Energy Innovation: How Can We Keep It Blooming

Bloom Energy’s recent announcement of their fuel cell-based “energy server” drew lots of attention from the press, and for good reason. It set some nice marks for performance, and, if successful, will likely be the first of a new market category of energy products.

At Sun we looked at this technology a couple of years back. The use case was as the backup for a datacenter, and to switch to it as primary power when grid power was more expensive (e.g. mid-day in the summer during peak AC time). In this example the technology would enable us to change our view of backup power, from something we only use in emergencies to an energy insurance plan against rising costs. If I recall the only issue was the number of the units that would be required to support a MW or higher datacenter, but improvements in their technology have likely reduced this problem in the meantime.

Beyond work applications, I can’t wait to see the home version of this technology, providing electricity and hot water from a single process. Hopefully the folks at Bloom or one of their competitors is working on a version for that!

But putting my nerdish desires aside, its useful to use this milestone to look at the environment in which the Bloom technology came into being. In this case there are two interesting aspects.

The first is the story of how this product came into being, which is interesting because it highlights all of the players required to get an interesting technology to market. It starts with the US government (as many interesting technologies do), who needed a better way to create oxygen on NASA missions. While this fuel-cell design didn’t meet those needs, K.R. Sridhar, now CEO of Bloom, realized that the fuel cell could also use oxygen as a source and be a potentially interesting source of electricity. Enter Kleiner-Perkins and the venture capital community to fund the effort, followed by key silicon valley innovators looking to try something new to lower their power bills and green their energy supply. Finally, the federal government, accompanied by the State of California, returns to the picture with incentives that help make the technology cost competitive during the early phase as it ramps up.

Every interesting energy technology may not follow this exact same road, but this story is a great demonstration of the type of involvement from both the public and private side that is required to get something to market at a reasonable initial cost. Take any one of these actors out of the story, and its not clear that the press has much to celebrate.

Its also important to recognize that, despite its Hollywood feel, this story wasn’t pre-scripted. Things fell into place as the story unfolded, and at each stage there could have been unforeseen roadblocks that stopped the story before the happy ending. In other words, we’ll have to be willing to let lots of these stories play out, understanding that not all will end happily. This is especially important for the federal government’s role, which needs to be repeated in some form in every one of these stories.

The second thing I find interesting about the Bloom Energy story is that the technology isn’t perfect. It’s not cheaper than the electricity from your wall socket, and it’s actually not even carbon-free. In fact, powered by natural gas the CO2 content of the power is around 0.77 pounds per kWH. While this is a radical improvement over grid power in a coal-dominated state like CO or WY (at around 2 lbs/kWH), its in the ballpark of CA grid power (Jesse Jenkins compares in his Bloom article). But overall its roughly half the CO2/kWH of the US national average, and that’s a good step forward.

Our collective reaction to this technology could have been different than it was. We could have said “Hey, this is still using fossil fuels”. We could have said “This still produces CO2, its not a clean technology”. We could have said “This technology isn’t cost effective today, why are we supporting it with our tax dollars?". And while all of these statements are, at their core, true, we would have been missing two key points: 1) we have no path to perfectly clean technology (including solar cells and wind farms, which are built on the backs of fossil fuels), so will need to rely on steps toward that ideal, and 2) any new technology is being measured against an energy infrastructure that has been fine-tuned for over a century, with the benefit of massive public and private innovation investment.

The fact that a new technology can beat grid energy on emissions and get in the ballpark on cost is a great accomplishment. We need to recognize that we had the right reaction here, and make sure we are ready to celebrate the next technology in a similar manner.

We need dozens, or maybe even hundreds of examples like Bloom Energy to get to the energy future we need from a climate and economic perspective. The Bloom story needs to serve as a reminder of all of the parts that go into making a story like this happen, and the way in which we need to evaluate and support these early stage efforts to transform our energy infrastructure.