Hello, and welcome to FuelCell Energy, Inc. conference call. Please note that this call is being recorded. I'd now like to hand over the call to Tom Gelston. Please go ahead.
Thank you. Good morning, everyone, and thank you for joining us on the call today. As a reminder, this call is being recorded. This morning, FuelCell Energy released our financial results for the Q4 and full fiscal year of 2023, and our earnings release and our SEC filings are available in the investors section of our website at www.fuelcellenergy.com. Consistent with our practice, in addition to this call and our earnings press release, we have posted a slide presentation on our website. This webcast is being recorded and will be available for replay on our website approximately 2 hours after we conclude the call. Before we begin, please note that some of the information that you will hear or will be provided with today will consist of forward-looking statements within the meaning of the Securities and Exchange Act of 1934.
Such statements express our expectations, beliefs, and intentions regarding the future and include, without limitation, statements with respect to our anticipated financial results, our plans and expectations regarding the continuing development, commercialization, and financing of our fuel cell technology, and our business plans and strategies. Our actual future results may differ materially from those described in or implied by such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the Safe Harbor statement in the slide presentation and in our filings with the Securities and Exchange Commission, particularly the Risk Factor section of our most recently filed annual report on Form 10-K.
During the course of this call, we will be discussing certain non-GAAP financial measures, and we refer you to our website and to our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our earnings press release and a copy of today's webcast presentation are available on our website at www.fuelcellenergy.com under Investors. For our call today, I am joined by Jason Few, FuelCell Energy's President and Chief Executive Officer, and Mike Bishop, our Executive Vice President, Chief Financial Officer, and Treasurer. Following our prepared remarks, we will be available to take your questions and be joined by other members of the leadership team. I'd like to now hand the call over to Jason for opening remarks. Jason?
Thank you, Tom, and good morning, everyone. Thank you for joining us on our call today. We are proud of the continued progress we are making toward advancing our purpose of enabling a world empowered by clean energy. This morning, we were proud to announce our Q4 and full year results, marked by our important progress on large projects, continued advancement of our solid oxide power generation and electrolysis hydrogen platforms, successful reentry into the Korean market, and announcing the next steps toward the commercialization of our direct flue source carbon capture platform, as you will have seen from our joint announcement with ExxonMobil regarding our carbon capture demonstration project, but more on that later. As a reminder, for those who are not familiar with FuelCell Energy, we have included a company overview on slide three. We are proud to be a global leader in electrochemical technology.
In simple terms, our proprietary fuel cell technology platforms do two things: decarbonize power and produce hydrogen. We operate in North America, Asia, and Europe, and we are focused on entering additional markets around the world. We have 188 modules in commercial operation and have generated more than 15 million MWh to date. Our carbonate technology has met our customers' needs for over 20 years, and our newly commercialized solid oxide platform extend the value we offer customers, including electrolysis and power generation using zero-emission hydrogen fuel as the only feedstock. We believe that our two differentiated fuel cell electrochemical platforms enable us to leverage our operating history and position us to meet the evolving needs of our current and future customers across distributed power generation, distributed hydrogen, electrolysis, and hydrogen energy storage, and direct flue source carbon capture.
FuelCell Energy provides technological solutions for, and collaborates with some of the world's largest global companies, including our work with ExxonMobil to develop carbon capture solutions, our work with Toyota for distributed hydrogen through the completion of our Tri-gen facility at the Port of Long Beach, building a microgrid for Pfizer, exploring the viability of using our electrolyzer paired with nuclear energy to decarbonize asphalt production in the U.K. with EDF Energy, and our collaboration with IBM to use AI to research new ways to extend the life of our fuel cells. Next, please turn to key messages for this quarter, shown on slide 4. First, we are maintaining the strength of our balance sheet and taking a disciplined approach to managing our capital investment, paced by visibility into the milestones we established as investment triggers.
We will continue to work to increase revenues and investable cash flow and take proactive steps to raise capital while also preserving the liquidity required to operate our business. Secondly, we were thrilled to jointly announce yesterday that ExxonMobil's affiliate, Esso Nederland B.V., plans to build a pilot plant at its Rotterdam Manufacturing Complex to test the carbonate fuel cell technology for carbon capture, jointly developed by FuelCell Energy and ExxonMobil Technology and Engineering Company, or EMTEC. This announcement follows completion of all required technology tests regarding the efficacy and longevity of our carbonate fuel cells to capture at least 90% of CO2 emissions from an external emission source with a concentration of 8% or higher CO2. Although not a required test for this pilot project, our lab testing has demonstrated the ability to capture 90% of CO2 emissions from lower concentration flue streams as well.
Next, we have continued to execute on large-scale projects and our solid oxide manufacturing capacity expansion. Our Tri-gen platform in Long Beach, California, began commercial operations and is producing emissions-free hydrogen, electricity, and water for our customer, Toyota. This capability is unique to FuelCell Energy. Subsequent to the end of the quarter, we opened our newest fuel cell park in Derby, Connecticut, generating competitively priced, renewable energy for many thousands of area residents and helping the state close its power generation gap. We also made progress on the capacity expansion of our solid oxide manufacturing facility in Calgary and advanced the planning for our potential U.S. capacity expansion.
Fourth, we are making progress in expanding our reach into markets such as Korea, where we signed a long-term service agreement for fuel cell operations with a domestic clean energy electric utility and an MOU, which outlines certain anticipated terms of the proposed business relationships with Gyeonggi Green Energy, or GGE, the utility hosting the largest fuel cell park in the world, with a total output of 58.8 MW. We see tremendous additional opportunity for long-term service agreements in Korea. Additionally, applications like electrolysis, time to power, and CO2 as a delivered product are gaining momentum among a broader set of customers and geographies. Lastly, as we look ahead to fiscal 2024 and 2025, we remain focused on delivering our growth plans. We are focusing on advancing our technologies, including advancing toward the commercialization of carbon capture and other advanced applications, and expanding our commercial relationships.
We believe that 2024 will be an important year for our company, and we believe that we have the technology and flexibility across our products and services to allow us to participate in the global energy transition in a number of different ways. Now, I will turn the call over to Mike to discuss the financial results for the Q4. Mike?
Thank you, Jason, and good morning to everyone on the call today. Let's begin by reviewing the financial highlights for the quarter shown on slide six. For the Q4 of fiscal year 2023, we reported total revenues of $22.5 million, compared to $39.2 million in the Q4 of fiscal year 2022, a decrease of 43%. This was driven primarily by the lack of replacement module sales in the Q4 of fiscal year 2023. Net loss was $29.5 million in the Q4 of fiscal year 2023, compared to net loss of $42 million in the Q4 of fiscal year 2022.
The resulting net loss per share attributable to common stockholders in the Q4 of fiscal year 2023 was -$0.07, compared to -$0.11 in the Q4 of fiscal year 2022. Adjusted EBITDA totaled -$30.8 million in the Q4 of fiscal year 2023, compared to adjusted EBITDA of -$36.1 million in the Q4 of fiscal year 2022. Please see the discussion of non-GAAP financial measures, including adjusted EBITDA, in the appendix at the end of our earnings release. Finally, the company held total unrestricted cash, restricted cash, cash equivalents, and short-term investments of $403.3 million as of October 31, 2023. Next, please turn to slide seven for additional details on our financial performance and backlog.
The chart on the left-hand side graphically shows our Q4 revenue composition by line item, other than the service revenues of - $0.8 million. Looking at revenue drivers by category. Product revenues for the prior year quarter included module sales to Korea Fuel Cell Co., Ltd., or KFC, under the company's settlement agreement with KFC and POSCO Energy Co., Ltd., or POSCO Energy, for which the company recognized $24 million. This compares to $10.5 million of product sales in the Q4 of fiscal 2023, reflecting revenue recognition related to a performance guarantee, which was part of the settlement agreement with POSCO Energy and its subsidiary, KFC.
This revenue was constrained until certain of the modules previously sold by the company to KFC were installed at the Noeul Green Energy site, and the company entered into a long-term service agreement to service those installed modules. Generation revenues were generally consistent quarter-over-quarter, decreasing to $8.5 million from $8.8 million in the comparable prior year period. Advanced technology contract revenues decreased to $4.3 million from $7.5 million, compared to the Q4 of fiscal year 2022, advanced technology contract revenues recognized under our joint development agreement with ExxonMobil Technology and Engineering Company, or EMTEC, were approximately $0.3 million higher. This increase was more than offset by lower revenues recognized under government and other contracts as a result of the allocation of engineering resources to EMTEC and other internal engineering and product development efforts during the quarter.
Service agreement revenues for the Q4 were - $0.8 million, compared to - $1.07 million in the prior year period. Revenues in both quarters were impacted by higher future cost estimates related to future module exchanges compared to the company's prior estimates, which more than offset revenue recognized in each quarter. There were no module exchanges during the Q4s of fiscal years 2023 and 2022. Looking at the top right-hand side of the slide, I will walk through the changes in gross loss and operating expenses during the Q4 of fiscal year 2023. Gross loss for the Q4 of fiscal year 2023 totaled $1.5 million, compared to a gross loss of $15.2 million in the comparable prior year quarter.
The gross loss decreased for the Q4 of fiscal year 2023, primarily due to three items. One, product recognized in the Q4 of fiscal year 2023 that did not have any associated cost of goods sold in the quarter. Two, generation cost of sales was lower in the Q4 of fiscal year 2023, as the company recorded a derivative gain of $4.1 million. And three, generation cost of sales were lower in the Q4 of fiscal year 2023 as a result of lower impairment charges compared to the comparable prior year quarter. These benefits were partially offset by the lack of module sales in the Q4 of fiscal year 2023.
Operating expenses for the Q4 of fiscal year 2023 increased to $35 million from $27.5 million in the Q4 of fiscal year 2022. Administrative and selling expenses were higher during the Q4 of fiscal year 2023, primarily due to an increase in compensation expense resulting from an increase in headcount in support of sales, marketing, and business expansion. Research and development expenses increased to $18 million during the Q4 of fiscal year 2023, primarily due to an increase in spending on the company's ongoing commercial development efforts related to our solid oxide power generation and electrolysis platforms, and carbon recovery and carbon capture solutions compared to the comparable prior year period.
On the bottom right of the slide, you will see that we finished the quarter with backlog of approximately $1 billion, a decrease of approximately 5.7% compared to backlog as of October 31, 2022. The reduction in backlog is primarily a result of revenue recognition under product, generation, and service agreements since October 31, 2022, partially offset by an increase in service backlog from the new service agreement with Noeul Green Energy, entered into during the year ended October 31, 2023. On slide eight is an update on our liquidity position and our ongoing investment in project assets. As of October 31, 2023, we had total cash, cash equivalents, and short-term investments of $403.3 million.
