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OTAs Boost DOD’s Ability to Acquire nnovative technologies

The Department of Defense (DOD), also known as the Department of War (DOW), is increasingly using Other Transaction Agreements (OTAs or OTs) as a mechanism for research, development, test & evaluation (RDT&E) and initial production activities. DOD’s OTA spending went from under $1 billion in FY 2015 to $18 billion in FY 2024. Issued in April 2025, Executive Order 14265: Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base, directs DOD to make a number of acquisitions reforms focused on improving speed and flexibility, including prioritizing OTAs and similar vehicles.

OTAs are meant to boost DOD’s ability to acquire innovative technologies, especially from nontraditional defense contractors and small businesses. OTAs, not subject to certain federal acquisition laws and requirements, are more agile contracting vehicles with more flexibility in the award process and contract terms and conditions. There are three types of OTAs: research OTAs, prototype OTAs, and follow-on production OTAs. Most are prototype OTAs, which offer a streamlined method for transitioning into production without further competition. All branches of DOD can use OTAs -. The Army has made the most use of OTAs by far, followed by the Air Force. (Some other federal agencies, such as NSF, have similar other transaction agreement authority.)

DOD can award OTAs to individual organizations (for-profit or non-profit) or to consortia—groups of organizations focused on specific technology areas. The majority are awarded through consortia. DOD awards consortia OTAs and directs the consortia to handle different aspects of the awards process for individual projects. An organization must be a member of the consortium to be eligible for project awards through that consortium. Examples of major DOD consortia include:

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Market Snapshot: Algal Production Systems & Aquaculture

Algae encompass a diverse group of organisms, including both macroalgae, such as kelp and nori, and microalgae, like spirulina and chlorella. Over 50,000 species of algae have been identified world-wide. All types of algae possess chlorophyll and play a crucial role in aquatic ecosystems, serving as the primary source of energy for aquatic organisms. The U.S. government has exhibited an interest in using algae for both nutrition/animal feed applications and for biofuels/bioproducts. In its most recent solicitation, the U.S. Department of Agriculture (USDA) sought novel or innovative approaches for algal production systems to improve quality, development, and harvesting of algal biomass for use in aquaculture feed and human food. The main cultivation systems widely used for algae cultivation are open ponds, attached growth systems, and closed photobioreactors (PBRs). 

The aquaculture industry has demonstrated a growing interest in cultivating microalgae because of its rapid growth and high lipids content. Algae products like lipids (omega-3, omega-6, and omega-9), carotenoids, carrageenan, agar, algal protein, algal flour, and alginate can be extracted from algae to serve various end-use applications. Applications in the algae products market include food & beverages, nutraceuticals & dietary supplements, animal feed, pharmaceuticals, personal care products, and other applications.

The algae-based animal feed market is one part of the algae products market. The algae-based animal feed market is expected to grow to $6.6 billion by 2034 from the 2024 valuation of $4.5 billion, exhibiting a CAGR of 3.9%. This market includes microalgae and macroalgae for both animal feed and aquaculture feed products. The use of algae in animal and fish feed is becoming increasingly popular. By type and source, aquaculture and microalgae hold the dominant share of the market respectively. Over half of the fish on the market are raised in fish farms, where fish feed constitutes around 90% of the cost. Most of the fish feed currently used is derived from either wild fish or terrestrial agricultural products. Both sources present problems in sourcing. Microalgae biomass, on the other hand, has the potential to support sustainable aquaculture and a circular economy as an environmentally-friendly feed ingredient. However, the high cost of microalgae  production remains a barrier to aquaculture.

While algal biomass cultivation has significant market potential, especially as seen for fish feed, the USDA is searching for improved production systems. The main cultivation systems—open ponds, attached growth systems[1], and photobioreactors (PBRs)—have their own shortcomings and challenges. General barriers for mass cultivation include financial challenges (the cost of water and nutrients) the limitations on recycling, biomass loss due to biocontamination and pond crashes, as well as the energy costs associated with harvesting. While open ponds have lower capital costs, they yield lower overall production rates. A major challenge of open ponds is the sensitivity to pollutants. Thus, only a few species can be cultivated in these ponds for biomass production on a commercial scale. Another concern is the problem of evaporation in open systems, which require water replacement to maintain the optimum balance of suspended salts and water.

