by Todd Woody
The Bloom Energy Servers installed at eBay’s headquarters in San Jose. Photo: Todd WoodyGreen tech had its Google moment this week in Silicon Valley when one of the most secretive and
well-funded startups around, Bloom Energy, literally lifted the curtain on what
it claims is a breakthrough in fuel cell technology: affordable electricity! Fewer greenhouse gas emissions! And that’s all before they throw in the
bamboo steamer.
After eight years in stealth mode—until this week, Bloom’s website featured the company’s name and
little else—the startup pulled out the stops in a carefully stage-managed media
blitz that recalled the high-flying dot-com days of a decade ago. First came a
report on “60 Minutes” that got the blogs abuzz along with stories in Fortune and The
New York Times.
It all culminated in a star-studded press conference at eBay’s
headquarters in San Jose
on Wednesday, where California Governor Arnold Schwarzenegger introduced
Bloom’s co-founder and chief executive, K.R. Sridhar, and gave him a bear hug
before several hundred suits, environmental movement honchos and a bank of
television cameras.
Before Colin Powell, the former secretary of state and a
Bloom board member, delivered the benediction, testimonials were offered by Google
co-founder Larry Page and top executives from Wal-Mart, eBay, Federal Express,
Coca-Cola, and other Fortune 500 companies that had quietly purchased
100-kilowatt Bloom Energy Servers over the past year.
New York Mayor Michael Bloomberg and Senator Dianne
Feinstein (D-Calif.), meanwhile, beamed in a bipartisan endorsement via video.
“This technology is
going to fundamentally change the world,” the California Democrat declared.
But is it?
That’s the $400 million question (what some of Silicon Valley’s most storied venture capitalists have
poured into Bloom so far).
With the hype—the apparently brilliant but unassuming
Sridhar was compared to Steve Jobs at one point Wednesday—comes the backlash.
Almost immediately analysts and competitors began asking hard questions about
Bloom’s claims.
And there are some big unknowns. Will the fuel cell stacks
last as long as the company anticipates or will frequent replacement undermine
the economics of going off the grid, for both Bloom and their customers?
What’s the total cost of ownership for customers? Bloom says
the energy servers have a lifespan of 10 years and a payback period of three to
five years. That’s based on the current price of natural gas—which is one
fuel used by the devices—and state and federal subsidies that halve the cost
of the machines that sell for between $700,000 and $800,000. Will Bloom be able
to scale up manufacturing and continue to innovate to bring the price of the
energy server down? Can they be
competitive without subsidies?
All legitimate questions. But it’s important not to lose
sight of what looks to be some fundamental breakthroughs, not only in energy
technology but in the way some major corporate players are embracing
distributed generation-placing electricity production where it is consumed.
Fuel cells convert hydrogen, natural gas, or another fuel
into electricity through an electrochemical process that results in reduced
greenhouse gas emissions.
For decades scientists have sought to create a solid oxide
fuel cell that can operate at extremely high temperatures-around 800 degrees
C. That increases efficiency and eliminates the need for expensive precious
metals and rare earth elements required as catalysts in lower-temperature fuel
cells.
The challenge has been to engineer fuels cells that can
withstand such high temperatures without cracking or leaking. UTC Power, the
leading fuel cell maker, for instance, has spent three decades trying to
perfect a cost-competitive and durable solid oxide fuel cell.
Bloom says it cracked the code by using a combination of common
materials like sand and proprietary technology.
“What we have today is a very sellable product and that’s
why people are buying it,” Sridhar, a 49-year-old former NASA scientist, said
as he gave me a tour of company’s manufacturing operations before Wednesday’s
unveiling of the Bloom Box.
One side of the building located in a non-descript Silicon Valley office park resembles a semiconductor clean
room. Thin ceramic fuel cells the size of floppy disks shuffle through machines
that paint them with green and black inks that serve as the devices’ anodes and
cathodes, respectively. Next door, workers assemble 25-watt fuel cells into
one-kilowatt stacks that are inserted into a metal cylinder, which in turn is
placed into a silver metal cube.
In another area of the office, employees monitor the 30 Bloom
Energy Servers in operation at companies around California. On one screen, video of a Bloom Box installed at Google appears along with a stream of data.
“Customers like Wal-Mart believe in doing the green thing
but they absolutely believe in the bottom line,” says Sridhar. “The technology
had to pass the muster and the muster simply was the rate of return on the
investment.”
As the world’s largest corporation, Wal-Mart alone could be
the key to giving Bloom and its many competitors a market to drive down costs
and continue innovating.
“We would like to be able to do this at scale,” Bill Simon,
Wal-Mart’s chief operating officer, said on Wednesday in San Jose, noting the
company had installed Bloom Boxes at two of its California stores. (Wal-Mart on Thursday announced that it is requiring its
suppliers to cut 20 million metric tons of greenhouse gas emissions by 2015. As
one speaker at the Cleantech Forum confab in San Francisco on Thursday noted, Wal-Mart has
the heft to set global climate change policy while governments dither.)
Sridhar says the Bloom Energy Server generates electricity
at 50 percent to 55 percent efficiency, which is about twice as efficient as
the overall power grid. Unlike competing systems, the Bloom Box will not repurpose
excess heat to warm buildings and water, which can raise the overall energy
efficiency of fuel cells to 90 percent. The tradeoff is that installing
so-called combined heat and power systems is an expensive and months-long
process.
The Bloom Box is plug and play—“power in hours,” as company
executives like to say. That removes hurdles from the deployment of widespread
distributed generation.
“I’d love to see us have a whole data center running on this
at some point when they’re ready,” Google’s Larry Page said Wednesday. “Moving
production of energy closer to where it’s used has a lot of environmental
benefits and a lot of commercial benefits. It lets you choose your fuel
source.”
There’s been much debate about the environmental impact of
the Bloom fuel cells. Most will use natural gas and thus emit carbon dioxide,
though much less than a typical fossil fuel power plant. If they use biogas—made
from methane emitted by cow manure—carbon footprint drops to zero. But to have
any meaningful impact, there will need to be a huge ramp up in biogas
production .
But distributed generation, even when powered by natural
gas, offers other environmental benefits. New transmission lines don’t need to
be built—itself a carbon-intensive process—and you don’t lose efficiency by
transmitting electricity from a distant power plant.
Rather than judge the Bloom Box unveiled Wednesday as a
final product, it’s probably best to view it as the 1.0 version.
The pressure will be on Bloom to build cleaner and cleaner
versions of its fuel cell if they are to be placed in cities and, as the
company predicts, in backyards one day.
For instance, Bloom has patented and tested a
next-generation fuel cell that would tap solar electricity from a rooftop array
to produce hydrogen that could be stored and used to generate electricity at
night or when the sun does not shine.
“That’s the killer app,” said Sridhar.
As he noted Wednesday, “Why clean? Is it because you’re an
environmentalist? Because of regulation? No. For energy to be distributed it
also has to be clean.”
Related Links:
Making sense of Wal-Mart’s big green announcement
The economics of the Bloom Box
Ask Umbra’s pearls of wisdom on nuclear energy
