Solar Vs. Fuel Cells

 Solar Vs. Fuel Cells

Bloom Energy today formally unveiledits energy server, an industrial solid oxide fuel cell that can convertnatural gas or other hydrocarbons into electricity pretty much ondemand. 

And in the process, the company has ignited a debate over which ofthe alternatives to coal, nuclear and centralized natural gas plantsmight be best. Can we answer it today? No-one of the pivotal factorswill be how Bloom’s servers (formerly known as Bloom Boxes) performover time. Board member Colin Powell said at the unveiling that thecompany doesn’t have twenty years of user data.

But we can speculate and compare. And here are some of the key things to keep an eye on.

Versatility and Up -Front Cost: A 100-kilowatt Bloom server array costsaround $700,000 to $800,000, or $7,500 a kilowatt, after incentivesthat cover around 50 percent of the costs. The company hopes to havehome versions that generate a few kilowatts and cost about $3,000 inten years, but they don’t exist now.

Bloom, however, doesn’t scale down yet. It sells its 25 kilowattboxes four units at a time. Home and small businesses need not applyyet. Solar systems span the kilowatt and megawatt range. Ergo, when itcomes to financing and flexibility, solar wins for now.

Can fuel cells scale down? Yes. Panasonicstarted selling home fuel cells in Japan last year that generate around1 kilowatt, not enough to power a complete household, for $30,000before incentives, or $15,000 if you factored in U.S./Californiaincentives. ClearEdge Powerhas a 5 kilowatt fuel cell that costs $56,000 and drop to the $30,000to $25,000 range after incentives. (Side note: Bloom’s fuel cellproduces mostly electricity and a little heat while heat consists ofhalf or more of the power from the Panasonic and ClearEdge fuel cells.Electricity is more valuable than heat so for Bloom to be equivalent inprice or less than these guys would be a victory for Bloom.) We’reguessing Bloom is aiming for around $1,000 a kilowatt. Ceres Power in England will come out with a fuel cell made in part with diesel components next year.

Energy costs: CEO and Founder K.R. Sridhar said theBloom server will produce power for 9 to 10 cents per kilowatt hourafter incentives in California. This price includes service,maintenance, gas and all of the other costs associated with running it.Commercial solar installations in California, when incentives andexternal costs are added, generate power for around 10 cents a kilowatthour, according to Shayle Kann at GTM Research. Residential solargenerates power for around 19 cents a kilowatt hour and utility scalesolar costs around 11 cents a kilowatt hour. Cutting edge wind turbinescan generate power for costs five cents a kilowatt hour afterincentives, according to the American Wind Energy Association. Kannsays on average wind is a little less than solar.

Wind, thus, still wins this contest and solar andBloom are about tied. Bloom server buyers will have to contend withfluctuating gas prices: the box does not work if you don’t put gas intoit. If methane and biogas rise in price, so will the cost of runningthe box. Buyers, however, can likely insulate themselves with long-termgas contracts.

Cost reductions: This is a big question mark. Solarand wind are somewhat mature technologies. Nonetheless, incrementaladvancements-better solar racking, cheaper thin films, more efficientturbines-continue to bring down the cost of both solar and wind. Bloomis just starting. Three years ago, the same box that now produces 25kilowatts of power only produced 5 kilowatts. Scott Sandell, a Bloomboard member and a partner at NEA, said the costs for Bloom have gonedown 25x in a few years.

Bloom, therefore, may have an advantage because costs always dropthe fastest in the beginning. On the other hand, Bloom is outnumbered.Thousands of engineers in various segments of the solar industry areworking on dropping those costs. Do you believe in individual genius orcrowdsourcing? That is the dynamic at play here and this will be one ofthe more interesting races to watch.

Maintenance. Solar wins here. Solar panels requirea minimum of maintenance. Dust them occasionally and wipe off the snowand you are done. Bloom servers will be monitored closely by theirinitial buyers. The servers also contain fans and other mechanicalobjects. More handholding and repairs seem inevitable.

One of the big hurdles that Bloom will have to cross is the reliability of the ceramic/zirconiumplates inside the fuel cell. These plates, which convert gas toelectricity, must operate in an 800 Celsius environment withoutbecoming distorted or corrupted. User data will be heavily scrutinized.Sources say that the plates have a lifetime of five years: replacementat this pace is contemplated in the 9 to 10 cents a kilowatt hourprice. If replacement occurs at a faster rate, it could throw off thecosts.

Warranty. Solar systems have warranties that last 20 years or more. Bloom currently offers a 10 year warranty. That will raise eyebrows.

Testing and certification. Solar and wind both have an advantagehere. Underwriters’ Laboratory and hundreds of utilities have testedand tinkered with photovoltaic panels and wind turbines for years.Getting a solar field approved mostly revolves around obtainingfinancing. Bloom will have to go through the proctology exam of utilityreliability testing. That could take a few years. On the other hand, ifBloom passes these tests well, sales will zoom.

Carbon emissions. Solar and wind win again. Ittakes about four years to work off the carbon footprint of a solarpanel. The Bloom server continually emits carbon dioxide. The Bloomserver emits about half of the carbon dioxide that would be generatedif you bought power from a power plant, but it’s still carbon dioxide.Consumers can reduce their carbon footprint by stoking the box withbiogas, but biogas remains an exotic substance. Most of the industrialgas sold and shipped in pipelines in the world comes from wells deep inthe ground, not landfills or manure digesters.

Bloom’s patents discuss converting the waste carbon dioxide into amethane-like fuel by running the carbon dioxide through the fuel celland adding water. It’s a fascinating, but extremely challenging idea.Effectively, that would be like making energy from Gerolsteiner bubblymineral water and some power. In today’s press conference, Sridhardownplayed the carbon dioxide-to-fuel idea, which makes it sound likethe idea might be on the far back burner. Still, Bloom represents astep forward compared to power plants.

Availability: This is Bloom’s biggest sellingpoint. The box can produce power 24 hours a day in a completelypredictably fashion. Solar panels only produce during the day and windturbines are only active about 30 percent of the time. Worse, windturbines in many areas generate most of their power at night.

Storage: Advantage Bloom again. Fuel cells are bytheir very nature electricity storage devices. Power doesn’t get madeuntil gas gets released into the fuel cell stack. General Electric andothers are trying to build sodium or lithium battery packs to storepower at wind and solar fields but these are in the experimental stage.

Sridhar also mentioned that in about ten years, Bloom will addplumbing and other technology to its servers so that the boxes canconvert water into hydrogen for more energy storage. Pulling this offwill require electricity from an outside source, preferably from solarpanels. Don’t be surprised to see them team up with Sun Catalytix, anMIT spin-off with a catalyst for splitting water.

Competition: Bloom will have to face an array ofcompetitors: General Electric, Siemens, Philips, Areva, you name it.The relatively small company will have to run fast to stay ahead ofindustrial giants or else face getting acquired. Solar and wind havealready gone through this process. Solar and wind companies again canalso license ideas and leverage partnerships. Bloom right now is sortof on its own.

Manufacturing footprint: the solar industrycontinues to work off a glut of excess factory capacity. Bloom needs tobuild its up. Solar, thus, wins for now, but for painful reasons.Although Bloom has raised around $400 million, it will need to raisemore to build up factory capacity. As other companies have found,finding financing still remains tough.