This includes $250 million of unrestricted cash and cash equivalents, represented by the darker blue bar on the chart in the center of the slide, $103.8 million of short-term investments, represented by the lighter blue bar, and $49.6 million of restricted cash and cash equivalents, represented by the purple bar. The short-term investments represent the amortized cost of U.S. Treasury securities outstanding as of October 31st, 2023, all of which are expected to be held to maturity. Throughout fiscal year 2023, we took a proactive approach to capital raising by entering into project financings with total gross proceeds of $100.5 million during fiscal year 2023, and net proceeds of $97.4 million from sales of common stock during the fiscal year.
In the Q4, we closed on tax equity transactions that yielded net proceeds of $7.3 million. We expect to receive an additional $20.6 million of unrestricted cash in the Q1 of 2024 after the Derby projects are placed in service. Finally, we generated $15.8 million in interest income during fiscal year 2023 from money market investments and U.S. Treasury securities, an increase of $12.4 million from the amount of interest income generated in fiscal year 2022. Looking at the right-hand side of the slide, there is a chart illustrating our total project assets, which make up our company-owned generation portfolio. As of October 31st, 2023, our gross project assets totaled $304.3 million, which excludes accumulated depreciation.
As detailed on slide 22 in the appendix of the presentation, our generation portfolio totaled 63.1 MW of assets as of October 31, 2023. This includes 43.7 MW of operating assets and 19.4 MW of projects in process. As projects in process begin commercial operation, they are expected to contribute to higher generation revenue. Please turn to slide 9. Here, we are showing greater detail on the targeted investments we plan to make during fiscal year 2024, which will support our growth plans, allowing us to compete and meet market needs over the medium and long term. First, we are planning $60 million to $75 million of capital expenditures in fiscal year 2024.
These amounts are a continuation of the capital expenditures and commitments made by the company in fiscal year 2023 to upgrade our manufacturing facilities, including the expansion of solid oxide manufacturing capacity at our Calgary facility to 40 MW a year of solid oxide electrolysis cell production. This expansion is expected to be completed in fiscal year 2024. We also expect to invest in our manufacturing facilities for molten carbonate, including importantly, for carbon capture. During fiscal year 2023, the company also began investments to add engineered carbon recovery capability to the on-site SureSource 1500 in Torrington, Connecticut, which is expected to be completed in fiscal 2024. This product enhancement will allow potential customers to observe the operating plant and, given the target market of food and beverage companies, will allow for the sampling and testing of recovered CO2 to verify quantity, quality, and purity requirements.
Internally funded research and development expenditures for fiscal year 2024 are projected to be $60 million to 70 million, which is consistent with our R&D expenditures of $61 million in fiscal year 2023. Priorities for R&D are to continue to accelerate the commercialization of our advanced technology solutions for distributed hydrogen, hydrogen-based long-duration energy storage, and hydrogen power generation. Lastly, in fiscal year 2024, we plan to invest $15 million to $25 million in the project assets in our generation portfolio backlog, with the expected monetization of tax incentives helping to offset a significant amount of the planned investment. This expected investment level is lower than it has been in prior years, as our Toyota and 14-megawatt Derby projects are now complete. In closing, I am pleased with our continued progress this past quarter and during the fiscal year.
We have taken, and will continue to take, proactive steps to ensure that we have the balance sheet strength required to support our growth objectives, and we will continue to take a highly disciplined approach to managing cash and allocating capital. From a financial perspective, we believe that we remain well-positioned to execute on our near, medium, and long-term powerhouse business strategy. I will now turn the call back over to Jason.
Thanks, Mike. I will now cover our business and operational updates in more detail, beginning with slide 11. As we have stated in previous quarters, our powerhouse business strategy serves as our framework for achieving long-term growth. I will summarize our approach. The first tenet is growth. We are working to optimize our business to achieve growth in markets where we see significant opportunities for our platform technologies. We have geographic market, segment, and application-specific playbooks that are focused on building a robust sales pipeline and converting that pipeline into revenue. To that end, our business development team is focused on moving the pipeline from prospects to executed agreements, and I will discuss our pipeline in more detail today. The second is scale. We are scaling our existing platforms by investing in, extending, and deepening our leadership and total human capital across the organization.
Across our operations, our previously mentioned, we are focused on optimizing manufacturing capacity for our carbonate platform, with the goal of achieving 100 MW of annualized, integrated, on-site manufacturing and conditioning capacity. We are also working with ExxonMobil on the development of a new business framework between the parties beyond the current joint development agreement structure. We are also evaluating additional U.S. locations with the goal of producing up to an additional 400 MW per year of solid oxide electrolysis sales, which would be implemented in phases as the market develops. We believe that the legislation enacted and being contemplated around the world will, over time, serve as a catalyst to support the acceleration of adoption of products like ours and to ultimately drive down costs. And third, innovate. Over our 50-year history, we have never stopped innovating.
