While famed venture capitalist and Bloom Energy investor John Doerr told “60 Minutes” last month that utilities will one day want to buy Bloom’s fuel cells, it looks like, at least in California, those sales could be slow going. Todd Woody reports that an administrative judge with the California Public Utilities Commission has made a preliminary decision to reject requests from utilities Pacific Gas & Electric (s PCG) and Southern California Edison to buy $43 million in fuel cells from FuelCell Energy (s FCEL) and Bloom Energy for 6 MW of electricity.
The CPUC can either accept or reject that judge’s recommendation, but still, it’s not a good sign for the pairing of fuel cells with the power grid anytime soon — fuel cells are just too expensive right now. Administrative law judge Dorothy Duda writes: “It is unreasonable to spend three times the price paid to renewable generation for the proposed Fuel Cell Projects, which are nonrenewable and fueled by natural gas.” As we’ve pointed out Bloom Energy says its fuel cells can be 100-percent carbon free, but that’s only if you run them on biogas, a resource that’s not exactly easy to get ahold of.
Woody reports that PG&E’s fuel cell project was hoping to use two 1.4 MW fuel cells from FuelCell Energy and two 100 kW Bloom servers. PG&E spokesperson Jonathan Marshall tells us that the contract with Bloom Energy is contingent on whether the CPUC ultimately approves the fuel cell project, but that the administrative judge’s recommendation does not have an effect on the deals or the project. Marshall also pointed out to us that the fuel cell project would be one of the rare cases that PG&E would own an energy project itself (rather than buying electricity under a power purchasing agreement), similar to its recent, but much larger, plans to own solar PV projects.
For PG&E the proposed fuel cell project is more about testing and learning than anything else. Marshall tells us the purpose of the fuel cell program is to “understand the economics and management of fuel cells on our grid. It’s a learning opportunity.”
But despite the interest, the the administrative judge’s skepticism is warranted. Fuel cells have made little dent on California’s power needs, in spite of the a state program to subsidize fuel cells. PG&E told Woody that only 13 MW, or just 0.01 percent of California’s peak electricity demand, come from fuel cells. And in California fuel cells are only counted for the renewable portfolio standard if they use biogas — dealing one more blow to the case for investing ratepayers dollars into the project.