ensure that you have logged into this meeting using your 16-digit control number and click the Vote Here button on your screen. I now ask that the stockholders who have not yet voted or who wish to change their vote do so now through the virtual meeting website. We now appear to have completed all voting. It is 9:12 A.M., and I hereby declare the polls closed.
The electronic votes and proxies will be held in the records of the Inspector of Elections. The Inspector of Elections has counted the votes received by proxies prior to the meeting and will count all votes received electronically at the meeting today. KR, based on the preliminary report from the Inspector of Elections, I can report that Mary Bush, Eddy Zervigon, and Jeff Immelt have all been elected to serve as Class 2 directors to serve a three-year term expiring at the 2023 Annual Meeting of Stockholders. I can refer to the report that the appointment of PricewaterhouseCoopers as the independent registered public accounting firm for the year ending December 31, 2020, has been ratified by the stockholders. We will file the final report of the Inspector of Elections with the records of this meeting.
We expect to report the results of the voting on a Form 8-K to be filed with the SEC within four business days of this meeting.
Thank you for attending today's meeting. The formal business of the meeting is completed, and the meeting is adjourned. I would now like to take this time to say a few remarks about the company, after which we will have a brief question and answer period. Good morning, everyone, and thank you for joining us today, albeit virtually, for our second annual meeting of shareholders. Here at Bloom Energy, our mission is to make clean, reliable, and affordable energy for everyone in the world, and we have developed an innovative energy server platform to enable us to execute on that mission. As a company, we believe that there are several fundamental changes occurring in society that are driving increased demand for our energy server. These changes are not new but have recently been highlighted and accelerated by the COVID-19 pandemic. The first fundamental change is the demand for clean energy.
With people directed to stay at home and work remotely, we are seeing fewer cars on the roads, fewer planes in the air, and fewer plants operating and producing harmful emissions. As a result, we are finally getting a glimpse into the real levels of damage that have been done and what the world could look like with that impact lessened. According to a recent article in The Guardian, citing a study done by the Center for Research on Energy and Clean Air, the lockdowns have resulted in improved air quality across Europe. And compared with the same period last year, levels of nitrogen dioxide have fallen by 40%, while tiny particulate matter, known as PM2.5, is down 10%, which means that people can breathe easier. These two forms of pollution, which weaken the heart and respiratory system, are together normally responsible for about 470,000 deaths in Europe each year.
The second fundamental change is the increasing need for reliable and consistent energy sources. This is not only true in the COVID-19 world we are all living in, with pop-up and field hospitals being erected in hard-hit areas of the world, but also something we have seen over the last several years as a result of climate-related and other severe weather events, such as extreme heat, hurricanes, and wildfires, the last one especially here in California. We are not going to get a pass on natural disasters because of the pandemic. If anything, we are worse prepared than previous years for the coming natural disaster sequence because of the COVID-related constraints. In light of this, it is particularly important that we secure our critical facilities with resilient infrastructure.
Both of these trends play directly to the strengths and provide optimism and confidence of the important role Bloom Energy will play in our energy future. Our energy server platform delivers on-site power with the strongest combination of sustainability and resilience benefits available in energy generation today. Because our servers are powered by fuel cells, electricity is produced through an electrochemical reaction, not combustion. This virtually eliminates the smog-forming pollution and particulate matter that comes from existing combustion-based power generation sources. By investing in technologies that generate energy without fuel combustion, like fuel cells, we can safeguard the progress we have made. With non-combustion power sources deployed around the world, we have a fighting chance at keeping our skies clean and clear, free of smog.
Clean air is more important than ever as we continue the battle against COVID-19 and support the millions of people who may have the little bit compromised respiratory health. Additionally, this pandemic has helped us realize how important localization of critical services and goods are. We now appreciate the role our local grocery stores, hardware stores, and medical services play in our well-being more than ever before. We clearly appreciate the need for reliable internet and other utilities and are thankful for the lifelines that they have been to us during this crisis. We understand the need for manufacturing plants to operate even during a crisis to keep the vital supplies flowing. Bloom Energy provides the same localization with its energy servers for one of the most important products we need in our modern life, electricity.
Our 80-plus customer sites with the microgrid options provide our customers with reliable and resilient power that they require. During the last few months, two customers utilized the rapid deploy and rapid upgrade optionality that we offer with our energy server. In one case, a grid-parallel installation was rapidly upgraded to an always-on microgrid and redeployed for a field hospital to treat COVID patients. The entire upgrade was done in a matter of days. In another case, our quick time-to-power feature was utilized to its fullest for standing up a field hospital for COVID patients. This project was deployed from standing start in just one week. There is no other commercial technology in the marketplace today that can offer deployment of always-on power that is clean in such a short period of time.