Enclosed photobioreactors offer several advantages over open systems, which include larger surface-to-volume ratio, reduced risk of contamination, smaller area requirements, and the ability to prevent evaporation. Vertical-column and tubular photobioreactors designs are the most used. However, photobioreactors are more costly: the construction and maintenance are ten times higher than open ponds. While photobioreactors can maintain higher biomass density, the significant cost difference makes photobioreactors uncompetitive for industrial-scale production of microalgae biomass. As a result, closed system photobioreactors are mainly used for higher value products. The development of new technologies, such as closed-loop photobioreactors and precision fermentation, are improving the cost effectiveness of algae biomass production. Such advances seek to address the concerns related to high production costs, but microalgae harvesting remains a challenge for commercial-scale biomass production.

Improved algal production systems would benefit various markets and industries beyond aquaculture, including biofuels/bioproducts, pharmaceuticals, and wastewater treatment. The U.S. Department of Energy’s (DOE) Bioenergy Technologies Office (BETO) has an Advanced Algal Systems program, which supports research and development (R&D) to lower the costs of producing algal biofuels and bioproducts. The Algae Biomass Organization (ABO) explains how algae-based systems have the opportunity to provide a sustainable solution to wastewater treatment, identifying Iowa-based Gross-Wen Technologies’ patented solution Revolving Algal Biofilm (RAB) treatment system, which utilizes an algae biofilm to treat wastewater.

[1] Open ponds and photobioreactors are the two systems predominantly used for algae growth related to animal and fish feed. Attached growth systems relate to algal biomass production for biofuel and wastewater treatment.

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Market Snapshot: Coal-Based Carbon Fiber

Acceleration of coal technology – including production of coal-based carbon fiber – is an area of interest under the current presidential administration. This is signaled by President Trump’s Executive Order “Reinvigorating America’s Beautiful Clean Coal Industry” (April 2025), which highlights coal-based carbon fiber as a research and development area alongside other high-performance, high-value coal-to-carbon products like coal-derived graphite. It is also implied by the energy and water development appropriations bill passed by the House in early September 2025, which proposes $688 million for DOE’s Office of Fossil Energy and Carbon Management (FECM) or Office of Fossil Energy (FE). Alongside critical minerals and materials technology, coal and carbon utilization is a focus for FE under its Minerals Sustainability program.

The global carbon fiber market is expected to grow at a CAGR of 7.2% over the next five years, from $4.82 billion USD in 2025 to $6.82 billion in 2030, according to MarketsandMarkets. Widespread adoption of carbon fiber in the aerospace, defense, and wind energy industries continues to drive growth, as does increasing demand for lightweight, high-strength materials in the automotive, sporting goods, and construction industries. Most carbon fiber – about 90-95% – is made from polyacrylonitrile (PAN), a synthetic organic polymer resin also widely used to make acrylic fabrics. Pitch-based carbon fiber, made from petroleum or coal tar, accounts for about 4-5% of the overall carbon fiber market by value in 2025, . Coal tar pitch is obtained by distilling coal tar, a byproduct of coal coking, primarily carried out in steelmaking.

While today’s market for pitch-based carbon fibers (CFs) is relatively small, pitch-based CFs are attractive because they can offer higher rigidity and electrical and thermal conductivity than PAN-based CFs. They also offer higher carbon yield using cheaper precursors, so they have the potential to be cheaper, although PAN-based CF’s more mature manufacturing techniques can mean it is cheaper to produce at scale. Compared to petroleum pitch-based CF, coal-based CF is generally lower in tensile strength but also has a lower precursor cost, higher carbon yield, higher electrical and thermal conductivity, and is simpler to manufacture. Challenges remain, however, before coal-based CF can be produced cost-competitively at scale. Natural impurities in coal greatly affect the attributes of the resulting CF, and manufacturing improvements are needed to address variability in the source coal and pitch composition and determine processing control requirements. (For more information, see DOE publications on coal-based CF on OSTI.gov.)

