I’ve been thinking a bit about Bloom Energy’s announcement last week that it wants to sell electricity as a service as a way to get its Bloom Box fuel cell into companies. The idea is that Bloom, as part of a service called Bloom Electrons, would sign 10-year power purchase agreements with the customer — i.e. the customer would agree to pay a certain amount per kilowatt-hour over 10 years in exchange for having Bloom plunk its fuel cells into their facilities and produce electricity on-site using natural gas. Bloom would presumably earn back its initial capital investment after a few years and the customer would be guaranteed a stable power rate that, in some jurisdictions anyway, is lower than what they pay today. That is certainly the case in California, where high electricity prices and generous subsidies make this approach a good fit. Bloom also handles all maintenance, another bonus for the customer.

Bloom is obviously betting that low-cost natural gas, thanks to the shale-gas boom, is going to be around for awhile. And the model is not unlike what we see today with many solar projects — a developer such as SunEdison, for example, will sign long-term projects at no upfront cost to the customer, which pays for the electricity it receives, not the equipment on its rooftop. The difference is that Bloom has to factor in the future cost of natural gas.

It will be interesting to see the uptake, and wouldn’t it to be nice to see this tested out in Ontario? Companies such as Enbridge should be kicking the tires on this, not sitting back and waiting to see what happens.  Bloom says it eventually expects the Bloom Electrons service to represent half of its revenues, and that doesn’t surprise me.

Now, one question: is this a green energy offering? Kind of. Burning natural gas onsite for electricity production (if you capture the waste heat) is more efficient than burning it in a power station and transmitting long distances via wires. Burning natural gas in a Bloom Box instead of a standard microgeneration system is even more efficient and eliminates nearly all smog-forming emissions. But having a Bloom Box in a community or a large building, such as a data centre, opens up the possibility of using biogas instead of natural gas. There are other benefits as well, if not green in nature. The Bloom Box can sell surplus electricity to the grid, creating a kind of distributed backup system that makes the grid more stable.

Bloom still has a lot of work ahead of it, and it’s not the only fuel-cell maker heading in this direction, but it’s at least trying to be creative and its high profile is getting people thinking how we can do things differently, and that’s a good thing.

There’s much hype around the 60 Minutes segment Sunday night about Bloom Energy and its miraculous Bloom Box. I’m scratching my head wondering why this is such a big deal, so maybe someone can enlighten me. This to me seems like a fancy solid-oxide fuel cell system. It’s still super expensive, though Bloom claims that it can get the cost down to $3,000 (U.S.) for a residential unit. It still relies on fuel, such as natural gas, meaning it still produces CO2 emissions. Yes, far less emissions than burning that natural gas in a power plant and sending it via transmission lines to your home, but it’s not the emission-free miracle that 60 Minutes is touting. I didn’t hear much talk on the segment about whether the Bloom Box has a dual purpose: that is, electricity generation and heat production. And while it may replace the need for electricity lines coming into your home, you still need a natural gas line. In this sense, I can see tremendous interest from natural gas utilities looking to compete against electric utilities (a good parallel is how cable and phone companies over the years ended up offering the same services as technologies converged).

Perhaps there’s more to this story that wasn’t revealed by 60 Minutes, but there are many companies out there working on this kind of fuel cell so I don’t see what’s particularly special or unique about Bloom Energy. More details are expected to be released on Wednesday, however, so maybe then my questions will be answered.

In the meantime, would someone out there please enlighten me?