Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the FuelCell Energy Third Quarter 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Tom Gelston, Senior Vice President, Finance and Investor Relations, you may begin your conference.
Thank you. Good morning, everyone, and thank you for joining us on today's call. As a reminder, this call is being recorded. This morning, FuelCell Energy released our financial results for the third quarter of 2023, and our earnings press release and our SEC filing are available on the investor 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 two hours after we conclude the call. Before we begin, please note that some of the information that you will hear or be provided with today will consist of forward-looking statements within the meaning of the Securities 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 could 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 the most recently filed annual report on Form 10-K and any subsequent filed quarterly report on Form 10-Q.
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. Again, it's 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, 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 our leadership team. I would 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. Today, we are pleased to announce another quarter of strong operational execution. We will highlight our consistent progress on key projects and strategic objectives, including the commissioning of our Tri-gen Distributed Hydrogen platform at the Port of Long Beach, California, the extension of our term of our joint development agreement with ExxonMobil Technology and Engineering Company, or EMTEC, as well as our success in reentering the Korean market. For anyone who may be new to the FuelCell Energy story, we have included a company overview on slide three. Our purpose is to enable a world empowered by clean energy. We are proud to be a global leader in clean energy 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 95 platform installations in commercial operation and have generated more than 13 million MWh to date. The technology behind these high-temperature electrochemical energy platforms underpins both our Tri-generation and the carbon capture platforms, which we believe enables FuelCell Energy to leverage 20 years of operating history and sets the stage for us to meet the evolving needs of our current and future customers. Next, please turn to key messages for this quarter, shown on slide four. First, we were thrilled to announce that the Toyota project located at the Port of Long Beach in California is online, producing power, hydrogen, and water, including delivering hydrogen that meets the stringent purity specification required for Toyota's mobility applications.
At this time, we are only waiting on the receipt, final fire department, and related building permits required to fully declare achievement of commercial operations. This marks a tremendous accomplishment in our technology development in partnership with Toyota and evidence of the power of collaborating on innovation, as we did with the Department of Energy on the initial Tri-Gen development. Our innovative Tri-Gen system will help Toyota achieve its decarbonization goals by producing emissions-free hydrogen and electricity, and help meet United Nations Clean Water and Sanitation Goal number six by producing water every day to support their port operations. Secondly, we are making progress in growing our business in Korea, most recently through new service opportunities.
During the quarter, we signed a long-term service agreement with Noeul Green Energy and executed a memorandum of understanding that outlines a potential business arrangement that could see us take over the long-term servicing of the world's largest fuel cell park. Thirdly, the development of our carbon capture technology in partnership with EMTEC is advancing well. In August, we were very pleased to announce the extension of the term of our joint development agreement through March 2024. Fourth, in Derby, Connecticut, on-site construction of our 14 MW project continues to advance, with installation largely complete. On-site civil construction of our 2.8 MW project is also advancing. We expect to achieve commercial operations on both of these projects in the fourth quarter of calendar year 2023, and upon declaring commercial operations. This will increase the size of our generation portfolio by 38%.
In addition, we are advancing our plans to expand manufacturing capacity for our high-efficiency solid oxide power generation and electrolysis platform. Lastly, we continue to focus on maintaining liquidity and exercising a disciplined approach to capital allocation. Our liquidity position remains strong, with a cash and short-term investment position of approximately $414 million, which we were able to increase through both project financing and equity offerings during the quarter. Now, I will turn the call over to Mike to discuss the financial results for the third quarter. Mike?
Thank you, Jason, and good morning to everyone on the call today. Let's begin by reviewing the financial highlights for the quarter as shown on slide six. For the third quarter of fiscal year 2023, we reported total revenues of $25.5 million, compared to $43.1 million in the third quarter of fiscal year 2022, a decrease of 41%. Excluding the revenues generated by the sale of modules in the prior year quarter, overall revenues in the third quarter were up slightly compared to the prior year quarter. Net loss was $23.6 million in the third quarter of fiscal year 2023, compared to a net loss of $29 million in the third quarter of fiscal year 2022.
The resulting net loss per share attributable to common stockholders in the third quarter of fiscal year 2023 was -$0.06, compared to -$0.08 in the third quarter of fiscal year 2022. Adjusted EBITDA totaled -$31.6 million in the third quarter of fiscal year 2023, compared to adjusted EBITDA of -$20.8 million in the third quarter 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 cash, cash equivalents, and short-term investments of over $410 million as of July 31, 2023. Next, please turn to slide seven for additional details on our financial performance and backlog.
