R-Squared Energy Blog

Pure Energy

A Day Late on the Bloom Box

I wasn’t going to write anything on the Bloom Box, but people keep writing to ask what I think. My initial reactions were “What a lot of hype” and “I have seen this all before.” I also wondered why it is that people keep falling for these kinds of stories.

But fuel cells aren’t my specialty, and as such I won’t weigh in on the relative technical merits of this design over another. I know that fuel cells have been very expensive for many years, and the initial projections I have seen over the Bloom Box are that they will be very expensive.

Lots of people with expertise in fuel cells have weighed in on the matter, though. If you want a more technical assessment, see the National Geographic story:


Bloom Box Launch Is “Big Hype”–Invention Nothing New?

The Bloom Box—an as yet unbuilt in-home “power plant” designed to be about the size of a mini-fridge—could provide cheap, environmentally friendly electricity to U.S. households within ten years, according to Bloom Energy. Or not.

But fuel cell experts say that, based on the information the company made public today, the Bloom Box technology is not revolutionary, nor is it the cheapest or most efficient fuel cell system available.

“It’s a big hype. I’m actually pretty pissed off about it, to be quite honest,” said Nigel Sammes, a ceramic engineer and fuel cell expert at the Colorado School of Mines. “It really is nothing new. Go to any [solid oxide fuel cell] Web site and you’ll see the same stuff.”

Those were my initial feelings as well, and here is why I say we have seen this before. The year was about 2001, and I was younger and a bit more subject to being influenced by massive hype. There was a company called Plug Power (still in existence today; stock symbol PLUG, but they are flirting with getting themselves delisted) and they came out with pretty much the same story.

In fact, if you go back into Google’s news archives on Plug Power, you can see a histogram that shows the news stories on Plug Power spiking in 2000, remaining fairly strong until about 2005, and then falling to lower levels in the past few years.

The buzzwords used to describe Plug Power were the same as those used to describe the Bloom Box. The technology was called revolutionary, disruptive, and a real game-changer. There was a prediction made that most people would have Plug Power’s fuel cells in their homes by 2010 and we would all be locally producing and using our electricity in a refrigerator-sized box.

What happened? Plug Power’s stock soared to $2 billion on the hype at a time when investors would bid up companies that had no earnings but incredibly high growth projections. It just so happens that hype can lead to those growth projections (a hard lesson for me that permanently changed my investing style), and what happened was that reality eventually caught up with the hype.

Plug Power, like Range Fuels from my previous essay, could not deliver on the hype. They couldn’t deliver cheap fuel cells, and so they didn’t get the market penetration many had (unreasonably) expected. Their valuation came crashing back down to earth. Today Plug Power is worth about $70 million, or about 96.5% less than it was when I was following the story.

Bloom Energy looks like both Plug Power and Range Fuels to me. It is a company that is attempting to produce energy cheaper than all those who came before using known technology – and using hype to attract investors. And if Bloom Energy fails to deliver, they will learn just like Range Fuels that hype is a two-edged sword.

Advertisements

March 2, 2010 - Posted by | Bloom Energy, hype, investing, range fuels

3 Comments

  1. Aneutronic nuclear fusion reactor could be a new breakthrough towards a highly efficient means of producing electric power without any type of waste.

    Comment by Robert | March 9, 2010

  2. What a crock of sand this whole things is. They have put all their effort into some very slick marketing, to sell people something for $800,000, that you can buy elsewhere for less than $100,000.They get 64% efficiency of hydrogen to electriicty, but have the throw away the carbon in natural gas to do so. so the overall energy efficiency is 41%.You can buy, today, specialised natural gas engines (such as GE Jenbacher) that will give you 40% gas to electricity efficiency, fit in the same size box, and cost about $1000/kW instead of Bloom's $8000. Yes they are a little noisier, and yes you have to change the oil, but for an 86% discount, I'll take that.WalMart and Google have money to waste on things like this, to keep their profile green, but for any real business this would put them out of business. Just to make it worse, there is a 30% subsidy. This represents a transfer of wealth from the people to Wal Mart and Google, the two companies on earth that are least in need of it. If they are truly doing this for the principle of being green, they would reject the subsidy. It is another case of so called "clean tech business" extracting money from the gov, and taxpayers, rather than finding ways to make their business sustainable.Wal Mart and Google, who have made their money by providing goods/service that people actually need, should reject this product, and this business model out of hand.

    Comment by Paul | March 11, 2010


Sorry, the comment form is closed at this time.

%d bloggers like this: