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The Energy Fix May Come in A Box

by | published June 13th, 2011

The prevailing outlook has been that a progressive rise in oil prices over a protracted period of time will benefit other energy sources. After all, the primary problem with alternative – especially renewable – energy has been price.

The eventual solution will involve a much broader mix of energies, with pricing or availability difficulties in one offset by an ability to rely on another. Such an approach will provide a balance among more genuinely different energy sources, rather than searching for a single “silver bullet” to replace crude oil.

A crucial part of the new energy matrix will be technologies with the flexibility to use several different energy sources. That would improve efficiency by allowing users to take advantage of changes in pricing.

No question the search is on… with one early possible answer coming in a box.

A Breakthrough in Fuel Cell Technology

Ever since it exploded upon the scene in an August 2010 segment of “60 Minutes,” Bloom Energy has captivated the market.

The Sunnyvale, California-based private company is certainly one of the more interesting startups to come along in some time. It has even enticed Colin Powell to join its board.

The reason is the company's apparent fuel cell breakthrough.

Bloom's Energy Server (the “Bloom Box”) uses a patented new solid oxide fuel cell technology, providing a distributed power generator of clean, reliable electricity on site.

Fuel cells, as you probably know, are devices that convert fuel into electricity through a clean electro-chemical process – rather than the more traditional combustion systems similar to diesel-fueled generators. They are like batteries, except they are always running.

Bloom's approach is an advance over hydrogen fuel cells, the usual approach, in a number of important respects.

  1. First, the Bloom Box uses low-cost ceramic wafers, made of a “sand-like powder,” instead of more expensive materials like acid, molten carbonate, or even platinum.
  2. Second, it offers a marked improvement in high-generation efficiency, converting fuel into electricity at twice the rate of other fuel cell approaches.
  3. Third, the system is reversible. A Bloom Box can both generate and store energy.
  4. Finally – and most intriguingly, in my view – the box can use either biogas or natural gas to generate electricity. That's likely to be a major focus of any move away from oil products.

Distributed Generation That Makes Sense

“Distributed generation” (or “on-site generation”) refers to power that is produced at the point of consumption. That eliminates the cost, complexity, interdependencies, and inefficiencies associated with transmission and distribution of electricity from a central location.

This does two very valuable things.

First, it lessens reliance on expensive-to-build power plants.

Second, it transfers control to the consumer – allowing power systems to be structured focused on end-user requirements, rather than those of the distributor or mega-producer.

Historically, distributed generation meant combustion generators – that is, diesel units. While these are affordable, they are not clean. That discouraged their use in population centers, unless (as is the case in many places worldwide) there is no other choice.

More recently, solar, wind, and geothermal have emerged as distributed generation options. They have the advantage of being clean, but they suffer from being intermittent and expensive. Plus, they require continuous heat load and involve protracted installation and maintenance.

A Bloom Box, besides being clean, is only as big as a parking space, weighs about 10 tons, and costs $800,000. And each unit generates 100 kilowatts of uninterrupted power – enough to meet the baseline needs of 100 residences or a small office building (about 30,000 square feet in area).

Plus, it's scalable. Need more power? Simply add more units.

A Move to Expand Production

Some 120 Bloom Boxes are now operating in California.

Among Bloom's initial customers are Bank of America Corp. (NYSE:BAC), Coca-Cola Enterprises Inc. (NYSE:CCE), eBay Inc. (NasdaqGS:EBAY), Google Inc. (NasdaqGS:GOOG), and Wal-Mart Stores Inc. (NYSE:WMT).

In late May, the company announced the launch of its international division, with plans to expand its fuel cells globally.

Bloom has the backing of some heavyweight venture capitalists. The company's Sunnyvale production plant has been expanded four-fold, but the real test of this technology will come in how fast it is adopted in a market broader than California.

And that addresses Bloom's latest move.

Earlier this month, the company announced it would create a manufacturing location in Newark, Delaware, using a former Chrysler plant.

Yet its first production venture outside California may face some serious tests.

For example, Bloom claims that customers typically generate power for less than grid prices for electricity (with payback for units coming in three to five years). But that's in California, where the state offers very attractive subsidies for fuel cells.

The cost of a box is equivalent to $8,000 per kilowatt. That is much higher than combined cycle gas turbine power, which comes in at about $1,500 per kilowatt.

Bloom has acknowledged it needs to get the cost down and has said the ability to manufacture and sell more units would help. Details, however, remain sketchy.

Another concern is the lack of any long-term data.

The key to the process are little plates coated with zirconium oxide. The life span of these plates under constant use is still unknown. At 10 years, the boxes could prove of advantage. But if they need replacement, say, every five years, generating expenses would be a problem.

There are new fuel cell technologies in competition, introduced by several new startups. Some of these are already trading. However, all of them remain small caps, often illiquid shares, with limited markets and questionable ability to survive.

Bloom Energy is currently leading a new sector with exploding technology.

What we need is a clear channel to invest in it.