The chart at the left-hand side of the slide graphically shows our revenue composition by line item. Looking at revenue drivers by category, service agreement revenues increased to $9.8 million from $9 million. The increase in service agreement revenues for the third quarter of fiscal year 2023 was primarily driven by two new module exchanges at the plant owned by Korea Southern Power Company in Korea and a module exchange at the plant at Trinity College. Generation revenues were consistent period-over-period, increasing to $11 million from $10.9 million in the comparable prior year period. Advanced technology contract revenues decreased to $4.7 million from $5.2 million.
Compared to the third quarter of fiscal year 2022, advanced technology contract revenues recognized under our joint development agreement with ExxonMobil Technology and Engineering Company were approximately $0.3 million higher, and revenue recognized under government and other contracts were approximately $0.8 million lower as a result of the allocation of engineering resources during the quarter. Looking at the top right-hand side of the slide, I will walk through the changes in gross loss and operating expenses. Gross loss for the third quarter of fiscal year 2023 totaled $8.2 million, compared to a gross loss of $4.2 million in the comparable prior year quarter.
The gross loss increased for the third quarter of fiscal year 2023 compared to the third quarter of fiscal year 2022, primarily due to the fact there were no new module sales during the third quarter of fiscal year 2023. The prior year period included favorable product margins as a result of module sales to Korea Fuel Cell Company. Operating expenses for the third quarter of fiscal year 2023 increased to $33.2 million from $23.8 million in the third quarter of fiscal year 2022. Administrative and selling expenses were higher during the third quarter of fiscal year 2023, primarily due to an increase in compensation expense from an increase in headcount in support of sales and business expansion.
Research and development expenses increased to $15.6 million during the third quarter 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 platform and carbon separation and carbon capture solutions compared to the prior year period. On the bottom right of the slide, you'll see that we finished the quarter with backlog at approximately $1 billion, a decrease of 17% compared to backlog as of July 31, 2022. The reduction in backlog is a result of a reduction in generation backlog due to the decision not to move forward with certain generation projects during the fourth quarter of fiscal year 2022.
Given their economic profiles, and also due in part to the timing of revenue recognition under product generation and service agreements since July 31, 2022. This decline was partially offset by an increase in service backlog related to a new service agreement with Noeul Green Energy, entered into during the third quarter of fiscal year 2023, which has a contract value of approximately $73 million. On slide eight is an update on our liquidity and our ongoing investment in project assets. As of July 31, 2023, we had total cash, cash equivalents, and short-term investments of $413.9 million.
This total includes $303.7 million of unrestricted cash and cash equivalents, represented by the darker blue bar on the chart in the center of the slide, $32.7 million of restricted cash and cash equivalents, represented by the purple bar, and $77.4 million of short-term investments, represented by the lighter blue bar. The short-term investments represent the amortized cost of U.S. Treasury securities outstanding as of July 31, 2023, which were purchased by the company during fiscal year 2023 as part of the company's cash management optimization efforts, and all of which are expected to be held to maturity. 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 July 31, 2023, our growth project assets totaled $289.4 million, which excludes accumulated depreciation. As detailed on slide 20 in the appendix of this presentation, our generation portfolio totaled 63.1 MW of assets as of July 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. In closing, I am pleased with our continued progress this past quarter. 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 10. 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 continue to focus on optimizing our business for achieving growth in markets where we see significant opportunities for our platform technologies. We created geographic market segment and application-specific playbooks that are focused on building a robust sales pipeline. Business development team is focused on moving the pipeline from prospects to executed agreements. Second is scale. Plan to scale our existing platforms by investing in, extending, and deepening our leadership and total human capital across the organization.
On our operations, we are focused on optimizing manufacturing capacity for our carbonate platforms, with the goal of achieving 100 megawatts of annualized, integrated, on-site manufacturing and conditioning capacity. Also working to expand our solid oxide manufacturing capabilities with the goal of adding an additional 400 megawatts of manufacturing capacity in the United States. We believe that 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. Third, innovation. For our 50-year history, we have never stopped innovating. As shown on an earlier slide, we have hundreds of patents granted or pending in jurisdictions around the world.
