Last Updated Sep 29, 2010 5:02 PM EDT
Without California's $2,500 per kilowatt subsidy for fuel cells -- along with the 30 percent federal tax credit -- the Bloom box is simply too expensive to legitimately compete with traditional energy sources. A quick back-of-the-envelope cost breakdown shows how difficult it is for Bloom to scale up its product outside of the state. That is, of course, unless its CEO KT Sridhar finds a way to lower the cost of his Bloom boxes -- something he's said the company is working on, according to CBS' 60 Minutes report.
A cost breakdown. Each 100 kw box costs between $700,000 to $800,000, or $7,000 to $8,000 per kilowatt -- without subsidies. That's about 10 times more expensive than what experts believe fuel cells should cost if they are going to compete unsubsidized with the traditional grid, according to Wired's report earlier this year. Lux Research figures without incentives, electricity generated from the Bloom boxes would cost $0.13 kilowatt per hour to $0.14/KWh. That's $0.03/KWh more expensive than the average retail U.S. electricity costs, according to Lux. Bloom Energy has claimed that when incentives are included the total lifescycle cost of electricity over 10 years is $0.08 kilowatt per hour -- cutting the cost for its customers nearly in half.
Not that this matters to Bloom Energy at this point -- or its customers. For one, California is an awfully big market and Bloom Energy' has already managed to sign on a number of big companies, including Google (GOOG), eBay (EBAY) and now Adobe (ADBE). And its customers don't appear to be too worried about the price.
For example, Adobe will use more expensive bio-methane from a landfill as its fuel source -- which is then converted to electricity -- for the Bloom installation. As Greentech Media notes, Adobe could have lowered its costs further by running standard methane.
A quick primer on the Adobe installation:
- 12 Bloom energy servers -- also known as Bloom boxes -- have been installed on the 5th floor of Adobe's West Tower at the company's headquarters campus.
- Each server is the size of an average parking space and contains thousands of Bloom fuel cells;
- Bloom cells are flat, solid ceramic squares made from a sand-like powder.
- The Adobe installation will convert air and biogas into electricity via clean electrochemical process.
- One server generates 100 kilowatts of energy. That's enough to power 100 average American homes.