Before we get too far, I want to make a few comments on the coronavirus and efforts to keep our employees and their families safe while also ensuring continuity of our operation. At Bloom Energy, our highest priority is the health and safety of our extended workforce and that of our customers and community. The global outbreak of COVID-19 has impacted every single one of us in one way or another, and for businesses, it has only accelerated the need to demonstrate resiliency to protect against macro disruptions and ensure continuity. Bloom Energy is in the resiliency business. The majority of our customers are essential businesses like hospitals and medical device companies, big box retail stores, grocery stores, and data centers that understand the role they play in staying open and keeping America healthy and running.
They are on the front lines, and we are there to provide them with always-on power. We have a resilient culture and the skills and expertise to quickly adapt in a time of natural crisis. It's who we are and what we do. It's in our DNA. That's why we were able to rapidly respond to Governor Newsom's call for help in addressing the critical need for ventilators in California and across the United States, and what led us to rapidly deploy our energy servers to field hospitals in both Vallejo and Sacramento, California. I want to acknowledge the extraordinary work that our employees have done to help support the fight against the coronavirus. You have my heartfelt thanks.
I am not only incredibly proud of the work that our teams have done in responding to the crisis but also in helping drive the business forward over the last year and continuing to execute on our mission to make clean, reliable, and affordable energy accessible for everyone in the world. I want to pivot now to discuss some business and operational highlights from 2019, as well as the key drivers of the business moving forward and why you should all be excited about the journey ahead of us. What we are doing here at Bloom is innovative, groundbreaking, and critically important for the world. Our path hasn't always been a straight line, and there have been hurdles along the way. But that is to be expected at a company that is disruptive and transformational at Bloom Energy.
Humbling as these hurdles are, we have successfully overcome our obstacles and made progress, as you can see in our results. 2019 was a solid year for Bloom as we saw acceleration in global customer demand and interest in our platform. We delivered record revenue and acceptance with growth of 24% and 48%, respectively, as compared to the prior year, and expanded our backlog by over 43% to 1,983 systems with good diversity across sectors and geographies, a strong ending to the year. We saw three key drivers behind this momentum. Number one, rising utility rates in domestic markets making our value proposition of cost and cost predictability more attractive to customers. Number two, a growing demand for clean, resilient, always-on microgrid energy solutions given the effects of climate change with weather-related events and wildfires and other natural disasters.
Number three, strong momentum in our international markets, especially in Korea, as countries adopt lower carbon energy solutions. In Korea, our flagship 8.35-MV power tower project achieved its first year of commercial operations and greatly exceeded its contractual obligations. In India, we signed our first commercial-scale on-site biogas to electricity project in the country. In Japan, our systems continued to operate in Typhoon Hagibis, one of the largest hurricanes in decades to hit the country. We know that the dual need of sustainability and resiliency has gained traction with our customers. Businesses are realizing the landscape around us is changing, and clear action is needed to address those changes before it's too late. Our energy servers address both the causes and consequences of climate change.
Our projects lower carbon emissions by displacing less efficient alternatives, improve air quality by generating electricity without combustion or criteria pollutants, eliminate the need for dirty backup power, and provide critical resilience from grid instability, and we achieve all of this by using no water during operations and at a very high power density, which optimizes land use. The nation's antiquated grid infrastructure is struggling, and businesses are increasingly adopting microgrids to safeguard their operations and protect their employees and customers from grid outages, particularly with extreme weather events on the rise. We are seeing this in California as the state's public safety power shutoffs have become the new normal for residents and businesses, as these are projected to continue for the next 10 years.
Last year, one of our microgrids provided power to a semiconductor manufacturing site for more than five days, which was just one of 26 Bloom-powered microgrids powering customers' facilities successfully in the California wildfire-related outage, or PSPS, zones. This year, we launched a new rapid deploy microgrid program for PSPS readiness, which provides the option to deploy always-on microgrids to help customers prepare for this and future wildfire seasons in California and also receive clean electricity at a predictable cost to mitigate the impact of utility rate increases. We see this as a solution for other rapid deploy scenarios for emergency management. Providing solutions like these requires innovation and advancement in technology, which is why at Bloom, we are working to reduce the carbon emissions from our products and are engaged in multiple efforts to align our product roadmap with a zero-emission trajectory.
