The bloom on Bloom Energy has begun to fade, and questions are rising about the fuel cell startup’s competitiveness against existing forms of power. At $7 to $8 dollars per watt, Bloom’s fuel cell capital costs have trouble matching those from some distributed generation systems such as solar panels, not to mention grid power — though Bloom says it’s working hard to bring its costs down further.
But what about those rare, but critical, hours when grid power goes out? While most power outages are brief, even a tiny break in electricity flow can wreak havoc with always-on facilities like hospitals, factories — and, in particular, data centers. To keep the juice flowing all the time, data centers need uninterruptible power supply (UPS) systems — and combining UPS ability with always-on power is where Bloom’s boxes might find themselves competitive, if they can prove their reliability.
That’s according to Sam Jaffe, analyst with IDC Energy Insights, who points to Bloom’s showcase customers Google (s GOOG) and eBay (s EBAY) as potential early adopters of next-generation UPS’s for their immense data center backup power needs. The fact that Bloom boxes can also deliver power 24/7 365 days a year strengthens their case, he says. In fact, it’s possible that Bloom could find data center clients to buy up all 40 megawatts of the production capacity Jaffe said that the company is planning to bring online in the near term — though they’ll have to bring down costs to expand much beyond that, he warned.
Data centers use up to 2 percent of the nation’s electricity. That power demand is expected to double by 2011, which would cost data centers some $7.4 billion in power bills, according to the Environmental Protection Agency. In an August 2007 report, EPA pointed to more efficient UPS systems — current ones can waste up to 10 percent of the power they use — as a key step to help avert a data center energy crisis. Google’s taken a crack at it with its one-battery-per-server methods, and other innovative UPS ideas are cutting inefficiencies as well.
Today’s most common UPS alternatives, Jaffe said, tend to technologies such as a warehouse of batteries or several flywheels to cover power outages for the first few moments, and diesel generators or microturbines for longer-term backup. How much that all costs is hard to calculate, since systems differ so widely from data center to data center, he said. Compared to similar-sized microturbines from Capstone Turbine (s CPST), which Jaffe estimated are selling at about $2,000 a kilowatt, Bloom’s boxes are still about four times as expensive, he noted.
But besides the fact that they’re always on — no more battery-plus-generator redundancy — fuel cells hold one distinct “green” advantage over diesel generators and natural gas-fired microturbines — both of those alternatives come with air emissions that might keep them banned from many office parks. Natural gas-powered fuel cells, which emit carbon dioxide but no other pollutants, don’t.
The big question is whether Bloom boxes can offer the 99.99-percent (“four-nines”) reliability required of UPS systems. According to GigaOm’s Pedro Hernandez (sub required), they don’t — at least not according to early trials with Google, which reported its Bloom boxes delivered 98-percent availability over 18 months of testing. How that might compare to post-testing reliability rates is hard to say. Google has also noted that it has been using Bloom boxes to power parts of its headquarters building, and not any off-site data centers.
UPS requirements, of course, stand in stark contrast to raw, everyday power. Many data centers get electricity price discounts to match their immense appetites, Jaffe noted, which makes powering them full-time on distributed systems like solar panels or Bloom boxes even tougher to pencil out. But adding UPS capability might just make it worth the high cost of that always-on power to replace grid power, he said.
Still, using fuel cells in data centers isn’t unprecedented. Fujitsu gets half its Sunnyvale, Calif. data center’s cooling power needs from a 200-kilowatt fuel cell, and Verizon is using seven fuel cells to power its Garden Island, N.Y. data and telephone center. Both projects use fuel cells from UTC, the division of United Technologies (s UTX) that started out making fuel cells for NASA some 50 years ago, which gives a sense of how long this technology has been around. Among the many fuel cell startups on Bloom Energy’s tail are several aiming at the backup power business.
By the way, Jaffe had a couple more calculations on Bloom that don’t look as good as the startup’s publicized figures. While Bloom says its fuel cells can deliver power at 8 to 10 cents per kilowatt-hour when federal and California state subsidies are taken into account, Jaffe puts the unsubsidized figure at 14 to 15 cents per kilowatt-hour. And while he hasn’t done a calculation for what they’d cost with just federal subsidies, the fact that Bloom’s claim to California incentives appears to rely on the availability of hard-to-get biogas might require customers to start doing that math on their own.
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