Big power company Constellation to finance Bloom Energy’s fuel cells by Katie Fehrenbacher @FortuneMagazine August 12, 2015, 9:29 AM EDT E-mail Tweet Facebook Linkedin Share icons One of the largest power companies in the U.S. is doubling down on funding the deployment of fuel cells by Silicon Valley startup Bloom Energy. Fuel cells are large devices that generate electricity through a chemical reaction and are usually installed close to a building that uses the energy. Constellation, which is owned by Fortune 500 company Exelon EXC , plans to provide equity financing to deploy 40 megawatts worth of fuel cells made by Bloom Energy. The forty megawatts would come from 170 fuel cell projects and is enough energy to power 32,000 average homes per year. Last year Exelon itself entered into an agreement to fund the deployment of 21 megawatts worth of Bloom Energy fuel cells. Now Exelon’s subsidiary is entering into this deal for double that amount. The size of the deal isn’t huge in the grand scheme of power agreements. But the deal is important for 14-year-old Bloom Energy because it means the company’s technology is becoming more bankable and more attractive to large power companies as a distributed clean energy source. As Bloom Energy’s fuel cells offer more reliable results over the years, big companies like Constellation can feel more comfortable entering into deals to fund these deployments. The new projects will be offered to customers in California, Connecticut, New Jersey, and New York, and are supposed to be built by the end of 2016. Confirmed customers already include additional fuel cell projects for AT&T, the City of Hartford, Connecticut, and Walmart. Bloom Energy fuel cells at NASAPhoto courtesy of Bloom Energy Customers like Walmart and AT&T are trying to lower their carbon emissions and hit sustainability goals, while also adding new sources of cleaner, and sometimes off grid, power. In certain states, like California, subsidies can make the cost of fuel cell electricity competitive. Bloom Energy has been particularly aggressive in tapping into state subsidies. For these latest deals, Constellation will provide the financing and own majority equity interest in the projects. The customer, like a Walmart, would enter into a deal to buy the fuel cell power at a fixed rate over 15 years. Solar and wind companies commonly offer these types of deals – called power purchase agreements — which can be attractive in the event of rising future electricity prices. Despite the positive nature of the news, it’s unclear how well Bloom Energy is doing in the marketplace or if the company has yet reached profitability. The company has no shortage of interested customers — from Adobe to eBay to Softbank — but whether or not those sales have turned into an economically sustainable business, remains to be seen. The company raised over a billion dollars in funding and was expected to IPO by at least last year. Earlier this year the company was reported to be closing on raising $160 million in convertible notes at a $2.7 billion valuation, which was its same valuation the company had in 2011. VC-backed companies don’t often remain private for more than a decade. The company raised funding from Kleiner Perkins, NEA, DAG Ventures, GSV Capital, Credit Suisse, and Goldman Sachs. In April, Bloom Energy brought on new chief financial officer Randy Furr. Former CFO Bill Kurtz remains with the company as chief commercial officer, managing the energy power purchase agreements and relationships with financial services partners. Fuel cells are a particularly hard problem to try to solve. The industry is littered with fuel cell companies that have tried to scale and never made the economics work. Bloom Energy has also faced criticism that its fuel cells don’t deliver as much carbon emissions reductions as the company has claimed in promotional material.