On Sunday, February 21st Bloom Energy was profiled on the American News Show 60 Minutes. Three days later Bloom unveiled for the first time to the public a fuel cell that had been under development for 8 years with Governor Schwarzenegger and General Colin Powell present. Between the media, the hype, the celebrities and the backers Kleiner Perkins it is safe to say the CleanTech world is buzzing about this potentially disruptive electricity source. At the press conference John Doerr of KPCB added: “The Bloom Box is intended to replace the grid. It is cheaper than the grid. It is cleaner than the grid.” So, let’s take a closer look.
Product: A compact, fuel cell able to provide 24/7 baseload power on or off the grid.
Fuel Source: waste landfill gas, or regular natural gas
Supply Materials: Generic beach sand gives us zirconium oxide which gives us a ceramic plate (mix in secret Bloom coating at some point.) No precious metals used or hard to find materials.
Price tag: For a 100kw box, $700-$800k. That implies a $7,000/kw capital cost. Compare this to say $1,200/kw for Combined Cycle gas, $2,600 for wind, $4,500 for geothermal or $6,500 for solar. On the 60 minutes interview K.R. claims an American home could be powered by a $3,000 version. Really?
Cost of power: Bloom’s Stu Aaron told Lux Research and the NY Times that with incentives, over the 10 year life of the fuel cell, your rate is $.08 to .10 cents/kWh, compared to the average American rates of about $.12/kWh.
Warranty: 10 years
Funding/Investors: Bloom has raised $400MM from backers such as Kleiner Perkins and NEA
Clients: Wal-Mart, Ebay, Google, Coca Cola, Fed-Ex and others. Ebay claims they are happy with their investment and it is already providing returns in the first year.
Tax Credits: In the US, a 30% investment tax credit. In California, an additional $2,500/kw . Thus for the above California clients their Bloom Boxes were nearly 50% off retail prices.
Calculated Payback: One calculation (via Oildrum) shows a return on investment in 15 years with no subsidies. K.R. claimed at the unveiling that it is 3-5 years with subsidies. Using the Oildrum numbers with subsidies would lead to a ROI around 7-8 years, not 3-5.
Cost Cutting: Earth2Tech’s Katie Fehrenbacher caught NEA GP Scott Sandell who claims Bloom will be able to cut costs 60-70% within a few years due primarily to economies of scale. A bold prediction and quite helpful if it occurs!
Conclusion: It is challenging to criticize a product that clearly brings several large technological breakthroughs to the market. Their source materials, fuel source and overall concept are top notch. The idea of providing cleaner, steady, off the grid energy 24/7 is a massive improvement over the well known variables for both solar and wind. Bloom may have accomplished what other, well funded companies could not in the past 30 years.
However the current economics without subsidies are atrocious at rates 2-3x current renewables and we can see Bloom uses optimistic assumptions in their numbers. On the positive side, there is room and real hope for improvement and their current clients appear happy with the product from a financial perspective. If you are fortunate to live in a state or region where tax credits are strong the Bloom Box is economic now. For the rest of us, we may need a decade or so before we prepare a spot in our homes for a fuel cell. If you are fortunate to be John Doerr, you just made even more money.
Side Note: Bloom has also patented a fuel cell design that uses wind and solar generated electricity to produce hydrogen which will then be used as a fuel for the cells. “That’s the killer app” said K.R. Sridhar of the side development they hope to release within a decade. Interesting that he could be more excited by this other, potential product. To be continued..
See YouTube interview here with K.R. Sridhar