Wednesday, October 20, 2010
A Secretive Start-Up Raises the Curtain
BY TODD WOODY
Paul Sakuma/Associated Press K.R. Sridhar, co-founder and chief executive of the Silicon Valley start-up Bloom Energy, holds up a stack of fuel cells in San Jose, Calif., on Wednesday. The company’s first product is a huge box of fuel cells that it hopes will allow homes and businesses to generate their own electricity.
In The New York Times on Wednesday, I wrote about Bloom Energy, the once-secretive Silicon Valley start-up that has apparently made a big breakthrough in developing a fuel cell that can generate electricity at competitive prices while minimizing greenhouse gas emissions.
The company is officially unveiling its Bloom Energy Server at a news conference on Wednesday morning featuring Gov. Arnold Schwarzenegger of California; Colin L. Powell, the former secretary of state and a Bloom board member; and John Doerr, Silicon Valley’s leading green-tech investor. But on Monday and Tuesday, I had the opportunity to spend some time at the start-up’s headquarters in Sunnyvale and to see the Bloom box up close.
In contrast to the usual Silicon Valley practice of announcing a coming product, Bloom spent nearly a decade developing its fuel-cell technology while saying nary a word. Over the past year and a half, it has quietly sold and installed 100-kilowatt Bloom boxes at Google, Bank of America, Wal-Mart and other big companies. The boxes cost $700,000 to $800,000 apiece.
“ Silicon Valley is learning some hard and important skills, mainly making stuff again,” said Mr. Doerr, a partner at the venture-capital firm Kleiner Perkins Caufield & Byers and a Bloom Energy board member.
Making stuff, particularly solid-oxide fuel cells, is very hard work. Such fuel cells have been something of a holy grail as they can operate at extremely high temperatures to maximize efficiency and can use a variety of fuels, like natural gas and biogas. Since the heat allows the fuel to be directly transformed into electricity through an electrochemical process, the expensive precious metals and rare-earth elements used in other fuel cells to act as catalysts could theoretically be eliminated.
But finding cheap common materials as substitutes and ensuring fuel cells don’t crack and leak under such conditions have stymied scientists for more than 30 years.
So how did Bloom crack the fuel-cell conundrum?
“I call it R.&D. on steroids,” K.R. Sridhar, Bloom’s 49-year-old co-founder and chief executive, said at the start-up’s offices. “We created an R.&D. platform where you continuously improve, validate and test. Learn why it broke and move on.”
Mr. Sridhar worked on fuel cells as a scientist on NASA’s now-defunct Mars program, where precision engineering and exotic materials were at his disposal. At Bloom, scientists used sand — the silicon-based stuff that gives the Valley its name — to create a thin ceramic wafer that resembles a floppy disk.
In the manufacturing area of Bloom’s offices, wafers shuffle through a machine that paints lime-green ink — the anode — on one side and black ink — the cathode — on the other. Mr. Sridhar says the ink is made from common, low-cost materials and infused with some proprietary “magic dust.”
he ceramic wafer serves as an electrolyte, and as fuel passes over the cell and mixes with oxygen ions, the resulting reaction generates electricity. Each fuel cell generates 25 watts of electricity — a couple of years ago, it was 5 watts, said Mr. Sridhar.
On the other side of the office, workers assemble stacks of fuel cells that fit into polished metal cubes that look like they could have been designed at Apple. A 100-kilowatt Bloom Energy Server will fit in a parking space. (“I didn’t want it to look like a power plant that you hide away,” Mr. Sridhar said.)
Bloom executives said the energy server, which can be installed in a matter of hours, operates at an efficiency of 50 to 55 percent and can reduce greenhouse gas emissions 50 to 100 percent depending on the type of fuel used.
Mr. Sridhar said the Bloom Energy Server has been generating electricity at a cost of 8 to 10 cents a kilowatt-hour.
In California , where Bloom has installed 30 fuel-cell systems, commercial electricity rates averaged about 14 cents a kilowatt-hour in October 2009, according to the latest figures from the United States Department of Energy. Elsewhere, commercial rates averaged 7 to 24 cents a kilowatt-hour.
Last July, eBay flipped the switch on five Bloom Energy Servers that now supply 15 percent of the electricity at its San Jose, Calif., campus, or about five times as much energy as generated by its 3,248 solar panels, according to Amy Skoczlas Cole, director of the company’s Green Team.
“We’re expecting a three-year payback period,” said Ms. Skoczlas Cole, adding that the calculation includes state and federal tax incentives that halved the price of the fuel cells.
In seven months of operations, Bloom has replaced a few fuel-cell wafers, but the machines have otherwise operated without a problem, Ms. Skoczlas Cole said.
Bloom executives said the company spent years developing a proprietary seal made from low-cost materials to prevent cracks and leaks. They estimate that the Bloom boxes will have a 10-year lifespan and that the company will have to swap out the fuel-cell stacks twice during that time.
Mike Brown, an executive with UTC Power, a leading fuel-cell maker, said the fuel cells need to last at least four or five years for the technology to be competitive.
Northern California’s largest utility, Pacific Gas and Electric, has asked regulators for permission to install fuel cells from Bloom and a competitor, FuelCell Energy, according to Janice Berman, a senior director at P.G.&E.
“We think it’s one of the emerging technologies that has great potential, and we’re really interested in understanding how the technology interacts with the grid,” she said.
One byproduct of fuel cells is water, and Bloom has patented and proved a fuel-cell design that could also tap electricity generated by solar panels and wind farms to electrolyze water to produce hydrogen that could be used as fuel in the cell.
“That’s the killer app,” said Mr. Sridhar, who said such a product probably would introduced within a decade.
Mr. Brown wished his rival well.
“We hope they’re successful because that it brings more attention to fuel cells,” he said. “But if they’re not successful, it is not good for the industry because it looks like it’s just more hype about fuel cells.”