Ceres Power Holdings is racing to supply data centers with electricity
Is it possible for the energy technology company to turn things around?
A number of businesses, including Ceres Power Holdings (LSE: CWR), have recently become entangled in the worldwide AI boom. So far this year, the fuel-cell provider's shares have increased by 240%. The shares have increased by 850% in the last 12 months. The stock is still down about 50% from its ten-year high in February 2021 in spite of this performance.
Chart of shares for Ceres Power Holdings.
Ceres Power, a UK-based company, develops hydrogen-power technologies and solid oxide fuel cells, which are essentially miniature power plants. Due to high prices and low demand, the company and its technology were largely disliked for many years. The enormous energy requirements of AI have caused that to change over the past 12 months, resulting in what can only be called an arms race for dominance. Because capacity-constrained electricity grids are unable to meet their needs, data center operators and the so-called hyperscalers Alphabet, Microsoft, Amazon, and Meta are looking for their own power sources.
Data centers saw a 17% increase in electricity demand in 2025. According to SandP Global, the typical newbuild data center's power consumption is expected to increase from nearly 47MW in 2025 to nearly 110MW by 2030. Data centers may use 1,000 terawatt-hours (1,000,000GWh) of electricity globally by 2023, a 100% increase from 2030.
Problems with BFIA today. American Electric Power, a US utility, and Bloom Energy signed a historic supply agreement in November 2024 for the purchase of solid-oxide fuel cell products with a 1GW power output. The fuel cells can run on blends of natural gas, biogas, or hydrogen and, most importantly, can be delivered and turned on in months rather than years. They are made to plug straight into AI data centers. Due in part to fuel cells' ability to eliminate reliance on power utilities, data center startup EdgeCloudLink asserts that it can build a data center and have it operational in nine months.
Ceres Power's turnaround?
Regarding whether Ceres can match the success of its US counterpart, the market appears divided. Its delivery track record is, to put it mildly, inconsistent, and its revenue hasn't increased in the previous five years. Its next-generation Endura technology, a solid-oxide stack platform that can run on both natural gas and hydrogen, is still on hold. Ceres asserts that its technology can produce electricity from fuels more effectively than its rivals using a solid-oxide stack and ceramic electrolytes.
Ceres claims that at scale, manufacturing costs will be one-third lower than those of its rivals, and its output is exactly in line with the electrical specifications and standards of contemporary data centers. This, according to Berenberg analysts, is a "gamechanger" that will enable the business to profit from its R&D into a scalable platform.
According to Peel Hunt analysts, this is just a branding ploy that repackages the company's current technology into a new product. However, the company's ability to sell licenses for its products will ultimately determine its success. Ceres has shifted from a manufacturing model to a licensing model over the past few years, and it has set a goal of obtaining at least one new manufacturing license agreement annually. Given that the company has identified a 22GW market opportunity for its products by 2030, driven by demand from industry and data centers, particularly in Asia and the Americas, that doesn't seem like a very high bar.
With Ceres' new Endura technology, a single partner could scale up to 1GW of production and earn between £50 million and £100 million in annual royalties. According to Berenberg, at the current sector valuation multiples, that would result in £1 billion in shareholder value. Given Ceres's current market capitalization of £1.4 billion, it is understandable why investors have flocked to the stock.
Do you think Ceres Power is worth investing in?
The upcoming years will be crucial. Revenue of about 80 million is projected by analysts for 2028, up from 52 million in 2024 when the business began its shift to a licensing model. The present valuation cannot be justified by this. Nevertheless, these numbers were gathered prior to the company announcing an off-grid energy generation partnership with Delta Electronics, a manufacturing partner of Ceres, and Centrica, the owner of British Gas.
Customers will have access to "competitively priced, on-site power generation, significantly reducing exposure to wholesale electricity market volatility and grid capacity constraints" thanks to the partnership. Within the next year, a demonstration site will be set up, and over the following three to five years, capacity will be increased. Other alliances formed in 2025, such as those with Weichai in China, Doosan in South Korea, and Shell in India, are anticipated to intensify and begin producing results in 2026.
Five years is a very long period. According to Ebitda, the company is still losing money and using a lot of cash (a projected Ebitda of 7.8 million for December 2028). At 17.5 times forward sales, the shares are currently trading. Nevertheless, Ceres has enough cash on hand at the end of 202583 millionto support itself for the next three years until it breaks even. The company spent £20 million in cash in 2025, and this year's expenses should drop by about 20%.
In the end, Ceres is a high-risk investment, and the company's valuation leaves little margin for error in the event that sales fall short of projections the following year. Nonetheless, it's evident that the fuel-cell technology Ceres has spent years developing has a sizable and expanding market. Even a relatively small order could change the company's fortunes because 50GW of additional electric supply is required in the UK alone to meet demand from AI data-center projects in the works.
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