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Summary:

Fuel cell maker Bloom Energy has scored a potential 30 MW (300 Bloom Box) contract with Delaware utility Delmarva Power, and Bloom plans to build a factory in Delaware as part of the deal. However, the deal is contingent on several conditions and regulatory approval.

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Fuel cell maker Bloom Energy has scored a preliminary massive deal with a Delaware utility, and plans to build a factory in Delaware as part of the plan. Delmarva Power & Light, a utility which has about 500,000 electricity customers in Delaware, has a proposal to buy 30 MW worth of fuel cells (300 Bloom boxes) from Bloom, based on certain conditions and regulatory approvals. Delaware Governor Jack Markell made the announcement on Thursday.

There are at least three things that are important about this deal. First, the deal is downright massive given many of Bloom’s largest customers to date have been more on the scale of an installation at Adobe’ headquarters  in San Jose, Calif., which is using 12 Bloom boxes, supplying 100 kW of power each, or a total of 1.2 MW. Delmarva’s deal is about 25 times that.

Second, the deal is for a utility. While Bloom has two small deals with utilities PG&E and Southern California Edison and one with EPB in Tennessee, it hadn’t yet really cracked the utility market (before this) and had mostly been selling to corporations like Google, eBay, Adobe, and Kaiser Permanente.

In fact, at one point last year, an administrative law judge in California made a preliminary decision to recommend against fuel cell projects for California utilities, because they were deemed too costly at “[T]hree times the price paid to renewable generation.” California regulators ended up not listening to that advice, and approved the utilities’ fuel cell contracts last year.

The third reason the deal is important is because it’s outside of California. While this isn’t Bloom’s first installation outside of California (that was Tennessee), it’s Bloom’s largest push outside of the state, particularly because Bloom will be building a 200,000 square foot factory at a former Chrysler plant in Delaware. Bloom just expanded its California factory to about that size.

However, there is a major caveat to the deal. It needs to be approved by state regulators, and the Delaware Governor also plans to push for legislation that would include the use of fuel cells under the state’s renewable energy mandates (the state says 25 percent of energy needs to be from clean power by 2025). In California, fuel cells are only included in the renewable energy mandate if they are powered by biogas.

Don’t consider this deal done until all the “t’s” are crossed, as state regulators and politicians tend to be fickle.

In April, Bloom touted how rapidly it has been expanding, quadrupling the size of its factory in Sunnyvale, Calif. to 210,000 square feet, and growing its workforce by over 70 percent in 2010, and 525 percent over the past four years. Bloom said it had created 1,000 jobs in California on its own.

But all that expansion requires funds. Back in January, VentureWire reported Bloom had “quietly raised about $100 million more in equity in the past few months,” citing two people familiar with the matter. Prior to that, nine-year-old Bloom raised at least $400 million from investors including Kleiner Perkins, and NEA, making it one of the most well-funded startups in the Valley.

Bloom still needs to reduce the costs of its $700,000 to $800,000 Bloom boxes to win over more customers. Building more factories and manufacturing at a larger scale will help with that. Bloom is also trying other creative ways to boost sales, and earlier this year, Bloom launched a utility-friendly Bloom-Box-as-a-service product, which offers 10-year electricity contracts (called a power purchase agreement in the utility world) with no upfront payment for the Bloom Box fuel cell itself.

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