Bloom Energy says its highly touted fuel cell system will deliver lots of power at low cost. But it faces some sticky problems along the way.
In the wake of Wednesday's star-studded, feel-good rollout of Bloom Energy's "Bloom box" server, the start-up now faces the gritty task of delivering products that are reliable and cheap.
Sunnyvale, Calif.-based Bloom Energy held a press event Wednesday morning detailing the Bloom box fuel cell, which is designed to be stacked into small blocks and housed in a unit about the size of a refrigerator. Luminaries in attendance included California Gov. Arnold Schwarzenegger, former Secretary of State Colin Powell, legendary venture capitalist John Doerr, Google co-founder Larry Page, and top executives from heavyweight companies such as eBay, Wal-Mart, and FedEx.
The combination within the Bloom box of oxygen and fuel creates a chemical reaction, producing electricity. The box, which promises to deliver generous amounts of power in a small space and to change people's dependency on traditional power grids--all for less than $3,000 for a future home unit--is already in use at places such as Google, eBay, and Wal-Mart.
Probably the single most fundamental promise made by Bloom Energy CEO K.R. Sridhar at Wednesday's event was that by starting with a 25-watt fuel cell building block, products can be scaled up from 1kW "home" solutions to systems delivering hundreds of kilowatts for businesses or communities.
One fundamental challenge is making the ceramic tile reliable.
"It's extremely thin and operates at a wide range of temperatures. The big challenge is thermal stress," said Tobin Fisher, who co-founded mobile fuel cell company Ardica Technologies out of Stanford University. "All of these different components heat up and expand at different rates. Over time, they can crack as a result."
Generally, when a system like Bloom's is not working, it can result in a phenomenon called "gas short," quickly gaining in temperature and losing efficiency, according to Fisher.
Fisher believes companies like Bloom Energy stress-test the technology over long periods of time, trying to find failures and fix them. Bloom was founded in 2001, and it took the company about eight years to get to the point at which it can deliver a very limited number of systems to select businesses.
Bloom has an elegant way to deal with failures when they occur, according to Sridhar.
"We have a modular, redundant architecture with hot-swappable technology," Sridhar said on Wednesday, referring to the same type of design offered by high-end corporate servers, which ensure that when one component, such as a hard disk drive, goes down, the system remains running.
"If a server were to break in a data center, it doesn't take your data center down. Similarly, if any one [Bloom Energy] unit has to be serviced, the customer is not going to be out of power," Sridhar said, applying the server analogy to Bloom boxes, which, indeed, are officially called Bloom Energy Servers.
How Bloom Energy's strategy stacks up:
Low cost, off-the-grid boxes
The low-cost aspect is predicated, to a large extent, on being able to generate power efficiently, at the point of consumption, off the electrical grid. "You lose about 20 percent of electricity in transmission and distribution," Fisher said. "So one of the big payouts is, you don't have that distribution [and] transmission loss."
But most users will still have to pay the going rate for energy going into the box. Biofuels are being touted as a potential energy source, but for most users, this option is not realistic today. Natural gas (what eBay is using) will be the most practical energy source for the foreseeable future, according to Fisher.
Bloom claims that customers can expect payback within three to five years on their investment from the energy cost savings. Sridhar has stated that a box is capable of generating electricity at a cost of between 8 cents and 10 cents per kilowatt-hour, using natural gas. But that's cheaper, in some cases, than only commercial electricity prices.
A goal of Bloom that has been challenged fairly widely already is introducing a 1kW Bloom box for the home. Although on paper, 1kW sounds very economical, that will not realistically power a home off the grid consistently. A more realistic amount, critics say, is 5kW.
The hardware itself isn't cheap, either. A home unit is expected to cost about $3,000, while units purchased by large companies like Google and Fedex cost between $700,000 and $800,000. Bloom stated Wednesday that while the goal is to eventually expand into small business and residential markets, it is currently focused on producing the more expensive 100kW systems used by Google, Fedex, eBay, and others. No smaller units have been commercialized yet.
The Bloom box also faces a manufacturing challenge. The tiles will be made with "mass-manufacturing techniques the semiconductor industry developed a long time ago," according to Sridhar. But semiconductor manufacturing is fraught with its own set of challenges that Bloom Energy will have to overcome, if it begins producing tiles in massive quantities for a worldwide market--which is the goal.
Update, 3:45 p.m. PST: Comments from Sridhar regarding how the Bloom Energy Server would cope with a unit failure have been added. In addition, an editing error regarding the Google co-founder in attendance has been corrected. Larry Page attended the event Wednesday.