We are developing new applications and market opportunities in sectors with dirtier grids and higher marginal emissions displacement, such as marine transport. We are focused on scaling the use of renewable natural gas, which is derived from waste sources, as fuel for our Energy Servers. Our research and development efforts are focused on preparing our Energy Servers to utilize renewable hydrogen fuel, a 100% clean fuel that produces no greenhouse gases. Finally, we are pushing technology and business model boundaries to pioneer carbon capture, utilization, and storage potential. With just 10 years of operation, we are already on our fifth-generation Energy Server. This latest-generation Energy Server delivers five times the electricity output of the first generation in a constant footprint. The next generation will deliver 50% more power, and we expect to continue this trend of power density improvements and cost reductions in the future.
With each generation, we have increased efficiency as well. The beginning of life efficiency of our Bloom Energy Servers has increased with the high 40s from the high 40s in the first generation to the 60s in the current generation. Our hardware costs have dropped approximately 27% each time our cumulative production volume has doubled, which compares favorably to other energy technologies such as wind and solar, which will help expand our markets and satisfy our mission goals pertaining to energy access and affordability. I want to thank you for your continued support and interest in Bloom Energy. We are confident in our long-term strategy and the team's ability to execute it. The coronavirus pandemic has accelerated the need for businesses to demonstrate resiliency and adaptability to protect themselves against macro disruptions and ensure business continuity, which in turn has made our strategy and Energy Server platform even more relevant.
We have a core set of principles that include doing the right thing no matter what, a commitment to constant and continuous improvement in the way we operate, and a long-term view to executing our mission to make clean, reliable, and affordable energy for everyone in the world. Thank you again.
I would now like to open the meeting for questions or comments by our stockholders. You are reminded that we will be following the rules of conduct and procedure set forth on the web portal. We ask that you restrict your remarks to the business of the meeting or the company. That there will be a time limit of two questions per speaker. A stockholder can ask a question by typing the question into the Ask a Question field on the virtual meeting website and clicking Submit. We will attempt to answer as many questions as time allows.
We have a question, KR, for you. Is a drop in oil prices going to impact Bloom Energy's business?
That's a good question, and people get confused because of the historic coupling of oil prices to electricity prices. About a decade ago, globally, and even longer than that here in the U.S., there has been a decoupling between the oil prices and electricity prices. And the reason is there is very little power generation that occurs using oil. Oil is not used as a fuel. So there is the decoupling, number one. Number two, for a while, gas prices were coupled to oil prices, and they were tied to the same OPEC issues of oil prices going up or down, change the gas prices. That has been decoupled, and that was decoupled mainly in North America for a while.
Now, all over the world, the gas price is completely decoupled from the oil price, and oil is not used as a fuel. So the answer is no. That's one. The second thing is the way oil prices can impact potentially in the long run is the pace at which transportation will get electrified. But that's a long time to come because today, if you look at most of the world where electrification is occurring, it is occurring more because of mandates, subsidies, and local policies wanting to bring about electrification, and that rate is going to continue. So no, the answer is oil prices going up or down has no impact on Bloom and its customers.
Great. We have a second question here, and KR, this is for you as well. Does using natural gas restrict you from doing business in any manner?
And what is the sensitivity on natural gas prices on your customers?
Again, very good questions. So it's a two-part question. So let me answer the second part first, which is the sensitivity of gas prices to the elasticity of our market. And here, what I would say is we are naturally hedged because if you look at the baseload power generation in the U.S., in the markets we operate mainly, it comes from natural gas being used in large power plants to produce that power. And those large power plants produce electricity less efficiently than we do in the Bloom system. So they require more of the gas to produce the same amount of electricity. And on top of that, you have transmission distribution losses that occur to bring that electricity to the customer.
So the net impact is for the same amount of kilowatt-hours that a customer uses at their premises, more natural gas is needed using the centralized model. Because Bloom is more efficient and it has no transmission distribution losses, that same amount of electricity can be produced with less amount of gas. What that means is if gas prices were to go up, the increase in utility costs to generate and distribute is going to be higher than what it happens in Bloom. So relatively speaking, with respect to the grid, our customers are going to be better off being with Bloom. So that's the first part of the question. The second part of the question was natural gas and its impact. Look, if you just look around the world, the world is long on natural gas.
If you look at the amount of investments that have been made in natural gas infrastructure, whether it's in pipelines, whether it's in LNG tankers, whether it's on liquefaction ports, plants, okay, distributions, whether it's the emerging world, whether it's the emerged world, in Europe, in Asia, in South America, the world is long on natural gas. It is the cleanest of fossil fuels for decades to come. We are going to need that no matter what the uptake in renewable electricity is going to be. So we take the cleanest of fossil fuels and convert that in the cleanest possible manner without the smog pollution that I referred to in the previous script and at the highest efficiency possible with the lowest carbon footprint, without noise, without using water. So our technology is extremely good under this current scenario.