As shown on our earlier slide, we have hundreds of patents granted or pending in jurisdictions around the world. We believe our technologies and our culture provide the opportunity for our participation in the growth of the hydrogen economy and the carbon capture market and will enable us to deliver on our purpose to enable a world empowered by clean energy. We are working to turn our innovations into diversified revenue streams by delivering a range of solutions and services anchored by our multi-feature platforms, providing the opportunity for FuelCell Energy to pursue the energy transition across the following four applications: distributed hydrogen, direct flue carbon capture, electrolysis, and long-duration energy storage and distributed power generation. We are making good progress in the execution of our strategy, and I will discuss specific highlights in more detail on the following slides. Please turn to slide 12. First, on Korea.
We were very pleased to announce earlier in the year that we are growing and strengthening our presence in Korea. We executed a long-term service agreement with Noeul Green Energy and quickly assumed full responsibility for fuel cell operations and maintenance services at their 20-megawatt fuel cell park. Through this agreement, FuelCell Energy is overseeing the operation and maintenance of eight SureSource 3000 fuel cells over the 14-year terms of the agreement. This agreement has added significant expected long-term recurring revenue to our reported backlog, with a contract value of approximately $75 million. We see further opportunities for operations and maintenance agreements in Korea with a large potential market of over 100 MW. Next, we have two new project awards to highlight. The first is a 1-MW solid oxide power generation project awarded by a university in the Northeast United States.
The second is a 2.8 MW carbonate power generation project for a municipality in California, using biofuels as the feedstock, taking advantage of our ability to use direct biofuels versus needing to spend additional capital upgrading that fuel to pipeline-quality gas, which other power generation technologies require. I should note that these project awards are in negotiation. Consistent with our practice, these awards are not included in the company's backlogs and will only be added upon execution of final agreements. We are also working with nuclear power providers, EDF Energy in the United Kingdom and Canadian Nuclear Laboratories, or CNL, in Canada. We believe that our previously announced work with Idaho National Laboratory and our work with EDF Energy and CNL demonstrates the differentiated value of our solid oxide electrolysis technology in nuclear applications. Please turn to slide 13. We are focused on building our sales pipeline.
On the left-hand side of the slide, we are illustrating the breakdown of our pipeline by type and geography. Consistent with our overall growth strategy and the capability of our platforms to deliver multiple values to our customers, we believe we will be well diversified across different applications as well as geographies. We offer a range of solutions enabled by our two electrochemical platforms, and we believe that this will allow us to compete and win on differentiated value. By type, our pipeline as of October 31st, 2023, consisted of almost 50% electrolysis and hydrogen, with 33% carbon capture and carbon recovery, and the remaining 18% in pure distributed power generation. Geographically, approximately 51% was in North America, 34% is in the Asia-Pacific region, and the remaining 15% is in the EU, U.K., Middle East, and Africa.
When we refer to our sales pipeline, we're referring to ongoing commercial discussions with new leads and potential customers. We believe that interest is being driven by demand in the market, particularly interest in carbon recovery plus, zero, and low-carbon hydrogen from electrolysis and time-to-power applications. We also believe that the recently announced U.S. hydrogen hubs are driving interest in technologies like ours. We are continuing to qualify and develop new leads and potential customers. Please turn to slide 14. We believe that the hydrogen delivery market represents a large and growing opportunity. We are already participating in this market with our Tri-gen facility at Toyota's port operations in Long Beach, California, producing hydrogen, electricity, and water. We believe that our Tri-gen technology has broad market application, and we are pursuing additional deployments. Next, we will consider the future development of the hydrogen delivery market.
In October, the Department of Energy selected seven regional hydrogen hubs, which will be supported by $7 billion of funding through the Infrastructure Investment and Jobs Act. We believe these hubs will act as a catalyst for accelerating the clean energy transition. The first round of funding awards are currently in negotiations. We were honored to have our technology named in two of the hydrogen hubs, and we are in discussions with all of the hubs as they prepare to make technology decisions. We expect that future clarification around the Production Tax Credit should help to further broaden the hydrogen market. We expect the U.S. hydrogen hubs will drive meaningful incremental demand for clean energy technology like those provided by FuelCell Energy.
Our trigeneration technology, which is being utilized by Toyota in Long Beach, California, provides a low-risk solution that we believe is an ideal fit for hydrogen hub applications. In addition, we believe that our first commercial solid oxide unit, which is expected to be delivered to the Idaho National Laboratory in 2024, will demonstrate superior performance and efficiency compared to competitors. Please turn to slide 15. We are advancing our strategic priorities across two areas of focus: decarbonizing power and producing hydrogen. As previously mentioned, we recently opened our newest fuel cell park in Derby, Connecticut. The 14-megawatt project was placed in service in December, subsequent to the quarter end. This project is generating competitively priced, renewable energy for many thousands of area residents and is helping the state of Connecticut close its power generation gap. We believe that this project further demonstrates our ability to execute large-...
complex projects on time and will make a meaningful contribution to our generation operating portfolio and contribute to EBITDA for years to come. Also, we expect that the smaller 2.8 MW project in Derby, Connecticut, will be placed in service later this month. Moving to solid oxide. We continue to invest in product development and manufacturing scale-up for our two solid oxide platforms, power generation and electrolysis. To enable our growth, we are expanding our Calgary manufacturing operations with the goal of delivering up to 40 MW of annualized solid oxide electrolysis cells production per year, compared to our existing capacity of 4 MW per year.