Given the abundance and relatively low cost of coal in the U.S., Giraud-Carrier and Barlow (2022) point out that coal tar pitch is a carbon fiber precursor candidate that could reduce reliance on foreign suppliers while helping coal-producing communities continue to cope with the decline in domestic consumption of coal as fuel. Carbon fiber can even be produced from waste coal, left over from ongoing and legacy coal processing. The University of Kentucky Center for Applied Energy Research (CAER) announced the development of such a method in 2023 under the $10 million C4WARD: Coal Conversion for Carbon Fibers and Composites project, in collaboration with DOE FE and the Oak Ridge National Laboratory and its Carbon Fiber Technology Facility.

Top global manufacturers of carbon fiber in general include Hexcel Corp. (U.S.), Mitsubishi Chemical Group Corp. (Japan), Teijin Ltd. (Japan), Toray Industries Inc. (Japan), and Zhongfu Shenying Carbon Fiber Co. Ltd. (China). For coal tar pitch-based carbon fiber specifically, there are a handful of key, vertically integrated players, including Mitsubishi Chemical Group Corp. (Japan), Nippon Graphite Fiber Corp. (Japan) – an affiliate of Nippon Steel Chemical & Material (Japan), and Osaka Gas Chemical Co. Ltd. (Japan). Mitsubishi Chemical’s DIALEAD, Nippon Graphite’s GRANOC, and Osaka Gas Chemical’s DONACARBO are coal tar pitch-based carbon fibers used for aerospace, sports, and industrial applications, among others.

To learn more about innovations in coal-based carbon fiber and other coal-to-carbon technologies, consider checking out the American Carbon Society’s Carbon 2026 Conference, to be held July 12-17, 2026 in Charleston, SC.

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Market Snapshot: In-Space Manufacturing

In-space manufacturing (ISM) encompasses the production and assembly of goods in space, beyond the earth’s atmosphere, to create products such  as artificial retinas, tissues, structures and parts, advanced materials, semiconductors and many others. As space exploration ventures further from Earth, the logistical challenges and associated costs associated with resupply missions and repairs become increasingly cost prohibitive. By reducing reliance on Earth-based supply chains, ISM could enhance the flexibility of future space missions. In this article, we provide a snapshot of the  status ISM and identify funding opportunities that small businesses can consider as they pursue research and development (R&D) funding for technology development.

Valued by MarketsandMarkets at $4.6 billion in 2030, the in-space manufacturing market is expected to expand exponentially to $62.8 billion by 2040, with a compound annual growth rate (CAGR) of 29.7%. A McKinsey analysis suggests that  R&D and manufacturing is approaching reality. The anticipated growth can be attributed to factors such as technological advancements in enabling technologies like 3D printers and bio-printers, space robotics for assembly and automation, and the miniaturization of hardware. Additionally, the growing demands of the space industry, heightened interest in space-based R&D manufacturing, and availability of funding for in space manufacturing contribute to this projected growth.

Factories in Space has compiled a list of over 200 companies engaged in this market, spanning emerging startups to well-established aerospace and defense entities. According to MarketsandMarkets, the key players in this sector include Airbus SAS, Northrop Grumman Corporation, Blue Origin LLC, Sierra Space Corp., Redwire Corporation, Axiom Space, Inc., Astroscale Holdings, Inc., Astrobotic Technology, Inc., Orbit Fab, Inc., Astra Space, Inc., Le Global Graphene Group, Inc., Virgin Galactic Holdings, Inc., Momentus Space, Inc., and others. Other notable small companies include  Varda Space Industries Inc., LambdaVision, CisLunar Industries, Auxilium Biotechnologies, Space Forge, Inc., Dcubed, Lunar Resources, Inc. and Faraday Technology, Astral Materials, and many others.