We believe our technology and our culture provide the opportunity for our participation in the growth of the hydrogen economy and carbon capture markets, and will enable us to deliver on our purpose to enable the world and power by clean energy. We're working to develop diversified revenue streams by delivering a range of solutions and services that exploit the multi-featured capabilities of our platforms, as exhibited by Tri-gen, and support our four strategic focuses intended to advance the global energy transition. Those strategic focuses are distributed power generation, distributed hydrogen, electrolysis, and hydrogen storage, and carbon recovery and capture solutions. 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 11.
We had a very exciting announcement during the quarter, as we are growing and strengthening our presence in Korea by developing relationships with two domestic clean energy electric utilities. The first is the long-term service agreement with Noeul Green Energy, whose plant has a total output of 20 MW using eight SureSource 3000 fuel cell platforms. Under the terms of the agreement, FuelCell Energy will oversee the operation and maintenance of these eight SureSource 3000 fuel cells over the next 14 years. This project is expected to have a total contract value of approximately $73 million, which is added to our total backlog. In addition, we signed a memorandum of understanding with Gyeonggi Green Energy, or GGE. GGE has the largest fuel cell power platform operating anywhere in the world.
GGE plant has a total output of 58.8 MW using 21 SureSource 3000 fuel cell platforms. The MOU provides a framework for negotiating the proposed business relationship between GGE and FCE, including future module replacement and service, as well as developing new opportunities in Korea. We are currently negotiating the detailed terms of that proposed agreement with GGE. In addition, we see future opportunities for operations and maintenance agreements with a large potential market of over 100 MW in Korea. We are focused on winning these opportunities and look forward to providing updates on our progress in Korea in future quarters. Please turn to slide 12. We continue to advance our decarbonizing power solutions. At the end of the quarter, we announced an exciting development in our partnership with EMTEC, which is part of our innovation strategy.
We have extended the term of our joint development agreement for carbon capture technology through March 2024. This extension is intended to provide the opportunity to continue de-risking the generation, new technology, fuel cell module demonstration projects, and the joint marketing and sales efforts to inform development of a new business framework between the parties beyond the current joint development agreement structure. We are continuing to finalize the engineering and cost elements of a potential demonstration of the technology with EMTEC. We are extremely pleased that our jointly developed carbon capture technology has been found to be feasible for the commercial use applications we are targeting. We are excited about the promising potential of this technology to capture CO2 emissions from industrial and commercial exhaust streams, with the goal of helping to solve one of the world's biggest environmental challenges.
A final investment decision on the demonstration project is expected later this year. Next, our two projects in Derby, Connecticut, continue to progress on schedule and are expected to soon contribute meaningful growth to our generation portfolio. On-site construction of the 14-MW project is continuing to advance. We have largely completed the installation of the majority of the balance of plant components, as well as the thin modules required for the project. On-site construction of the 2.8-MW project is also advancing well, and we expect to achieve commercial operation of both these projects in the fourth calendar quarter of 2023. Moving to our focus on producing hydrogen, 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 increasing the capacity of the facility from 4 MW to 40 MW per year of solid oxide electrolysis cell production. In addition, we see the potential to further increase our annual production capacity to up to 80 MW by leasing additional space and investing in various process optimizations intended to increase throughput on yield. We have hired and trained additional staff for a 3-shift production operation to support the initial planned expansion to 40 MW, and we need to add additional staff as required in the future to realize the potential 80 MW of annualized solid oxide electrolysis production capacity. Please turn to slide 13.
In terms of delivering hydrogen to our customers, we offer two solutions: our Tri-gen platform, which has just been completed for Toyota at the Port of Long Beach, California, as well as our solid oxide-based electrolysis platform. First, with regard to our Tri-gen solution, we deploy our innovative net 2.3 MW trigeneration platform to produce emission-free hydrogen, electricity, and water every day. In the Toyota example, the hydrogen produced will be used to fuel Toyota vehicles, while the electricity produced will be sufficient to power the Toyota Logistics Service Center, with additional electricity being sold into the grid, and the water that is generated will be used for car washing.
