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Fuel Cell Technology From Secretive Startup Light On Details

Mar 16, 2010 - 9 years ago

By Supply Post

Silicon Valley's most closely watched startups. Since its founding in 2001, it has been remarkably secretive about its technology. The lack of details, even in the official launch Wednesday of Bloom Energy's first product, concerned some experts. They said it's not possible yet to measure the true cost of generating power using a Bloom box and to determine whether Bloom Energy's technology is substantially different from that of other fuel-cell companies. "I would try to take a healthy dose of skepticism. What they have demonstrated is they have these systems and they have been able to deploy them," said Bryan Pivovar, fuel cell group manager of the Hydrogen Technologies and Systems Center at the U.S. National Renewable Energy Laboratory.

"There's nothing I've seen out of Bloom that makes me believe there's anything special about the way they're putting things together and what their approach is."

Bloom Energy does claim that its box can produce more energy – with less environmental damage – than other fuel cells on the market because it is not reliant on just hydrogen to trigger the chemical reactions that create power. Rather, it can use wind, solar power and whatever else is available, which could vary from community to community.

However, Bloom Energy didn't offer more details about how that worked, and Pivovar said that using wind or solar would require an extra step to convert the energy into something that could power the fuel cells, which could result in some energy loss. One of the easiest ways to power the Bloom box would be to hook it up directly to a natural gas line.

A key detail Bloom Energy did disclose was the price its customers pay for power generated by their Bloom machines, and how much money they save over buying regular power from utilities.

Bloom Energy said its customers, which include Google Inc. and eBay Inc., pay nine to 10 cents per kilowatt-hour. For power they buy directly from the electricity grid in California, where all of Bloom Energy's boxes are currently located, the price is 13 cents to 14 cents per kWh, the company said.

The savings are big but there's a catch. Bloom Energy said its customers are getting a big federal tax credit that amounts to 30 per cent of the price of the Bloom box, along with a rebate from California based on how much energy they buy.

The figures suggest that Bloom Energy's customers might be saving money solely because of the subsidies, not because the power generated by Bloom Energy machines is cheaper to produce. Bloom Energy didn't break out what the costs would be without the subsidies. Sridhar said the investment pays for itself in three to five years but declined to provide further details.

The use of subsidies could make the Bloom boxes less economical in markets in which subsidies do not exist or are not as generous. Sridhar said other states and countries abroad have attractive subsidies as well, but added that a key goal is driving the price of the product down enough so that subsidies won't be necessary.

"We need to get that subsidy in the early days," he said. "But very early we need to get out of those subsidies. Otherwise we are not going to the developing world like we want to."

He said the potential market for Bloom Energy's technology is so large that the company could thrive even if it stayed in California. "We can grow as fast as we want and serve California for the next five years and be a multibillion-dollar company," he said. "That's how big this market is."

Scott Samuelsen, director of the National Fuel Cell Research Center at the University of California, Irvine, said he was concerned that Bloom Energy's boxes have not been deployed long enough to evaluate their long-term reliability.

"Most customers are looking for a minimum of five years solid performance with a new technology,'' he said. "We don't know the minimum. We know almost nothing about the company, almost nothing about the technology, and there are a number of manufacturers around the world doing the same thing. ... It's cause to be cautious and recognize that there's going to be a path that has to be followed that will take some time."

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