Advanced technology firms often require funding to advance the maturation of their technology. Funding opportunities are available in the form of non-dilutive funding sources from the federal government and various states. NASA’s In-Space Production Applications program (InSPA) is an applied research and development program sponsored by NASA and the International Space Station National Lab aimed at demonstrating space-based manufacturing and production activities by using the unique space environment to develop, test, or mature products and processes that could have an economic impact. On an annual and ongoing basis, NASA releases two calls for white papers from U.S. entities through Special Focus Area #1 (In Space Production Applications) of the NASA Research Announcement NNJ13ZBG001N, “Research Opportunities for International Space Station Utilization.” Companies with the highest-rated white papers are subsequently invited to submit a comprehensive proposal. Other programs such as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), administered by 11 federal agencies can help de-risk early-stage in space manufacturing ventures. Through competitive awards, the SBIR and STTR enable small businesses to explore their technological and commercialization potential. To be eligible for the SBIR/STTR program, a company must be a United States-based, for-profit, small business with 500 or fewer employees, at least 51% U.S.-owned and controlled. Additionally,  States also offer financial assistance to small companies in the form of grants, loans, and investments, as well as networking opportunities.

Upcoming events for networking in 2026, include the following conferences:

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Defense Portal: A One-Stop Resource for U.S. Navy Insights

In an environment where information changes quickly and accuracy is critical, access to reliable, consolidated resources can be the difference between informed decisions and missed opportunities. Dawnbreaker’s Portals were created with this very challenge in mind: to deliver reliable, concise, and continuously updated information to those working with, or seeking to better understand, the U.S. Navy.

As one of the most complex organizations in the world, the U.S. Navy’s structure includes commands, program offices, and leadership roles that evolve regularly. Finding accurate, up-to-date details about its structure and leadership often required hours of research across multiple websites, reports, and announcements.

Dawnbreaker’s Defense Portal eliminates this challenge by providing:

  • A concise, one-stop summary of Navy organizational structure
  • Details of organizational functions, clarifying the role of offices, commands, and leadership bodies
  • Regular leadership and personnel updates, ensuring users know who is leading and in what capacity

For anyone navigating Navy programs—whether government, industry, or academia—the Defense Portal offers a streamlined path to reliable insights.

The importance of staying current cannot be overstated. Leadership transitions directly impact priorities, decision-making, and program direction. We’re pleased to share that as of September 2025, the Defense Portal has been updated to reflect recent significant leadership changes. As leadership shifts and new challenges emerge, this resource ensures that you stay informed—saving time, reducing uncertainty, and helping you move forward with confidence. Key personnel roles are and will continue to be regularly reviewed and updated to maintain the highest standard of current information.

Visit the Defense Portal
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Will the Senate allow the SBIR/STTR programs to lapse TODAY?

For over 43 years, the House and the Senate have acted together to assure that the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs do not lapse. Now, at the last minute – the Senate appears to be hesitating in approving bill HR 5100 unanimously presented by the House which extends the SBIR/STTR programs for one year. “This bill simply pushes the termination date back to September 30, 2026, and makes no programmatic changes to the program.” This will allow time in the future to evaluate any proposed changes.

However, if the program is allowed to lapse today, no new SBIR/STTR awards can be made, no new solicitations will be released and countless small, advanced technology firms will be damaged. We encourage the Senate to pass HR 5100 today!

See the link below to…

Urge Your Senators to Support SBIR/STTR 1-Year Extension

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Market Snapshot: Small Modular Reactors

Small modular reactors (SMRs) are an integral part of the Department of Energy’s goal to “develop safe, clean, and affordable nuclear power options.” SMRs are nuclear fission reactors with a power capacity of up to 300 MW(e) per unit, approximately one-third of the generating capacity of traditional nuclear power reactors. Modular designs allow components to be assembled in a factory and add more modules as required. SMRs can be deployed for various applications like power generation, process heat, desalination or other industrial applications. SMRs could also help with the demanding energy needs of data centers. The various types of SMRs include heavy water and light water reactors, high-temperature reactors, fast neutron reactors, and molten salt reactors.

SMRs are an emerging market with numerous designs currently under development. In a July 2025 report, the Nuclear Energy Agency (NEA) identified 127 global SMR technologies (74 with publicly accessible information, 25 under development but which requested not to be included, and 28 not under active development). Of the 74 SMR designs under development, 30 designs are being pursued by 25 design organizations headquartered in North America. NEA also cited additional benefits of SMRs including using significantly less water than large reactors and a lower requirement for critical minerals.