Given the use of carbon-negative, renewable natural gas for this project, this installation demonstrates our ability to generate renewable hydrogen at the point of consumption, avoiding the cost and emissions associated with delivery of hydrogen to remote users. We see tremendous potential to apply our Tri-gen technology in other locations, utilizing a space that is the equivalent of three NBA basketball courts, providing energy that is distributed at the point of consumption and avoiding most, if not all, of the permissions and permitting required for centralized production and distribution infrastructure. And we look forward to pursuing those future opportunities. Turning to our solid oxide electrolysis platform, we believe solid oxide presents one of the best opportunities to minimize overall cost while maximizing efficiency, and that our platform will give more organizations the option to implement a flexible energy strategy.
We will touch more on our design attributes and differences in a moment. While our Tri-gen platform benefits from reducing the cost of hydrogen through the sale of electricity. Solid oxide electrolysis is an ideal solution for geographies that have low to no cost power and hydro, strong wind, and or sun coverage. Because most of the cost of hydrogen produced by electrolysis is related to the cost of input power. Efficiency is one of the most effective ways to lower hydrogen costs, and we believe FuelCell Energy's solid oxide platform is among the most efficient electrolysis technologies available. Our platform can generate 600 kilograms a day of hydrogen without any incremental heat source, only using a 1.1 MW power input. Adding a heat source just increases the benefits of our platform's high efficiency.
As an example, process heat from a nuclear power plant further increases platform efficiency, lowering the required power to produce the 600 kilograms a day of hydrogen to 1 MW. A low temperature electrolyzer would require about 35% more power to produce the same amount of hydrogen. Turning to slide 14, I would like to emphasize how FuelCell Energy solutions are highly differentiated versus other solid oxide technologies. Our first-generation, high-efficiency solid oxide product comes in two different configurations. One is our 250 kW power generation platform, and the second is our electrolysis platform, capable of producing 600 kilograms of hydrogen per day. FuelCell Energy solutions offer a number of key performance advantages. Our platform is compact and lightweight. Our designs keep costs low and avoid supply issues with minimal need for rare earth minerals and no use of platinum group metals.
Our integrated package product provides complete solutions for our customers. Our electrolysis platform is fed with water, not steam. Steam is generated on board using internal heat and electric power. Our power generation platform is capable of combined heat and power operations at up to 80% efficiency, and our power generation platform is flexible in its ability to operate on various fuels, hydrogen, biogas, fuel blends, or natural gas. All of these differentiators give us confidence in our ability to grow in the solid oxide market. Our thin cell architecture leads to a very low stack weight per kilowatt of power rating, which translates directly to lower material costs and which also provides benefits in faster heat up and runtime. As we increase our solid oxide production capacity, we see significant market opportunities in standalone hydrogen generation applications, particularly given the cost advantage of distributed production.
We also see market opportunities in power generation as low carbon solutions increasingly displace gas and diesel generators. In addition, renewable energy and nuclear power represent key- end markets where solid oxide electrolyzer cells can be operated in tandem with power generation, yielding high efficiency hydrogen and increasing overall efficiency and flexibility. Before moving to Q&A, let's conclude with takeaways on slide 15. I am excited about how, over the last four years, our company has navigated our journey. We are commercializing technologies and advancing new technologies toward commercialization. We believe that our technologies will have a positive impact on our world. We are demonstrating the commercial value of our technology. With our Tri-gen platform operating for Toyota in Long Beach, we are delivering commercial results for our customers and for the planet. We are succeeding in our international growth efforts, most notably in Korea during the third quarter.
We are making progress in developing advanced applications for our platforms, specifically through our collaboration with EMTEC on carbon capture technology. We are making progress on large projects, including the Derby, Connecticut project, which we expect to achieve commercial operation during calendar year 2023. In addition, we are making progress in increasing manufacturing capacity for our high-efficiency, solid oxide power generation and electrolysis platforms, which we believe will give us a differentiated position in the market. We have remained focused on disciplined capital allocation and have increased our liquidity through both debt and equity financing. We believe we are positioned for growth. 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.
At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from the line of George Gianarikas from Canaccord Genuity Group. Your line is open.
Hey, everyone, good morning, and thank you for taking my questions. Maybe just to start, the first question, you mentioned in the press release that you're examining additional facilities for the build of your solid oxide platform. Could you just help illuminate a little bit about additional interest that you've seen and what gives you the confidence to continue to build out the capacity there? Thank you.
