Fuel cells are rapidly becoming the preferred power source for AI data centers, not because they're the cleanest option, but because they can be installed and generating electricity in roughly 90 days, compared to 3 to 5 years for nuclear licensing alone. Industrial Development Funding and Oaktree just committed $1.7 billion to power Nebius' AI cloud infrastructure with Bloom Energy fuel cells, marking the second major nine-figure bet on the technology in under a year.

Why Are Fuel Cells Beating Nuclear to AI Power Contracts?

The answer comes down to timing. Data center operators need electricity now, not in 2030. Bloom Energy's solid oxide fuel cell systems arrive as pre-built modular units that install directly on site, bypassing the public grid entirely. This "behind-the-meter" approach means power flows straight from the fuel cells to the data center without routing through traditional electrical infrastructure.

Small modular reactors, or SMRs, cannot match that deployment speed. Companies like Kairos Power, X-Energy, and TerraPower do not expect their first fully operational reactors before 2030. Even before construction begins, new reactor designs must clear federal licensing, a process that alone takes 3 to 5 years. Grid-scale renewable energy and new transmission lines face similar delays, typically requiring 5 to 10 years to build in U.S. markets.

The electricity shortage is expected as early as 2028, according to industry projections. That gap between urgent demand and long timelines explains why major infrastructure investors are placing massive bets on fuel cells right now.

How Are Investors Structuring These Fuel Cell Deals?

• Financing Model: Industrial Development Funding leads development while Oaktree holds a minority equity stake, with Morgan Stanley serving as tax equity investor and MUFG Bank providing senior debt financing.
• Scale of Commitment: The IDF-Bloom partnership now exceeds $2.6 billion in combined project value, while Brookfield expanded its Bloom financing framework from $5 billion to $25 billion between October 2025 and June 2026.
• Technology Deployment: Bloom's systems can install and begin generating around 100 megawatts of power within 90 days on site, making them attractive for operators racing against electricity shortages.

"By bringing together institutional capital and critical power infrastructure, IDF and Bloom are unlocking the next generation of energy solutions and are proud to help Nebius meet the energy demands of the AI economy," said Nik Nunes, CEO of Industrial Development Funding.

Nik Nunes, CEO of Industrial Development Funding

The repeat pattern of billion-dollar fuel cell investments signals confidence in the technology's ability to solve an immediate problem. Two of the world's largest infrastructure investors have now placed multibillion-dollar bets on the same platform within nine months of each other.

What About Emissions? Are Fuel Cells Actually Clean?

This is where the story gets complicated. Most Bloom fuel cell deployments today run primarily on natural gas, not hydrogen. Clean hydrogen still costs significantly more, and its supply chain is still developing. Solid oxide fuel cells do burn cleaner than standby diesel or gas turbines, producing next to no nitrogen oxides, sulfur oxides, or particulate matter. However, they are not zero-carbon when running on natural gas, and that distinction matters for an honest assessment.

Amazon learned this lesson in 2024 when it withdrew from a 2023 deal to run Bloom fuel cells at three Oregon data centers. State regulators flagged that natural gas-powered cells would add real emissions in a region already served largely by clean hydropower.

The hardware itself is not locked to one fuel source. Bloom's solid oxide platform also powers its electrolyzer line, designed to produce hydrogen using the same underlying technology. As regional hydrogen hubs scale up supply, and as projects like California's ARCHES and the HyVelocity Gulf Coast hub work through funding, the cost gap between natural gas and clean hydrogen should narrow. For now, fuel cells function best as a bridge technology, starting on natural gas and transitioning toward cleaner feedstock as it becomes affordable.

How Is Nuclear Energy Adapting to the AI Power Boom?

While fuel cells dominate near-term contracts, nuclear power is gaining new attention through environmental markets. Xpansiv, a major environmental commodity exchange, launched trading for New England Power Pool Emission-Free Energy Certificates, or EFECs, on its CBL spot exchange. These certificates trade alongside Renewable Energy Certificates, carbon credits, and alternative fuel credits, giving companies a way to verify and trade nuclear-generated electricity.

The move reflects growing demand for reliable, carbon-free electricity. The International Energy Agency projects that data center electricity use will more than double by 2030, reaching around 945 terawatt-hours annually, with AI being the largest driver of that growth. Nuclear plants in the United States already generate about one-fifth of the nation's electricity and provide nearly half of all carbon-free electricity, making them vital for clean energy goals.

"The launch of our NEPOOL EFEC contract is an important step in our strategy to support the development of robust, dispatchable, emissions-free electricity as the industry works to keep pace with rising demand and energy transition goals," remarked Russell Karas, Senior Vice President at Xpansiv.

Russell Karas, Senior Vice President, Xpansiv

Xpansiv's registry network already supports more than 25 gigawatts of nuclear generation, representing about one-quarter of total U.S. nuclear capacity, and tracks more than 90 gigawatts of renewable energy across North America. During the first week after launching PJM EFECs in 2024, 675,000 megawatt-hours of nuclear certificates were traded on CBL, one of the fastest starts for a new environmental commodity on the exchange.

Large technology companies including Microsoft, Amazon, Google, and Meta are teaming up with nuclear energy firms to secure reliable, constant power for their AI data centers and cloud computing needs. This partnership trend suggests that while fuel cells solve the immediate deployment crisis, nuclear power remains part of the long-term energy strategy for AI infrastructure.

What Does This Mean for the Broader Energy Transition?

The fuel cell boom is pulling capital into adjacent decarbonization sectors. Direct air capture developers are pairing carbon removal with data center power sales, and sustainable aviation fuel production has climbed sharply on the strength of similar federal incentives. The same investment appetite flowing toward fuel cells is reshaping environmental markets beyond traditional carbon credits.

Companies are no longer looking only for carbon offsets. They increasingly want verified proof that the electricity they use comes from low or zero-carbon sources. Environmental certificates provide that evidence and help companies report progress toward climate goals. As electricity demand grows from AI, cloud computing, and transport electrification, the need for reliable clean power is also growing, changing how environmental markets operate.

Expect more deals shaped like the IDF-Oaktree transaction. Behind-the-meter power solves a real bottleneck for developers stuck waiting years for grid interconnection. The speed advantage of fuel cells means they will likely dominate the next 3 to 5 years of AI data center power contracts, while nuclear reactors and grid upgrades work through their longer timelines. By the time SMRs and new transmission lines come online around 2030, the energy landscape for AI infrastructure may look very different from today.