The World Nuclear Association states there are two SMRs currently operational: Russia’s KLT-40S pressurized water reactor (PWR) and China’s high-temperature gas-cooled modular pebble bed (HTR-PM) reactor demonstrator. The KLT-40S began commercial operation in May 2020. It is owned and operated by Joint Stock Company ‘Concern Rosenergoatom.’ China’s HTR-PM began commercial operation in December 2023. It is owned by China Huaneng Group and operated by Huaneng Shandong Shidao Bay Nuclear Power Company, Ltd.

In 2020, the U.S. Nuclear Regulatory Commission (NRC) approved the first SMR design in the U.S., which was submitted by NuScale Power (NYSE: SMR) based in Corvallis, OR. In May 2025, NRC approved NuScale Power’s uprated power module–the company’s second SMR design. Other U.S. SMR companies that are publicly traded include BWX Technologies (NYSE: BWXT) in Lynchburg, Virginia and Oklo Inc. (NYSE: OKLO) from Santa Clara, California. Some of the major SMR developers in North America expected to commercialize SMRs in the near future are NuScale Power, LLC. (U.S.), GE Hitachi Nuclear Energy (U.S.), Moltex Energy (Canada), and Terrestrial Energy Inc. (U.S. & Canada), according to MarketsandMarkets.

Upcoming events of interest include MiNES 2025 and SMR, AMS Winter 2025, and Advanced Reactor 2026. Materials in Nuclear Energy Systems 2025 (MiNES 2025) in Cleveland, Ohio December 7-11, 2025. Conference organizers are affiliated with several national labs, universities, and industry leaders. The 2025 ANS Winter Conference & Expo will be held in Washington, DC November 9-12, 2025. This event includes executive sessions to unpack the latest executive orders and attended by senior officials from the administration and Congress. The SMR & Advanced Reactor 2026  will be held in Austin, Texas in May 2026. This senior-level meeting for the SMR community will bring together over 750 leaders from utilities, financiers, reactor developers, technology providers and regulators.

If you found this helpful and would like more information, please contact Lyn Barnett.

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For all other questions and more information, please contact Lyn Barnett by emailing lbarnett@dawnbreaker.com

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The Negative Impact of the Department of Energy (DOE) 15% Overhead Rule on SBIR/STTR firms

The Negative Impact of the Department of Energy (DOE) 15% Overhead Rule on SBIR/STTR firms

The implementation of the 15% rule applied to the Department of Energy’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs will inadvertenty cripple the innovation for which this program has been justly recognized. In May 2025, the Department of Energy’s Office of Acquisition Management issued three Policy Flashes (PF) which limit the indirect rates allowed for grants and cooperative agreements. Collectively, these documents affect (1) nonprofits – in particular Institutions of Higher Education (PF 2025-26), (2) for profits – including both large and small business (PF 2025-27) and (3) state and local government (PF 2025-25). The stated purpose of the Policy Flashes is to improve efficiency and curtail costs where appropriate. PF 2025-27 clarifies that “The Department seeks to better balance the financial needs of financial assistance award recipients with the Department’s obligation to responsibly manage federal funds.”

However, what is left out of this balance is the profound and negative impact that this ceiling will have on small, advanced technology firms participating in DOE’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. It will stifle their ability to advance DOE SBIR/STTR funded technologies into cutting edge, commercial products

Funding for the SBIR/STTR programs comes out of extramural research and development funds. The federal government spent approximately $192 billion in FY23 on research and development.  According to the National Science Board two-thirds of the FY23 federal R&D budget ($128 billion) went to extramural performers, while the remainder ($64.1B) went to intramural performers.  Extramural performers include the three categories affected by the DOE Policy Flashes. In FY23, only $4.65B of the $128B spent on extramural R&D went to small business participating in the SBIR/STTR programs[1]. DOE which provides its SBIR/STTR awards as grants, accounted for just 5.89% of the total SBIR/STTR budget in FY23.

 Figure 1: FY2023 SBIR/STTR Budgets by Agency

The amount of R&D funding that went to large business in FY23 is not readily available. However, one can gain insight into this information from a 2019 AAAS report. The following figure represents the distribution of federal R&D funding in FY16. The total amount of federal R&D funding spent on both intramural and extramural performers in FY16 was $113.8B. Of that total, $38B was spent on Intramural R&D, leaving $75.8B or 66% for extramural R&D. The combined SBIR/STTR budget in FY16 was $2.38B[2]. This represents 10.8% of the total extramural funding spent on industry ($24.7B) in FY16.