George, good morning, and thank you for joining the call, and thank you for your question. Yeah, we continue to use the interest that we're seeing from customers and the pipeline that we're building as how we think about the need to expand capacity for our solid oxide manufacturing. In addition to that, we continue to look for ways in which we increase our capacity and our existing footprint, or making small additions to our existing footprint, even in Calgary. So today, you know, we believe that we can get to, you know, 80 MW of capacity from originally where we thought we were at 40, just based on additional process optimizations and things that we're doing at that facility.
So our decisions will be driven by demand and the pipeline that our business development team is building. But we're seeing really strong support for solid oxide, for power gen, and for electrolysis.
Do you still expect a reversibility to come into the platform in 2027?
We do. We believe that that's gonna be a significant opportunity for us in the longer term, as energy storage continues to be a more important part of the energy transition as we continue to add more and more intermittent technologies to the grid. Our view is that hydrogen works as an excellent energy store, and that it's far more practical for long-duration energy storage versus mineral-based solutions. S o our ability to leverage reversibility of our platform, so the same stack that's gonna make hydrogen is the same stack we can reverse and feed that hydrogen to produce power, we think is gonna be a real opportunity for us.
Maybe just a last question. I'm wondering if you could share your thoughts on the upcoming decision by Treasury to give us more detail around additionality, excuse me, deliverability and matching, and your thoughts as to how that decision will turn out. Thank you.
Yeah. I think it was on the seventh, the Deputy Secretary of the Treasury said that they plan to, you know, clarify more of the rules by the end of this calendar year. So one, I would say we're excited that there's, you know, we're gonna get to real clarity around the rules. You know, as a company, we've continued to be in a position to leverage the ITC, and we've demonstrated our ability to attract tax equity as part of the way in which we recycle cash in our business. We think that the Treasury Department and overall, the administration is really trying to listen to the voice of the market in terms of how it's making these decisions. And so when you think about things like, you know, additionality or matchability, they're really trying to get this right, we believe.
We think that they'll ultimately get to the right decision and put together more of a transition path than kind of a clear, hard determination one way or another, in terms of how they're gonna account for whether it's additionality or matching.
Thank you.
Your next question comes from the line of Manav Gupta from UBS. Your line is open.
Good morning, guys. I actually quickly wanted to focus on this SRIA study from California that came out on Friday, that's calling for, like, 90% emission reductions for 2045. It lists a number of fuels, including hydrogen, so it's pretty bullish on hydrogen. And I'm basically trying to understand, now that California, it seems, would be very supportive of alternate fuels, does that change your plans? And also, in the report, it's basically saying a book and claim would apply to even green hydrogen, which is they are encouraging the sale of green hydrogen within the state of California. That's when you can get the credit. So if you could talk around your plans of California, based on what we are seeing with SRIA, which basically would support alternate fuels in a big way in the state of California.
Manav, good morning, and thank you for your question. And also, you wrote a pretty nice report on this yourself, just that just came out, so appreciate that. Look, we are strong supporters of using biofuels, you know, not only for power production, which we've done on a number of different installations in California. We support the methodology in terms of how you think about using alternate fuels to produce green hydrogen, which is exactly what we're doing with our trigeneration platform at the Port of Long Beach. So we're really supportive of this move that they're making. And as you know, as a company, from a CARB standpoint, who's driving this movement in California, we've been CARB-certified for a long time. We're the first fuel cell provider to get there.
So as we think about air quality issues and the, you know, real focus around things like SOx and NOx and other particulates coming back into focus, we think strong support of alternate fuels, our platform that doesn't combust those fuels, so we don't produce SOx and NOx and other particulates, just could, you know, show stronger support for what California is trying to do. So we're really excited about it, and we think it's a real positive, and we think that opens the door for us. From a distributed power generation, it opens the door for more opportunities around trigeneration to actually produce, you know, carbon neutral power, green hydrogen, and water, like we're doing in California. So we think it's a very positive thing.
Well, thank you for a very detailed response, and congrats on getting the Tri-gen platform up and running. We hope it's first of many, because those things really help to de-carbonize at a faster pace. So I'll turn it over. Thanks again.
Thank you.
Your next question comes from the line of Ryan Pfingst from B. Riley Securities. Your line is open.
Hey, good morning, guys. On product sales, can you provide any color around demand and any progress you might be making with new customers, potentially outside of Korea?