In addition, we have designed in flexibility that would allow us to further increase cell stack manufacturing capacity at our Calgary facility to facilitate the potential annualized production of up to an additional 40 MW of solid oxide electrolysis cells per year by leasing additional space and investing in various process optimizations intended to increase throughput and yield. This approach would allow for the potential to increase our total annualized solid oxide electrolysis cell manufacturing capacity to up to 80 MW per year. We have hired and trained additional staff for a three-shift production operation to support the initial planned expansion to 40 MW and would add additional staff as required in the future to realize the potential 80 MW of annualized solid oxide electrolysis cell production.
Our Solid Oxide manufacturing operation is in the process of building four units, two units that will run internally for advanced testing and two production units for delivery externally. Of these commercial units for external delivery, one will be our Electrolysis platform for delivery to Idaho National Laboratory, and the other will be our distributed power platform for delivery to Trinity College in Hartford, Connecticut, for use under a long-term power purchase agreement. We expect that the INL unit will be operational at our Danbury location this month and then delivered to INL in early 2024, where the unit will operate and undergo extensive validation testing. Turning to Slide 16, we wanted to highlight some very recent developments regarding our Carbon Capture work with ExxonMobil.
ExxonMobil announced yesterday that its affiliate, Esso Nederland B.V., plans to build a pilot plant at its Rotterdam Manufacturing Complex to test the carbonate fuel cell technology for carbon capture, jointly developed by FuelCell Energy and EMTEC. Esso Rotterdam's integrated manufacturing site will be the first place in the world to pilot this technology. ExxonMobil has stated that the captured CO2 will be transported and stored via the Porthos project for permanent storage under the North Sea. Additionally, the release indicated that pending a successful demonstration, ExxonMobil could deploy this technology at its manufacturing sites around the world, and when the carbonate fuel cell technology is technically ready for broad-scale implementation, it could potentially offer economical decarbonization solutions for customers from a wide range of industries.
We believe that our technology could significantly reduce direct at-the-source CO2 emissions from industrial emitters, and we are very excited as we move into the next phase of activities and action. Before moving to Q&A, I will conclude with takeaways on Slide 17. I am excited about how our consistent efforts to advance new technologies toward commercialization are progressing. We believe that our technologies will have a positive impact on our world. We have remained focused on disciplined capital allocation, and we have maintained the strength of our balance sheet through both debt and equity financing. We are making critical investments to position FuelCell Energy for future growth while taking a highly disciplined approach to maintaining cash and liquidity.
We are excited about Esso Nederland B.V.'s recently announced plans to build a pilot plant at its Rotterdam Manufacturing Complex to test the carbonate fuel cell technology for carbon capture, jointly developed by FuelCell Energy and EMTEC. As mentioned earlier, this announcement follows completion of all required technology tests regarding the efficacy and longevity of our carbonate fuel cells to capture at least 90% of CO2 emissions from an external emission source with a concentration of 8% or higher CO2. We believe that capturing carbon at the emission source and sequestering it could be an efficient way to decarbonize heavy industry. In addition, we have shown that our technology can capture carbon and produce electricity and hydrogen simultaneously, which differentiates it from other forms of carbon capture technology which consume energy.
We believe our carbon capture technology could be an important solution for helping decarbonize the hard-to-abate, carbon-intensive industrial sector. We are demonstrating our ability to execute large projects, most recently with our Tri-gen platform operating for Toyota in Long Beach and the commercial operations of our Derby generation facility. We have had success in our growth efforts in Korea, where we see tremendous additional opportunity for the future. Lastly, we believe we are positioned for growth, and we remain focused on advancing both our technologies and commercial relationships in 2024. We believe FuelCell Energy is well-positioned to capture market opportunities over the coming years and deliver enhanced shareholder returns over the long run. I will now turn it over to the operator to begin Q&A.
Thank you. We are now opening the floor for Q&A. If you'd like to ask a question, please press star and number one on your telephone keypad. That's star and number one on your telephone keypad. We have our first question from George Gianarikas from Canaccord Genuity. Your line is now open.
Hi, everyone. Thank you for taking my question. Happy holidays, and congrats for getting Tri-gen operational. So,
George, how are you this morning? Thank you, and happy holidays to you.
So maybe first, if it's okay, on the Exxon announcement from yesterday, I'm curious as to, you know, how extensive Exxon's, I guess, trials are in building other pilot plants with other technologies outside of yours. Is this their first deal announced to build a pilot plant with carbon capture technology?
So, Exxon has a number of different efforts going on in carbon capture technology. So obviously, the work that we're doing with Exxon is exclusive to our carbonate fuel cell, and what makes it different is that of any of the trials or other work that's going on, is that our platform is the only one that can, you know, capture carbon from an external source, produce power and hydrogen simultaneously. You know, Exxon has announced other carbon capture projects that they're doing that are leveraging different technologies than ours, but this is the first trial using our platform.
Okay. And then maybe to focus on just the outlook for 2024. You mentioned your backlog, and you also mentioned some increased spending initiatives. And so can you help us just compartmentalize what revenue could look like next year? You have, you know, a growing backlog. You also have—we're all kind of waiting for the Treasury Department to give us more guidance as to, you know, the rules around hydrogen, clean hydrogen production. So, how should we think about balancing the investments you want to make and also what the pipeline and the executable pipeline and backlog are for next year, and how that translates into revenue? Thank you.
