The Energy Fix May Come in A Box
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.
- 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.
- Second, it offers a marked improvement in high-generation efficiency, converting fuel into electricity at twice the rate of other fuel cell approaches.
- Third, the system is reversible. A Bloom Box can both generate and store energy.
- 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.