Hey, Ryan, good morning, and thank you for the question. Yes, you know, as we've indicated, as a company, we've begun to really focus on creating a better balance between our power purchase agreement opportunities that we drive and product sales. So we're building a pipeline that enables us to do both of those things, 'cause we think continuing to offer multiple ways for our customers to purchase from us is a benefit to us as a company. But we see strong pipeline builds, not only in you know, our traditional markets, but as we expand into new markets outside of kind of our core, we're seeing strong product demand, and those generally tend to be more product sale-focused markets as opposed to PPAs.
And so we think that over the coming quarters, you'll see, you know, more from us on product sales as an overall opportunity.
That's helpful. And then turning to the generation segment, can you talk a little bit about the economics of the Derby projects, or maybe at a higher level, how they might help the profitability of the generation segment as a whole?
Yeah, sure. I think maybe Mike could give you a sense of how we think about, you know, margin and on our generation business and what we've seen happen over the last several quarters and certainly this quarter, but Mike can walk you through that.
Sure. Good morning, Ryan, and thanks for joining the call. So, yeah, as we think about the two Derby projects, that will add, you know, meaningful generation revenue. Right now, today, we're producing about $44 million on an annualized rate. We did about $11 million of generation revenue this quarter. So $44 million today, but adding, obviously, the large Derby project, another 14 MW will make a meaningful increase there. When we think about profitability of the generation portfolio, you know, we target EBITDA margins in our generation portfolio of between 40%-50%. When you if you look at just last quarter's results, when you back out the Toyota, you know, one-time charges as well as depreciation, we're in the 46% range right now.
We would expect that to continue as we add additional operating assets in the portfolio.
Great. Thank you guys for the color.
Thank you.
Thank you.
Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Eric Stine from Craig-Hallum. Your line is open.
Good morning, everyone.
Good morning, Eric. How are you?
Hey, doing well, thanks. So maybe I'll just stick with generation. You know, curious, so now with Derby coming on, I think you'll be at, what, 63, you'll be around 60 megawatts, and I know... And this goes back a while, so, not this, this isn't necessarily a target you've given, but at one time you had kind of a 50-60-megawatt area where you thought you'd break even. Obviously, you've got a lot of irons in the fire, so you've taken on more expenses. Do you kinda have a high-level, you know, megawatts in generation portfolio break-even number?
Good morning, Eric. This is Mike. I'll take that one. So, yeah, historically, you know, if you go back four -plus years ago, we were really centering the business around the generation portfolio with the meaningful backlog of projects that we had. So to your point, you know, we've been working really hard at getting those projects up online. We'll be north of 60 MW after Derby comes online. And, you know, back at that time, we were focusing the business on getting to EBITDA positive around the generation portfolio. You know, fast-forward a couple of years with the energy transition, you know, now being here in a big way with, you know, global support around what we're doing, we've accelerated investments around our different technologies, and Jason talked about both solid oxide, but also carbon capture.
That has increased both our operating expenses and CapEx, which has pushed out our profitability into the future, but we made that trade-off in order to get these technologies to market. When we look at the external targets we've put out there, you know, we're targeting getting over $300 million of revenue in 2025 and over $1 billion by 2030. We're still confident in those targets, and with the increased revenue, we would expect, you know, profitability to come as well.
Got it. I mean, is it something where we should think about, I mean, is there a time in the future, say, when carbon capture, when maybe that has progressed, you've gotten through the, the pilot project program, where that spending maybe tails off a little bit? I mean, I know this is all dependent on what your spend looks like. So maybe how do you think about those things, or do you think that you're gonna have kind of this elevated spend, you know, for the, well, foreseeable future or longer term than that?
So when we look at the R&D spend, we've ramped that up here over the last couple years. We have not put out, you know, guidance of when that would come back down. But clearly, you know, as we've talked about, we're investing in first article products that we're building here in our Connecticut facilities. And, you know, as those become commercial, that will shift up to cost of sales, which would likely drive down research and development expenses in the future. But we haven't put out a specific guidance around that.
Then just going back to the question around megawatt guidance, you know, as we look at the revenue potential for different products that we have out there now, it's a different math than just, you know, dollars per megawatt. We can potentially see, you know, higher revenues, particularly around a project like Tri-gen, that has multiple attributes coming out, not just power generation, but hydrogen and water. And then obviously, with government incentives out there around, like the PTC credit, that was not there, you know, a couple of years ago, you know, potentially higher revenue opportunities for those projects than just $1 per megawatt.