Good morning, George. This is Mike, and thank you for the question. So, as I outlined in my remarks, we have, we are planning on making targeted investments as we go into 2024, really a continuation of what we were doing in 2023 as far as commercializing our solid oxide technology and expanding manufacturing capacity at our Calgary facility, as well as beginning additional expansion in Torrington, particularly around carbon capture. Those investments set us up nicely for being competitive and increasing revenues in future years around those new technologies, so as Jason talked about, carbon capture as well as electrolysis. So we expect to see those contributions in future years.
As for 2024, we haven't put out specific guidance around revenue for 2024, but with Toyota coming online and with Derby coming online, you would expect to see increasing generation revenues as we go into 2024. We did put out expectations around R&D spend. Expect that to be in the range as we were this past year. We ended last year with about $61 million. We've targeted $60 million to $75 million there. So, you know, potentially some slight increases there, but really focused on the targeted investments around commercializing the technologies that we've been developing here for some time.
Maybe just on the Treasury's decision and how that kind of impacts how you think about next year in terms of investment and revenue outlook.
As far as the Treasury, you know, we're obviously carefully watching that. The company has a history of being able to monetize tax benefits, and we've talked about that here recently with tax benefits that we've monetized around both the Toyota projects, as well as Derby. So, wouldn't expect, you know, anything to impact that. It's obviously opportunity in the future for potential additional monetization, but we're watching it carefully like everybody else.
You, you had mentioned, and I think in a previous call, that you expect Toyota, the Tri-gen facility to get $3 a kilogram. Is that still the expectation, or do you think that could change based on what happens?
So as far as the Tri-gen facility, we announced in a press release that we put out last week, that we have entered into an agreement to sell the production tax credits from that facility. We did not put out the exact number, but we've entered into a financing transaction to sell the PTCs, which does add incremental value to that project.
Great. Thank you so much.
Thank you.
Our next question comes from Manav Gupta from UBS Financial. Your line is now open.
Thanks, guys. I'll respect the queue and only ask one question. You are working on a DOE loan guarantee program, not a DOE loan, but a loan guarantee program. Can you help us understand how that process is going and any update on that? And I'll turn it over after that. Thank you.
Hi, good morning, and thank you for the question. Yeah, with respect to our expanding manufacturing around solid oxide in the U.S., we are in the process around the DOE loan guarantee. We are getting close to finalizing the location. We've narrowed it down to just around three locations, which is the next phase that we need to get through in that process, and then we'll continue to move forward with the DOE.
But we're excited about the progress we're making and certainly around the pipeline that we're seeing, which is obviously, you know, we need to see from a corporate perspective before even moving forward with that.
Thank you, guys.
Our next question comes from Eric Stine, from Craig-Hallum. Your line is now open.
Good morning, everyone.
Morning.
Hey, so on the generation portfolio when Toyota up in Derby, I believe shortly, I mean, you'll be at that 60 MW. As I think about the past, I mean, this goes back a ways, and I understand you're taking on much more investment here to drive some of these, you know, very sizable opportunities. But in the past, you had talked about a 50 to 60 MW kind of break-even level for generation where you would be EBITDA positive. And I'm just curious, is that something that you plan to update? I mean, could you give a little color there as it stands, given your new cost structure?
Good morning, Eric. This is Mike, so I'll take that. So yes, as these additional projects come online, we will have over 60 MW of projects online in the portfolio. So finishing up, you know, investments that have been made in the last several years, that will increase our generation revenue. As far as EBITDA for the portfolio itself, that's a positive EBITDA portfolio. You know, when you take out the depreciation, so, you know, on our financial statements, we're showing negative margins from the portfolio. But when you take out depreciation, as well as the cost that we've expensed around the Toyota project for the quarter, that came in around... I'm sorry, for the fiscal year, that came in around 45%, and for the quarter, around 42%.
So, you know, EBITDA positive, positive cash generation from the portfolio. When we look at the overall business, as we said, we are making additional investments. We have increased our SG&A as well as R&D over the last several years to bring on these new technologies. As those come online and become revenue producers in the next few years, you know, that will continue to improve the EBITDA profile of the company. We have not put out specific guidance around when the company gets to EBITDA positive, but we would expect to continue to drive in that direction as we get revenue from not only these new technologies, but continue to grow our activity on a global basis. You know, we've, Jason talked about the opportunity in Korea.
We recently had a new service agreement come on, come online that's revenue producing, and we see further opportunities there as well.
Okay, got it. That is helpful. And then maybe last one for me, just on the pipeline. You know, do appreciate the breakdown, both by application and by geography, but wondering, you know, maybe I missed it, but did you give an actual amount or estimate of what that might be? I know that is something that you have done in the past.
Yeah, Eric, what we provided was really a look at the type of applications that we see in our pipeline. So if you look at that between power generation, electrolysis and hydrogen, and carbon capture, and what we refer to as carbon recovery, and then we gave a view of it by geography with those same applications. What we did not provide a specific, you know, megawatt or gigawatt number to the pipeline. I don't think we've done that in the past, at least since I've been here. But what I would say is, if you look at what we've talked about on the call today, if you take, for example, the service agreement that Mike just talked about in Korea, there's 100 MW of, you know, additional opportunity in the Korea market.
We talked about, you know, three additional, you know, awards that are not fully negotiated yet. So we're starting to see that pipeline convert into opportunities. We also, you know, see that some of the projects that we have in Europe, as they come up for renewal, we're having some success there. So we think that we're starting to get to a point to where we're seeing that pipeline convert to opportunities, and we're excited about that.