Number two, as time goes on, the pipeline is still going to be very important. However, we will start decarbonizing the molecule inside the pipeline. That could come from biogas. That could come from including some amount of hydrogen within that natural gas pipeline. That's another way to further bring down the carbon footprint. However, the part that I want to emphasize is innovations come from places that people didn't think about. What if we could take the natural gas and not emit, not have a carbon footprint in terms of carbon going into the atmosphere? This is carbon capture and sequestration. Including us, there is a tremendous amount of innovative new technology that we are all working on.
I'm hopeful in the future we will have that working affordably at scale, in which case we can have reliable, clean, resilient, zero-carbon electricity coming from one of the most abundant fuels. So I think we are extremely well-positioned in a world that wants to be carbon-constricted.
Thank you, KR. There was a question that came in on carbon capture, and you just answered that. So there's a few questions related to PG&E. I'll try and bundle them together. Can you address your possible business with PG&E? And particularly, what do you see within the realm of microgrid opportunity with PG&E?
So let me start by saying how we view utilities and utility relationships. If you look at our project financing for lots of our projects, we have had Exelon, Southern, Duke. We are working with several of these large utility players as our partners.
We view the utility industry as our partners within California, and we are doing projects with Eversource. We are doing projects with LIPA. These are all utility partnerships within the state of California with all the big IOUs, SoCal Edison, San Diego Gas and Electric, PG&E. We have very good working relationships. They are the provider of natural gas to us along with SoCal Gas. Here again, PG&E has been a very good partner to work with in terms of interconnections and gas. A very recent good example is they worked cooperatively with us to stand up this pop-up hospital in Sleep Train Arena in Sacramento from a standing start to getting this project done. We did that in five days. This is a fantastic example and a demonstration of time to power that Bloom can do when we have everybody's cooperation.
So we would love nothing better than to figure out with them how we can put resilient communities using always-on resilient microgrids prior to the next wildfire season so we can move forward. So we are always open to discussions, and we are always looking at opportunities that we can work with them.
Great. KR, another question for you. Can you provide an update on the Samsung shipping partnership?
Yes. So I think it was a while ago that we had announced that we have signed a memorandum of understanding with Samsung to work with them on cargo ships where Bloom Energy servers can replace the dirty gensets that are used out there, the combustion engines that use heavy oil and produce the power for the ship.
Just to give people a sense of understanding, if you take the shipping industry, their carbon footprint will be the equivalent of one of the top 10 countries in the world. That's how large that emission profile is, and so the International Maritime Organization, a UN agency, has mandated that in a very short period of time, they need to reduce the amount of emissions that come out of ships, so Samsung is a leading builder of ships for the world, and they wanted to partner with us on this particular project to take our Bloom fuel cells and figure out what modifications, what changes need to be made. So ultimately, the Bloom fuel cells using natural gas can be providing clean, reliable power for the shipping industry, so that project is moving along really well as a partnership with them.
In addition to that, cruise liners are very interested for the same reason in our technology, and we have started conversations with them. However, you need to understand that this is the shipping industry. We have to go through a whole set of protocols of testing, validating, working with various insurance firms and underwriting firms. So all this process is starting. Expect in a couple of years to see something, but that work is going full blast as an R&D project right now.
Great. So it looks like we have one last question, or maybe two more. What percentage of capacity is your plant running at in Delaware? And KR, can you take that question?
Yeah. So at this point in time, our Delaware facility is roughly running at 50% capacity.
We have the ability to flex up fairly easily in that plant as demand increases. I think that was the question, right? Yeah. That was the question.
One last question, KR. Can you give a little bit more color around the timeline for the Samsung partnership and when there might be actual product in the market?
We would expect in about a year or so, Samsung to be trying out in field in their lab setting, going through various tests and protocols. You can imagine a ship is going to go through tilting and shock and stuff like that when it's in a marine environment, and it's going to go through inclement weather and everything relating to that. They have ways of simulating all these on the ground, and that's the kind of testing we would expect happening for another year or so.
After that, maybe in a two-year time frame is when you would expect the first prototypes of that to go into limited power production for a particular ship. In a three-year time frame, you should expect the technology, assuming everything is working well, to get into a first ship as a demo. So that's the kind of timeline that you're looking at for the shipping industry. Okay.
Okay. So there are no further questions. So with that, I'll conclude the meeting today. I want to thank all of you stockholders who attended this meeting and for the interest that you've shown in Bloom Energy.
Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.