Okay, thank you.
Our final question today comes from the line of Noel Parks from Tuohy Brothers. Your line is open.
Hi, good morning.
Good morning, Noel.
Just had a couple. You know, talking about the generation business and the more recent investments in new technologies, can you just talk about sort of the state of your business momentum with generation, new customers, a nything that's shifted in terms of how you'd characterize the types of customers that are being more aggressive? You know, whether they're moving any faster, or as with so many things, waiting for sort of more of the IRA and infrastructure guidance?
No, no, thank you for your question. So as we think about what we're seeing with customers, you know, and, and you think about what we've just done with Toyota, well, many of the things that we're doing are new applications in the way in which we're using our platform. What's important to note about that is that it's our same existing platform, we're just extending the capabilities of that platform to deliver additional value. So the same carbonate platform that we commercialized in 2003 is the same platform we deployed at the Port of Long Beach in support of the Toyota opportunity, yet we're delivering hydrogen and water from that platform in addition to, to power.
We see that as a great example of where customers will now be able to see a real commercial implementation of that platform, and we think that will help us drive additional opportunities around the Tri-gen platform as an example. We are seeing, you know, customer interest in the way in which we're building our pipeline, growing even without the clarity around IRA, and especially when you think about globally, because, you know, we're not just focused in the U.S., but, you know, you've got programs in the E.U., you've got programs in Korea, all of which drive strong tailwinds that really support the business that we're in. And when you think about what's really happened, net zero in countries around the world have been legislated in, and so companies are gonna find ways to get there.
We think that you'll see even more states in the U.S. take more progressive attitudes, like what you're seeing in California, like what we just talked about, and the expansion of, and support for renewable fuels. We think that all serves us really well to help drive our business, especially some of the advantages we have, for example, in renewable fuels, the fact that we can use renewable fuels directly, you know, coming out of an anaerobic digester, as opposed to needing those fuels to get the pipeline-quality gas, as an example, which we think gives us an advantage, lowers the cost of the fuel, and puts us in a position to deliver, you know, carbon neutral to carbon negative power. So we're really excited about that.
As we look at our pipeline, we're seeing growth happening despite of the IRA, but there's no question that customers really want to understand, in the U.S., how to really fully maximize the IRA. But we'll continue to take advantage of the Investment Tax Credit. We think we're in a really strong position around a project like Toyota to take advantage of the Production Tax Credit. When you think about the incremental benefits, we are a U.S. manufacturer. We largely use, you know, U.S.-based content in our platform, and, you know, we use labor that are at prevailing wages. So all of those things continue to ladder up as just incremental benefits to bring down the cost for the customer, and to create a different set of economics for us.
You know, there are instances where you can get almost up to 50% through the IRA based on, you know, the way in which we're configured as a company. So we're pretty excited about that.
Great, thanks. And, I just wanted to turn to the ExxonMobil JV, and I was just curious about a couple things, I guess just sort of the working relationship, they're a huge company, and sort of their internal process, and maybe how it affects progress in the JV. You've had a number of extensions of the agreement, and I guess in just even more on a practical level, do you have any thoughts about the process that's left in the pipeline before, you know, there'll be more info about, for example, the timing of plans at Rotterdam for a capture installation there?
No, thank you. You know, I don't want to speak on behalf of Exxon, but I think it's clear from their public pronouncements that they are committed to their low carbon business. Our technology is directly supportive of what, you know, Darren has talked about and Dan Ammann have talked about in terms of their low carbon business, and so we feel really good about that. They have, you know, been clear that they expect to get to a FID decision later this year on a demonstration project. So we, you know, we think that will happen. So, you know, I think you're seeing Exxon operate very differently with their low carbon business and, you know, they've and we think that that will be benefit for us as well.
You know, they've got a strong commitment there, and we're excited about it.
Great. Thanks a lot.
Thank you.
This ends our question and answer session. I will now turn the call back over to Mr. Jason Few for some final closing remarks.
Rob, thank you. We want to take a moment to acknowledge and honor the victims, families, and communities impacted by September 11. As a Connecticut-based company, today, our thoughts are with those impacted in our community. As a company, we will continue to execute on 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 look forward to updating you again next quarter, and have a great day.
This concludes today's conference call. Thank you for your participation. You may now disconnect.