Okay. I'll take the rest offline. Thanks.
Thank you.
Our next question comes from Jeff Osborne, from TD Cowen. Your line is now open.
Yeah, thank you. Just two quick ones on my side. I think you had mentioned you advanced—had advanced the planning for the solid oxide fuel cell facility, potentially in the U.S. Can you just give us an update on how that advancement has gone, if there's any update in terms of scope and/or CapEx? I think in the past, you had talked about potentially upwards of $300 million. So I'd be interested in that. Then just following up on what you just had said to Eric on the 100 MW in Korea, just hypothetically, if you were to receive an order tomorrow for that, when would the revenue flow through? Would you encourage the analysts to sort of model a proportion of that 100 MW for maybe the second half of next year or...
sort of zero out the product revenue for the year.
Jeff, thank you for your, for your question. On, on the first part of your question, you know, what we've talked about for the U.S. is a manufacturing facility that would have the ability to produce at 400 MW. We have since refined our view of that, and, and our view of the, the capital required to achieve that has come down by a factor of about two-thirds, or roughly, in terms of how we think about the cost. The facility that we have in Calgary is 40 MW, is what we're expanding there to, and we think that we have the ability to get that to 80, with minor, you know, investment in making that happen. So we're, we're excited about, about the opportunity to get the Calgary facility also to 80.
But in the U.S., we think that's important, one, just because of where we see opportunity, and two, obviously, to make sure we're in full position to take advantage of the IRA, as we are with our carbonate platform, which we've always manufactured that here in the United States. With respect to the 100 MW opportunity, what I would say there is that if you think about the way our business works or our modules work, depending on when modules were installed, that's what really creates the opportunity for the upgrade cycle. So it's not an even distribution in the way you might think about it.
So we can look to maybe help with that a little bit more in terms of how you might think about it, but that's all gonna be driven by when modules come up for renewal and are working through those contracts with each of the Gencos in the Korea market.
So just to follow up on the CapEx, if it previously was 300 2/3 less, is it 100 now, or are my figures off?
Yeah, initially, to build out a facility, that's more of like what we're thinking will end up being.
Got it. And then you won't be more specific on Korea, how many units are, you know, roughly 5 years old that might be up for renewal? Is there a way of thinking about that portfolio and what would be up for the next 12 to 18 months?
So Jeff, this is Mike. Let me, let me take a shot at that. So, and as, as you mentioned, currently, we, we do not have product backlog, so would not expect to see product revenues early in the fiscal year. But as, as Jason said, we are in the process of working through transition of the portfolio in Korea, which is, which is currently under POSCO Energy or KFC. That's 100 MW of opportunity. It's all of our carbonate fuel cells, so, you know, we do have inventory for that. And as, as those renewals happen and these repowering opportunities happen, you know, we will be as, as, you know, prudent as we can about shipping those modules to Korea.
There is a time lag there, but we will be producing the inventory, and we'll be able to ship modules to Korea in the second half of the year. It just really depends on timing of, you know, transitioning these projects from POSCO Energy or KFC to FuelCell Energy and the cycle in which those renewals happen.
Perfect. And then just lastly, Mike, there, there's no more. Is there any more similar to the $10.5 million from performance guarantees? Is there any residual performance guarantees flowing through in the next fiscal year from prior units shipped, that we need to model pure profit on?
We wouldn't expect anything significant there, Jeff. Those modules which the performance guarantees were related to were Noeul Green , and those were installed this past quarter.
Great. That's all I have. Thank you.
Okay, thanks.
Our next question comes from Dushyant Ailani from Jefferies. Your line is now open.
Hi, thank you. Good morning, everyone. I just had maybe one or two quick ones. Just on the timing of the pilot for the carbon capture with Exxon, could you maybe share more about how that, when the pilot's gonna take place, when that's gonna be, you know, of what's the next steps after that?
Sure. So if you think about the announcement we just made yesterday, part of that work that's going on with Exxon includes their participation with the innovation fund in the EU. And right now, the timing for the pilot is slated for early 2026. And there's a, you know, there's documents out there that you can see online around the EU innovation funding to give some more clarity on that, but, but we expect that we'll be, you know, operational in that time frame.
Awesome. Thank you. Then just on the hydrogen hubs, I know that you talked about, you know, your technology being, like, in the two hubs, and then also you have discussions going on. So maybe just timing around that as well.
Yeah. So I think, you know, if you think about the hubs and what's going on there, the negotiations between, I'll call them hub owners, for lack of a better expression, is going on between them and the DOE around how the funding is gonna work. But what we're excited about, when you look at all seven hubs, you know, four of the seven all have an aspect of transportation tied to them. We think our Toyota project is a great example of our ability to execute a project like that very quickly. If you think about the fuel mix or the way in which the DOE is trying to demonstrate these hydrogen hubs, there's a cross between doing electrolysis, whether that's through wind and solar, or things like hydro, or utilizing fuel to do that.
There's also, hubs that have the opportunity around doing, you know, blue hydrogen, as it used to be called, and doing that by capturing CO2. So we think we're really well-positioned to add value across all seven of the hubs. And so, as those hub owners work through the funding cycle with the DOE, we are working with them in lockstep to provide technology as part of the solutions they need to make the hydrogen hubs work.
Awesome. Thank you. I'll turn it over.
Our next question comes from Ryan Pfingst from B. Riley. Your line is now open.
