reading the tea leaves of bloom energy - by Doug Mohney

Views and Opinions on Green IT (Apr 23 2010)

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   Having introduced its concept of the "energy server,” Bloom Energy now seems to be content to shut the doors and live off the press clippings generated by its February launch event.  Why does a company so intent on making the world a better place through cleaner and cheaper energy have such a control-freak streak when it comes to communications?

   Take my experiences. An email request to visit Bloom's facilities in Silicon Valley in April or May went unanswered.  I called Bloom's PR agency to make the request over the phone and was similarly -- abet politely told no.  But if I had any questions, feel free to email them and someone would get back to me.

   Let's assume for the sake of argument that all this Howard Hughes-esque tightlippedness is indeed necessary and not just an annoying front.  The reason may just boil down to a single area: cost.

   Bloom's fuel cell technology is based on having no expensive metals -- "ink and sand" as the company's founder likes to call it. The "sand" makes ceramic plates and the "ink" is a proprietary mixture of (cheap) elements sprayed onto the plates.  Add fuel and heat to 800 degrees C to generate electricity.  Bloom has been very tight-lipped about the green and black anode and cathode “ink” sprayed onto the fuel cell's plates.

   Could the "ink and sand" combination be remarkably easy to replicate (or "clone" as we used to say back in the old PC days) with a few good hints?  It would be interesting to see how Bloom handles its garbage and see what sort of draconian "Do not reverse engineer" clauses are wedged into a purchase agreement.

   Combine cheap materials with company assertions to make a Bloom Energy Server small enough and cheap enough to power a single US or a group of third-world homes within a decade.  Currently, a 100 kW Bloom Energy Server costs between $700,000 and $800,000 -- before tax credits -- for the box.  Federal and California state tax credits cut that in half -- or about $350,000 to $400,000. Presumably, a Bloom home box would cost $3,000 or less, according to company comments and provide about 1 kW.

   Can Bloom cut its costs enough to A) Make the larger energy server affordable for "The Rest of us" (i.e. without federal and state tax credits propping it up?) and B) Build a unit cheap enough for home use? The answer for both is likely "yes." 

   Bloom Energy currently builds one server a day (don't know if that's per business day, per year, didn't hear Leslie Stahl pin down Bloom CEO K.R. Sridhar).  Regardless, there didn't appear to be a lot of automation involved and if we assume around 240 units per year, there's not a lot of "scale" (as in economies of scale there).   Net-net:  Bloom is effectively hand-building these boxes in one of the most expensive markets in the United States.

   An automated plant built in the South -- Bloom has reportedly looked at a site near the University of Tennessee -- would substantially cut down on labor costs and presumably would be able to buy materials in larger quantities to produce discounts and crank out thousands of units per year. Enough to cut costs in half? Sorry, my crystal ball gets foggy on that account.

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