Bloom Energy Lands Utility to Fund “Energy Servers”

7/29/14Follow @mlamonica

Bloom Energy has found a surprising financial partner—utility Exelon—to fund installation of its walk-in freezer-size fuel cells.

The Sunnyvale, CA-based company said on Tuesday that Chicago-based Exelon will provide financing for Bloom’s generators, called “energy servers,” at commercial sites such as office parks. It’s the first time an energy company has provided capital to finance Bloom’s product, and will lead to the company’s biggest round of deployments, according to Bloom.

Founded in 2001, Bloom came to fame by appearing on 60 Minutes in 2010, with its CEO KR Sridhar and renowned investor John Doerr proclaiming how fuel cells will quickly disrupt the energy business. The reality has been far less dramatic. Bloom, which is still a private company, is said to have raised more than $1.1 billion and has taken several years to gain commercial acceptance.

In the past few years, though, commercial and industrial companies have shown more interest in distributed energy, particularly generators that can provide power during outages. Bloom’s fuel cells generate electricity from natural gas or methane captured from landfills in a process the company says is less polluting than getting power from the grid.

Fuel cells can be configured to provide backup power as long as the natural gas service isn’t interrupted. For instance, eBay built its latest data center to run off of a huge, six-megawatt installation of Bloom boxes, using the local power grid only as backup. In all, Bloom has installed 130 megawatts worth of its machines.

The challenge for Bloom Energy and other distributed energy companies is that the equipment is expensive and many companies won’t make the upfront investment, even if on-site generators can help improve their power reliability. Instead, companies either lease the equipment or buy the electricity they generate through a power purchase agreement, a model the company is seeing more customers gravitate towards, says a Bloom representative.

One of the big questions for energy startups is what role utilities will play in advancing new technologies. A number of smart grid companies have been stymied by utilities since they are slow to install new products. Utilities tend to be conservative and regulations are designed for investments in power plants and transmission lines, rather than distributed energy.

With the Exelon deal, Bloom now has a utility that could help provide the financial backing and credibility to attract more commercial customers. “We are committed to meeting the growing demand for distributed generation with Bloom Energy’s clean, reliable, non-intermittent power solution,” Exelon CEO Chris Crane said in a statement. Utilities have started to invest in other forms of distributed energy, such as solar, although it’s at a very small scale.

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  • John

    The levelized cost of Bloom’s fuel cells, per the consultants hired by the Delaware Public Service Commission to evaluate the Delaware Bloom feed-in tariff, is $215.00 per megawatt hour. Want more information? The fuel cells are only 47% efficient based on almost two years of operational data in Delaware. Because of this, they emit far more CO2 and VOC than competing combustion technologies – at 4 times the price! This is tax scam fueled by State and Federal Grants and/or subsidies. The commercial users get cheap electricity while everyone else foots the bill, while Exelon profits on the cash flow from the sale of Bloom’s electrons. The lack of objective reporting on Bloom is breathtaking.