 Figure 2: Federal R&D by Performer, FY2016

Most extramural R&D funding is awarded to LARGE business, not to small SBIR/STTR funded firms. I can’t speak to the ability of large business to absorb a 15% indirect cost ceiling. However, the mission of small, advanced R&D firms focused on basic and applied research limits their ability to supplement a 15% indirect cost ceiling. A potential side effect of  PF 2025-27 is that DOE will lose some of its more seasoned performers to other Agencies participating in the SBIR/STTR program that use contracts as opposed to grants.

Although large business invests in R&D, studies conducted by the National Center for Science and Engineering Statistics indicate that the preferred model for large business  is to have high-risk, basic and applied research funded by the federal government and then become involved when the technology is de-risked at the development stage (TRL 6-9). When the technology is sufficiently mature, the smaller entities could be acquired by a larger firm, intellectual property licensed-in, or joint ventures formed.

 Figure 3: Composition of U.S. Basic Research, Applied Research and Development by Funding Sector, 2022.

PF 2025-27 states that “The Department plans to establish a maximum allowable dollar amount (stated in terms of a percentage of the total project award amount) that it will reimburse for allowable, allocable, and reasonable indirect costs under Awards. The percentage that will be reimbursable is inclusive of total indirect costs and fringe benefit costs.”

The 15% which is recommended in PF 2025-27 has historically been the de minimis and applies when the recipient does not have a current federal negotiated indirect cost rate. In practice, this tends to be used by start-ups which are often first-time applicants with minimal infrastructure. Start-ups with 1-3 employees use the de minimis rate as it does not require any back-up data. Fifteen percent of a Phase I DOE SBIR award of $200,000 is $30,000. Although this may sound like a lot to someone who has not run a business – health care benefits alone would take half of that in one gulp. If the company is a start-up working out of their home with minimal infrastructure, they might be able to make that work for their first year.

However, to grow a business so that it has the resources to both develop and commercialize a technology requires that a company add business functions and physical infrastructure. Gere Glover,  the Executive Director of the Small Business Technology Council  notes that the average indirect rate for maturing Department of Energy SBIR/STTR companies is approximately 50%. The 7% profit typically allowed to an SBIR/STTR firm by the Department of Energy cannot make up for the shortfall that the imposition of this 15% indirect rate will create. Implementation of this policy will damage their future and the ability of these companies to remain good suppliers of innovative technology to the Department of Energy.

PF 2025-27 states that “In circumstances where the Secretary has determined it is necessary and appropriate, the dollar threshold for payment of indirect costs may be modified for Award(s) to for-profit organizations that are subject to this policy.”

Grouping large and small businesses together that receive extramural R&D funds from the Department of Energy and then applying one indirect rate to all, ignores significant differences between large and small business. Large well-managed companies are financially stable and have an established and diverse infrastructure built over decades.  They have personnel dedicated to product development, marketing and sales, distribution, manufacturing, quality, legal and the like. Large businesses make profit from the products that they sell and have cash reserves.

For small, advanced technology firms to become and remain viable entities on the path to financial independence requires time and resources. Examples of the typical expenses an SBIR firm must cover are available in examples that DOE provides small business on how to develop indirect cost models.[1] In this document a sample ledger provided by DOE depicts a 32% fringe rate and a 12.2% Indirect rate for a total of 44.2%, when combined. Funding is the life blood of a company and a 15% indirect rate is inadequate for a small, advanced technology firm.

Given the importance of the innovation that stems from the SBIR/STTR program to the Trump Administration, it is respectfully suggested that indirect rates for companies participating in the SBIR and STTR program be considered for separate benchmarks established after an analysis of historical data on SBIR/STTR indirect rates.

[1] The FY2011 reauthorization of the SBIR program increased the set aside to 3.2% of the extramural R&D budget and 0.45% for the STTR program.

