Is the Bloom Box the Future of Energy Efficiency?

by Kirsten Nelson-Johnson

Bloom Energy's Bloom box made its long anticipated debut last week. Bloom Energy is well funded clean-energy startup which thus so far kept critical parts of its business plan secret as it launches its first product. With around $400 million in venture funding, Bloom Energy is one of Silicon Valley's most closely watched startups.

Bloom Energy claims that its box can produce more energy – with less environmental damage – than other fuel cells on the market because it's not solely reliant on hydrogen to trigger the chemical reactions to generate power. A Bloom box energy server can provide 100 kilowatts of power by converting natural gas or other hydrocarbons into electricity pretty much on demand. It can also use wind or solar power and whatever else is available, which varies from community to community. Using wind or solar requires an extra step to convert the energy into something that could power the fuel cells, which can result in some energy loss. One of the easiest ways to power the Bloom box is to hook it up directly to a natural gas line.

Founded in 2001, Bloom has been secretive about its technology and hasn't offered many new details on how it plans to make its promising fuel-cell technology affordable enough, especially for large portions of the population to buy for residential use.

Bloom Energy's CEO K.R. Sridhar stated that the price cut could take a decade or more as the technology improves. Bloom Energy's customers, including Google Inc. and eBay Inc. pay 9 to 10 cents per kilowatt-hour, making the payback period approximately 3 to 5 years with subsides for their required power which they purchase from California utilities. All of Bloom Energy's in-use boxes are currently located in California where the average price is 13 to 14 cents per kWh. Depending on whether the box uses energy input from a fossil or renewable fuel, they can achieve a 40%-100% reduction in their carbon footprint as compared with the U.S. grid.

The savings are big, but the economics are not that simple. Bloom Energy customers are getting a large federal tax credit that amounts to 30 percent 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 customers might be saving due to current subsidies, not because the power generated by Bloom Energy machines is overall cheaper to produce.

The use of federal and California subsidies could make the Bloom boxes less economical in markets where generous subsidies don't exist. Sridhar said other states and countries abroad have attractive subsidies, but added that a key goal is driving the price of the product down enough so that subsidies won't be the only option to increase affordability.

 

While the Bloom Box is perhaps not yet the ultimate solution in energy efficiency, partnering it with renewable energy and continued reduction efforts to increase affordability shows that the Bloom Box will have real promise.