Hey, guys. Thanks for taking my questions. With the Tri-gen site now available for potential customer visits, can you talk about the interest you've seen from others in recent months and your confidence in attracting another customer?
Ryan, good morning, and thank you for the question. You know, we, you know, one of the things that's really exciting about the Toyota project is that unlike even some of the, the other projects that have been talked about, you know, this is a real commercial implementation of the solution for a customer that has a real need to leverage the power, the hydrogen, and the water from the platform. Between the platform and its capabilities, and the way in which Toyota, as the customer, is leveraging the platform, that has served as a catalyst to generate a lot of interest in the product itself. We continue to do a number of tours. We have a number of opportunities that we're pursuing around Tri-gen as a solution.
In addition, like I just mentioned, we think that there's maybe some applicability for Tri-gen, even in some of the hydrogen hub opportunities.
That's helpful. Nice to see the nuclear-related announcements the last couple of months in the U.K. and Canada. How big of an opportunity do you see with nuclear, and what does appetite look like here in the U.S.?
A great question, and maybe I'll ask Tony to chime in here a little bit about why we are excited about the nuclear opportunity, given our solid oxide electrolysis platform, and why it's such a good pairing with nuclear and the renewed interest that we're seeing around nuclear, not only here in the U.S., but around the world.
Yeah, happy to do that. The key advantage of marrying nuclear power to our solid oxide electrolysis is that it's zero carbon power, and it's available 24/7. So if you think of the other zero carbon solutions that can produce zero carbon hydrogen through electrolysis, they tend to be intermittent renewables. So nuclear, A, has that very high capacity factor, and B, it also provides waste heat, which we can use to increase our electrical efficiency. It starts out high at about 90%, but we can literally get it to 100% if we have an external source of waste heat, which we can get from nuclear power. So it's a really good fit for our solid oxide electrolysis.
Got it. Yeah, it's an application that seems to make a lot of sense. Happy holidays, guys. I'll turn it back.
Happy holidays to you, too. Thank you.
Our last question comes from Noel Parks from Tuohy Brothers. Your line is now open.
Hi, good morning.
Good morning.
I just want to talk on, sort of a general topic on the product development side. I wonder if you could talk a bit about some of the work you've been doing as far as reducing the footprint of the fuel cells. Any particular progress you expect to see in the coming fiscal year, and, you know, how that might manifest itself?
Good morning, and thank you for the question. I think if you look at our two platforms, our carbonate platform and our solid oxide platform, you know, if you look at solid oxide, it's effectively the size of a container, is the module size. And it, too, just like our carbonate platform, is very modularized. And we think that creates an advantage for us in terms of, you know, space and how we utilize space. If you take the Tri-gen platform, just as an example, I mean, that's a platform providing, you know, 2.3 MW of power. It's providing hydrogen, it's providing water, and it's on the equivalent of roughly three basketball courts, so not a lot of footprint needed for our platforms.
As you think about the ability around solid oxide and rack mounting and doing other things like that with a platform that's more containerized, you can be very efficient in space utilization while delivering a lot of power or other benefits, like hydrogen and/or carbon capture.
Okay, great. I apologize if you touched on this earlier, but when it comes to the recent announcement of the Exxon deal, I was wondering if you could talk a little bit about maybe the last stages of getting to the agreement. I feel like earlier in the year, maybe in your comments about the JDA, you mentioned a good deal about the joint marketing aspects of it. To a degree that made me think maybe the first announcement would actually be something other than Rotterdam. But you know, then of course, pleasantly surprised to hear that that was the project. So anything you could talk about sort of the background of kind of what's been happening in the last couple quarters?
Yeah, no, as we, as we've talked about, one of the things that both Exxon and, and FuelCell were very focused on in the joint development was really around optimizing the platform. And optimization of the platform really centered around, you know, how effective were we in capturing and transferring carbon? How good was the platform in terms of maintaining power density, right? Because we think that's a significant advantage to our platform versus any other technology out there to capture carbon. So we spent a lot of time on those two things. And then thirdly, you know, one of the other elements was just around life and how long the, in a carbon capture mode would our cell stack life last? And, and life testing takes time. And so those things were all things that we really focused on through this development effort.
After solving those things from a technical standpoint, and both sides being comfortable with the results that we were able to generate, the next phase was to move to this demonstration project, and we're really excited to do that. You know, not only because, you know, it's, you know, it's Exxon and they've been our, you know, who we've worked with jointly around optimizing the technology. But like, you know, they said in the press release that, you know, after successfully demonstrating, this is technology that they think they could deploy at their other sites. And if you just look at them as a customer, right? That's a pretty significant opportunity.
And then if you open up the aperture and you look at industrial customers broadly, that is a significant market opportunity for a technology like ours that will capture carbon and produce power simultaneously, and have the optionality of delivering other benefits, like hydrogen, as part of the platform.
Great. Thanks a lot.
Thank you.
The question and answer session is now closed. I'd now like to hand back over to Jason Few for closing remarks.
Ellie, thank you. We will continue to execute our powerhouse business strategy with the goal of delivering growth and optimizing returns. Thank you all for joining the call today and for your interest in FuelCell Energy. We wish you all a peaceful and happy holiday season, and we look forward to updating you again next quarter. Have a great day. Thank you.
Thank you for attending today's conference. We hope you have a wonderful day and happy holidays. You may now disconnect.