Sincerely,

Kent

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  1. jack gordon
    June 13th, 2011 at 11:45 | #1

    ZrO2 “fuel cells” have been used in utility power plants for many decades.
    they are called bailey oxygen meters.
    you connect a H2 bottle to one side of the wafer & pipe the combustion gas to be measured to the other side.
    when maintained at the proper temperature, an EMF appears across the cell proportional to the O2 concentration in the test gas.
    you record the emf output on a chart recorder.
    or you run it the other way & burn a fuel gas against an O2 supply. then it is called a solid-oxide fuel cell.
    > jack

  2. Ellen Stubbs
    June 13th, 2011 at 11:52 | #2

    I’d be interested in your take on Sauer Energy’s vertical wind turbines as another even more individual power source. They seem to avoid some of the more problematic features of large wind turbines, and offer an individual household or business power source, though they probably won’t supply all the energy needs. Might it offer investment potential?

  3. C. J. CORNELIUS M.D.
    June 13th, 2011 at 13:19 | #3

    I”ve been interested in wind power for the past 5 years or more and the Sauer wind turbine looks rally good to me.
    CJC

  4. david
    June 13th, 2011 at 13:53 | #4

    What about Fuel Cell? (FCEL) and to say that solar “involves protracted installation and maintenance” is just not correct. There are no moving parts and the installation is not complicated: once there you can forget the panels exist( almost anyway). If you have lead acid batteries you have to keep them topped up with water. What other maintenance is there?

  5. Moozer
    June 13th, 2011 at 14:48 | #5

    Both 60 minutes and recently “20 20” programs on the “Bloom Box”
    are misleading at best. Fuel Cells for production of household
    electricity are no closer that they were 5 – 10 years ago.
    The reporters covering those stories are not too bright.

  6. Billy
    June 13th, 2011 at 15:25 | #6

    The Sauer wind turbine illustrates what is wrong with American education. Anyone with a high school physics education should know that this device is not worth building. Bucket wheels were abandoned more than 100 years ago due to terrible efficiency. Two blades are always moving the wrong way against the wind.
    The energy in wind is kinetic and is expressed as E = mass x velocity squared. The claim of output at low velocity is obviously nonsense as low speed wind has almost no energy. Only part of the energy can be recovered as some velocity is needed to let the air get away from the turbine. There is also no way to control the bucket wheel in gales.

  7. ronald g oconnor
    June 13th, 2011 at 17:04 | #7

    Bloom wouldn’t be in business w/o subsidies. These co’s have a long way to go to be competative. In this economy the fed’s aren’t in the mood to give away much more money to these inefficient players, not even the Dem’s.

  8. Dr. Juan
    June 13th, 2011 at 19:17 | #8

    Fuel cells using fluoropolymer (Nafion or Aquafin) membranes unfortunately are easily poisoned by contaminated hydrogen and contaminants in the air. Locations near highways are bad for these units so they are a non-starter for transportation purposes, despite the hoopla about the “hydrgen econmy”. These membranes use platinum which makes them excessively costly. Combine this with short life and they are non-starters.

    Ceramic is more immune to this damage but is brittle and difficult to seal into a cell with adequate thermal cycle life. This gets worse as the size gets into ranges with markets. Specific power density does not look good for transportation, except possibly for fork lift trucks. Stationary, continuous operation may actually work out but cost is still much higher to install and operate than an ICE generator, particularly if the waste heat is utilized for more energy production or for building hot water/heating/AC. The early adapters of the Bloom Box have money to burn and don’t care about any problems. These units are part of their corporate image and have as much PR value as they do energy output.

    Distributed rooftop solar can stand on its own. Accountants with sharp pencils can calculate a payback and the systems have very high reliability. Power is used for Air Conditioning, refrigeration and store lighting during the day when energy demand in the South is highest. They are also fully practical and cost effective for remote off-the-grid locations, housing and commercial. Germany will prove solar can supply their county with 30% of its power. Combine this with roll-out of efficient LED light sources and they will have no need for nuclear or new coal power plants over the next 20-30 years. We could do the same but lobbies are defending the status quo.

  9. Richard Horne
    June 13th, 2011 at 20:20 | #9

    australian company Ceramic fuels CFU.AX is trialing the same sort of thing in a box the size of a washing machine for individual houses.

  10. warner cowan
    June 13th, 2011 at 20:45 | #10

    bank of america–should i buy it now?

  11. Ventureshadow
    June 14th, 2011 at 15:06 | #11

    @warner cowan
    Bank of America is essentially Bankrupt. It is overpriced at any price above zero. It may take some time to fold, and it will probably fold when the stock market itself is tanking hard, but it is not an investment. It is at best a wild speculation. The other huge banks aren’t much better. Stick with a regional bank such as HOME or PBCT.

  12. MW
    June 14th, 2011 at 23:20 | #12

    Question for DR Juan or anyone else with the knowledge

    Could one use a fuel cell to convert pure hydrogen to a hydrocarbon?

  13. Eric Stannard
    June 15th, 2011 at 05:28 | #13

    Ceramic Fuel Cells CFU.ASX, is producing units in Germany and Australia, and has many units on trial with utility companies in Japan, US, Germany, UK, Australia and a few others. They have overcome the Chromium poisoning of the electrodes problem, and licenced the technology to other Fuel cell producers.

  14. Jeffrey J Hines
    June 15th, 2011 at 10:49 | #14

    Any information you can give about the Bloom Box would be appreciated. After my lady friend and I watched it on 60 Minutes we could find no more information about the company. We have been hoping to invest in it. Her family business just sold to Exxon and she is looking for new technology companies into which to invest. We both have been interested in “Clean Energy Producers”. I have been interested clean energy production since Architecture School. This is the most promising thing I have found and the most efficient. Thank you!!

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