Image: Bloom Energy Servers at eBay campus
Bloom Energy
Hundreds of fuel cells are stacked inside each of the Bloom Energy Servers seen at eBay's corporate campus in San Jose, Calif. staff and news service reports
updated 2/24/2010 12:40:33 PM ET 2010-02-24T17:40:33

A secretive Silicon Valley startup on Wednesday took the wraps off its cleaner energy product: a fuel cell "server" the size of a parking space that it hopes will allow homes and businesses to generate their own electricity.

Bloom Energy introduced its devices at eBay Inc. headquarters in San Jose, Calif., joined by Gov. Arnold Schwarzenegger and several of its early customers.

"We believe that we can have the same kind of impact on energy that the mobile phone had on communications," CEO K.R. Sridhar, a former NASA scientist, said in a statement. "Just as cell phones circumvented landlines to proliferate telephony, Bloom Energy will enable the adoption of distributed power as a smarter, localized energy source.

"Our customers are the cornerstone of that vision," he added, "and we are thrilled to be working with industry leading companies to lower their energy costs, reduce their carbon footprint, improve their energy security, and showcase their commitment to a better future."

EBay as well as Google, Inc., have been testing the server at their corporate campuses, and other customers announced Wednesday include Bank of America, Coca-Cola, FedEx Express, Staples and Walmart.

The technology had been the subject of intense anticipation because it promises to produce more power — with less environmental damage — than other fuel cells on the market.

"Each system generates enough power to meet the needs of approximately 100 average U.S. homes or a small office building," Bloom Energy stated. "For more power, customers simply deploy multiple Energy Servers side by side."

The company said its patented technology "is fundamentally different from the legacy 'hydrogen' fuel cells most people are familiar with" in four primary ways:

  • it uses lower cost materials;
  • is more efficient in converting fuel to electricity;
  • can run on a wide range of renewable or traditional fuels; and
  • is more easily set up and maintained.

Customers "can expect a 3-5 year payback on their capital investment from the energy cost savings." Bloom Energy stated. "Depending on whether they are using a fossil or renewable fuel, they can also achieve a 40-100 percent reduction in their carbon footprint as compared with the U.S. grid."

"Even running on a fossil fuel," it added, "the systems are approximately 67 percent cleaner than a typical coal-fired power plant. When powered by a renewable fuel, they can be 100 percent cleaner."

Niche areas for now?
Yet analysts warn that the technology has yet to be widely proven.

"Fuel cells have always held the promise that they're going to be this huge thing, but so far it hasn't really materialized," said Shu Sun, an energy technologies analyst with Bloomberg New Energy Finance. "What we are seeing is some of these fuel cell companies are making inroads into niche industries."

A 2008 study by his firm found that the fuel cell market would reach $1.5 billion by 2015, primarily in wireless telecommunications, recreational vehicles and midsize "distributed generation," which refers to fuel cells that would power, say, a block of apartments rather than individual homes.

Fuel cells themselves aren't new. Scientists have been working on them since the 1800s, and they are used today in the space program, telecommunications and the military. They haven't caught on widely for residential use largely because of costs.

Even in Japan, where fuel cells are more common, their use is limited to powering smaller devices because those cells don't generate a lot of energy, said Dallas Kachan, managing director of the Cleantech Group, a research and consulting firm.

Kachan said Bloom Energy's product offers a "glimpse at this possible nirvana" of placing cells that can generate huge amounts of power closer to where the power is being used. Large technology companies could attach them to their computing centers, which can be energy hogs.

Google cites payoff
For instance, Google said Bloom Energy's fuel cells are helping to power some of the facilities at the company's headquarters in Mountain View, Calif. In 18 months, those cells produced 3.8 million kilowatt-hours of electricity — many more times the 16,500 kWh the average U.S. household consumes over that same period.

Kachan said Bloom Energy's technology is exciting because of the amount of power it can produce and its ability to run on a variety of fuels, including renewable energy sources.

Fuel cells make power through chemical reactions, but they need fuel themselves to work. Instead of only being able to use hydrogen, Bloom Energy cells can use natural gas, wind, solar power and whatever else is available, which could vary from community to community.

Kachan also was drawn to the cells' relatively low cost. The boxes that businesses are buying currently cost $700,000 or more, but the company hopes to have the price down to just a few thousand dollars for residential customers.

Bloom Energy, which is based in Sunnyvale, has lured a high amount of venture capital — around $400 million, its co-founder and CEO, K.R. Sridhar, told the "60 Minutes" news show in a segment that aired last Sunday.

Kachan said he is "cautiously optimistic."

"With $400 million having gone to this company, there are some exciting claims, but like everything else out of Silicon Valley, the market will separate fact from fiction, and will prove claims versus reality," he said.

CEO Sridhar, who earlier worked on fuel cells while at NASA's Mars space program, says his goal is nothing short of this: "making clean, reliable energy affordable for everyone in the world."

The Associated Press contributed to this report.


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