Frankly I don’t understand what the hype is all about.

For solar PV panels you can use $5,000-$6,000/kW for installed costs as a rule of thumb. Really big central plants may be able to bring those costs down a bit, but as a general rule, you’re safe with those numbers.
For Wind… you’re looking at $2,000-$2,500/kW installed.

Those figures are just for generation. If you’re talking about central plants then you have to add in transmission and distribution costs to the mix (which is what Bill and I are going back and forth on in the other comments)

But $500/kW for T&D upgrades? I have to push back and say there’s absolutely no way. Take a look at the projected costs for T&D upgrades ( http://goo.gl/WiCj – PDF at the bottom of the page) from the Brattle Group. They’re talking about $2200/kW for transmission and $4400/kW for distribution. Even cutting those numbers in half its still way above the $500 figure! Maybe it comes down to geography too (Midwest vs our insanely overcrowded East Coast grids where we’re in ISO Congestion Charges up to our ears!)

I’m not trying to argue that the Fuel Cell from Bloom is cheap ($8,000/kW…who are they kidding, really?) but I will put my chips with other forms of DG (recip engines for smaller applications, turbines for 5MW and up) over big central power any day.
But since this post is about fuel cells, I will say that there are scenarios where fuel cells become economically viable options. The incentives in Connecticut, paired with the 30% ITC grant will essentially buy a fuel cell down to the same price as a nice recip from, say, Jenbacher. Add in the MACRS accelerated depreciation and make sure you’ve got a nice high capacity factor and offtake for thermal (ie. winter heating and absorption chilling) and you can come up with a pretty decent IRR and debt-coverage ratios.

It’s too bad, because I am a big fan of distributed power. We don’t need more power lines around. We just need fuel cells that are closer to $1000/kw installed cost rather than $10,000/kw.

As for customers only wanting electric output….uhh, OK…I don’t know that I’d let that dictate the design of this kind of product, but alright. It just seems like an awful lot of wasted heat that could be put to good use.

As for the second point, that the heat is used in the process – you’re right (or rather, they’re accurate in saying that) Fuel Cells do use some of their own heat output in the reformer – heat’s needed to get useable H2 from the natural gas (CH4) so any fuel cell that uses a reformer will divert some of the heat output to that task – companies like UTC and FCE list all of their heat outputs as heat available net any used for the reformer. It could very well be that they’re diverting nearly all of the useable heat to the reformer to bump up the H2 output from the natural gas and therfore improve the Electric efficiency…I don’t know.
One good thing about SOFCs is that they can take both H2 and CO as fuel sources – unlike other types which cant work with CO. I’d be curious to know if they have any plans to get Bloom’s model working with CO as an input fuel.
One disadvantage that is characteristic of the SOFCs is that because they operate at such high temperatures, the materials used (especially sealants and metal components) are subject to considerably more wear-and-tear…meaning less time between major maintenance and, presumably, stack replacements. Not sure how Bloom is dealing with that (lower materials costs, perhaps?)

One other thing that I forgot to add to my original comment was an observation on the emissions profile. Its a mixed bag for the Bloom unit. While they do better with CO2 emissions (about .35 tons/MWh compared with .50-.55 tons for the UTC and FCE units) it’s not any better on NOx emissions. NOx emissions can be dealt with through SCR, but that costs more money (like $100-$150/kW more).