The pain point for Bloom Energy and fuel cell makers

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In the grand scheme of energy technologies, the key component that makes up a fuel cell — which is like a chemical battery that produces electricity — is relatively short-lived. This Achilles heel is one of the main reasons that building, installing and selling fuel cells can be so expensive, and almost none of the fuel cell makers are profitable yet.

Of course, there are different types of fuel cells, but in general, the stacks that make up a fuel cell, and create the reaction that produces electricity, often last only about two to five years. This is common for different types of fuel cells like solid oxide fuel cells (Bloom Energy makes this type) or proton exchange membrane (PEM) fuel cells, like what ClearEdge Power builds.

A fuel cell’s stacks fill a chamber called the hot box, and it’s this chamber that gets swapped out of these fuel cells every few years.  The stack contains a catalyst, often platinum, which, when combined with the fuel source (natural gas or hydrogen) and oxygen create electricity.

Break down

Over time, as the fuel and oxygen are constantly being pumped in and run over the catalyst in the stacks, the chemicals start to degrade and the system starts to wear down.

Fuel cells are similar to a battery in their degrading process (see Why lithium-ion batteries die so young), and fuel cell stacks, like a battery, have an anode and cathode portions. Fuel cells also run at high temperatures, which is another reason these systems degrade quickly.

The short life span of the hot box is a key problem for the capital costs of fuel cell makers. The hot box can make up a significant portion of the fuel cell, and I’ve heard as high as 50 to 75 percent of the cost of the system. That cost can be lower, however, and for example, ClearEdge Power’s VP of Marketing Mike Upp told me the stacks in a ClearEdge fuel cell can make up 25 to 30 percent of the cost of the system.

Costs climb

Fuel cell makers are toiling away at trying to extend the life time of the hot box, as well as reduce overall manufacturing costs. Upp said that while the stacks in ClearEdge’s first iteration of its fuel cell last three to five years, the company’s engineers are working on doubling and tripling that lifetime every few years. Stacks can also be recycled, which can reduce the overall capital costs.

Fuel cell makers are spending a lot on R&D trying to find these stack lifetime breakthroughs, but are also looking to reduce costs via reaching economies of scale of manufacturing. The idea is even if the stacks don’t last longer in the future, they can ultimately be cheaper to produce. Bloom Energy has been scaling up manufacturing of its solid oxide fuel cells, and NEA Partner Scott Sandell told me back when Bloom launched that it would be the economies of scale that would push down costs dramatically over the years.

I heard a rumor recently that Bloom Energy had closed yet another round of $150 million in funding, which would bring its funding raised to over $550 million. Earlier this year, VentureWire reported that Bloom had quietly raised about $100 million more in equity, above its confirmed $400 million. No doubt part of these funds are going to both R&D to extend the life of the hot box, as well as the capital costs to actually replace the hot boxes for its first customers.

We’ll see if any of the leading fuel cell makers can effectively reduce their costs enough, and lengthen the lifetime of the hot box. If they are successful with that, then more of these companies could be profitable one day.

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