[2] Small Business Administration, “ SBIR/STTR 2016 Annual Report to Congress,” 2019

[3] DOE National Technology Laboratory, “Negotiated Indirect Cost Rate Agreement and Indirect Rate Proposal Guidance,” https://netl.doe.gov/sites/default/files/2024-09/Negotiated-Indirect-Cost-Rate-Agreement-and-Rate-Proposal-Guidance.pdf

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Market Snapshot: Solid Oxide Fuel Cell Market

U.S. and global electricity demand are both expected to increase 50% or more by 2050. To meet anticipated demand, cleaner, more efficient, reliable, and affordable energy generation and storage solutions are needed. Solid oxide fuel cell (SOFC) technology is a promising, efficient, low-emissions means of generating electricity from a range of fuels, including hydrogen, natural gas, biogas, and syngas. A recent U.S. House of Representatives Energy & Water Development Appropriations subcommittee report (July 2025) recommended up to $30 million to advance SOFC research and development.

SOFCs, which produce electricity by oxidizing gaseous fuels at high temperatures, are closely tied to solid oxide electrolysis cells (SOECs) and reversible solid oxide fuel cell (R-SOFC) systems. While SOFCs use hydrogen and oxygen to produce electricity along with heat and water, SOECs use electricity, water, and heat to produce hydrogen gas, along with oxygen. R-SOFC systems are single, hybrid devices that can do both. SOFCs are the leading fuel cell technology for stationary applications and are well-suited to serving as continuous power supplies.

According to MarketsandMarkets, the global solid oxide fuel cell (SOFC) market is expected to grow at a compound annual growth rate (CAGR) of 31.2%, expanding from $2.98 billion in 2025 to $11.61 billion in 2030. These figures account for planar and tubular-type SOFCs and for the fuel cell stacks as well as the balance of the plant.* In these projections, analysts segment the market into portable, stationary, and transport applications and identify residential, commercial and industrial, data center, and military and defense customers as the major end user groups. MarketsandMarkets projects that data centers will be the fastest-growing end user group through 2030.

The fuel-to-electricity efficiency, near-zero emissions, and fuel flexibility of SOFCs, as well as the integration of R-SOFC systems with renewable energy sources, are driving market growth. As a result, substantial market opportunities are emerging. These include data centers, drones, battery chargers, distributed generation, microgrids, chemical and fuel production, transportation, and more. The high temperatures at which SOFCs operate make them an attractive option for industries using combined heat and power (CHP) systems to improve efficiency. However, SOFC technology is not without competition from other low-emissions fuel cell technologies, including molten carbonate (MCFC) and polymer electrolyte membrane (PEMFC) fuel cells. Currently, SOFC market growth is challenged by the high cost of high-durability materials needed for high-temperature operation.

Top players in the global SOFC market include Bloom Energy (U.S.), Mitsubishi Heavy Industries (Japan), AISIN Corp. (Japan), and Kyocera Corp. (Japan). The global SOFC market is fairly consolidated, as those four companies account for about 70-80% of the entire market, according to MarketsandMarkets. Other notable SOFC companies include Ceres Power (UK), Convion (Finland), Cummins (U.S.), Doosan Fuel Cell (S. Korea), Elcogen (Estonia), FuelCell Energy (U.S.), Miura (Japan), Nexceris (U.S.), Sunfire (Germany), WATT Fuel Cell (U.S.), and Bosch (Germany), which pivoted away from the SOFC business in early 2025 in favor of hydrogen-generating electrolyzers.

The DOE Office of Fossil Energy and Carbon Management (FECM) supports the growth of the domestic market with its Solid Oxide Fuel Cell (SOFC) Program,  initiated in 2000 and led by the National Energy Technology Laboratory (NETL). NETL’s SOFC team, under the Hydrogen with Carbon Management Program, conducts R&D projects  on “technical issues facing the commercialization of R-SOFC technologies and pilot-scale testing… to validate the solutions.” This line of inquiry is designed to “enable the generation of efficient, low-cost electricity and hydrogen.” Areas of focus include cell degradation characterization and modeling, advanced electrode engineering, and systems engineering and analysis. (See sample publications on OSTI.gov.)

To learn more about innovations in SOFCs, SOECs, and R-SOFCs, consider checking out these upcoming events in 2026:

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Mini-Mag: Issue 2

Issue no. 02 – Published  2018

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