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Bloom Energy CEO: Fuel Cells for Home Power Will Hit "Grid Parity" Within 5 Years

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For Kleiner Perkins-backed startup Bloom Energy, the vision is to have its refrigerator-sized fuel cell devices eventually powering transportation — ideally within a decade. But according to a new interview with CEO KR Sridhar, an important milestone will come years ahead of that goal. Within 3-5 years, Sridhar tells BusinessWeek, the so-called Bloom box could reach “grid parity” for home use, or competitive pricing with conventional electricity sources.

The 5-kilowatt device involves a fuel cell system that can generate electricity using a range of liquid fuels, such as natural gas or ethanol. Installed at the University of Tennessee in Chattanooga in 2006, one of the earliest Bloom box units (running on natural gas) was reported in the New York Times last year to deliver enough power at twice the efficiency of a standard gas-burning boiler system, with 60 percent fewer emissions, for a 5,000-square-foot home (about twice the size of an average single-family home in the U.S.). Bloom marketing and product management chief Stu Aaron confirms those results in this latest report.

Really competing with conventional energy sources in the residential market, however, will depend on much more than efficiency and energy savings. Several variables will factor into the success of these devices as they become available — reportedly within the next year or two. Key issues could include the upfront cost of the devices, reliability and the relative ease of the process for installing them (largely in rural areas of the developing world currently lacking a grid connection, but also for use in conjunction with other power supplies in the developed world).

Initially, Bloom plans to target businesses, “that want to explore whether they can get reliable green energy at the same price or less than they now pay the electric company,” writes BusinessWeek, noting rumors that tech companies including eBay (s EBAY) and Google (s GOOG) have already started testing the system.

At least one thing is certain: Bloom’s investors have a lot riding on the startup’s ability to parlay a promising technology into a profitable business. According to recent comments from Kleiner Perkins leader John Doerr, Bloom now has “substantial revenues and orders,” but they haven’t come cheap. Doerr said 8-year-old Bloom, with its $250 million in financing, has “required ten times as much capital,” compared to other venture companies (Google took only $25 million to get to an IPO), and he predicted the company remains at least a year away from an initial public offering.

11 Responses to “Bloom Energy CEO: Fuel Cells for Home Power Will Hit "Grid Parity" Within 5 Years”

  1. Is the product by Bloom Energy going to wind up like the Tesla Roadster? There was a LOT of hype and bloggers claiming they were going to line up to get one, and then the actual proce tag came out and reality set in. This happened again with the Nexus One.. huge hype on the blogs, but overall pretty lackluster sales and a high price tag.

    A home fuel cell device is obviously going to be REALLY expensive any way you look at it. Or is there something else in the works?

  2. What’s particularly frustrating about Bloom is the lack of any specifics when it comes to what they’re working on, or what they plan to release in the next year or so. So far, it really has taken on this image of ‘vaporware’.

    Within the past two or three months alone, I’ve read about a 5kW unit, a 25 kW unit, and, from the Business Week article, a 100kW unit(they mention 5 units sold to eBay that produce up to 500kW)…so which is it?
    Aaron notes that part of the secrecy is because they want to have field experience that demonstrates that they have a reliable product. The problem is that Solid Oxide Fuel Cells typically operate at really high temperatures and that takes toll on the materials used. Bloom may have a product that operates at lower temperatures (thus increasing stack life and the life of the other components). So presumably all of these tests with U. Tennessee and eBay and others are to verify this – but in order to be competitive with existing commercial offerings they need to hit at least 50k operating hours…well thats at least 6 years of operation…and if the tests don’t go as planned it could be a lot longer before we see Bloom ready to sell anything.

    As for the economics of the fuel cell, its incredibly difficult to imagine a set of circumstances in which they’ll approach anything close to grid-parity anytime soon. OK, if you’re talking about just the manufactured price (which is how a lot of solar PV manufacturers get away with the grid-parity claim)…and if you wrap in the 30% ITC credit, and various state capital offsets, and RECS, and maybe you’re talking about 17c/kWh grid rates in Alaska or Connecticut, oh and don’t forget to waive the interconnection fees! Absent stacking the deck in their favor with those parameters, its just hard to imagine.