The Economics of the Bloom Energy's "Breakthrough" Fuel Cell

With all the hype today around the release of the "breakthrough" Bloom Energy fuel cell (which has become known as the "Bloom box" and is referred to by Bloom as an "Energy Server"), it's good to find a couple of posts looking at some real details:

Todd Woody, writing for the NYTimes GreenInc blog, has some details on the design of the Bloom Box solid oxide fuel cells from his look inside the Bloom Energy facilities this week. And Lux Research has this post looking at the economics of the Bloom Box, which is a good read.

It appears that the unsubsidized price of the Bloom Box is about $7-8,000/kW so their 100 kW units cost $700,000-800,000 without subsidy. As a fuel cell, it also needs fuel to run, in this case natural gas or another source of methane (such as landfill gas or biogas from anaerobic digesters).

After federal subsidies for fuel cells (they can claim the same 30% investment tax credit that solar gets) and a $2,500 California rebate, and assuming $7/mmBTU price for natural gas, a 100 kW Bloom Box unit generates electricity at 8-10 cents/kWh. That compares favorable to commercial electricity rates in many parts of the country,(average about 11 cents/kWh across US with higher rates in several states, including California, New York and Hawaii) so there could be good market for the Bloom Box in distributed generation applications in a variety of places, assuming federal/state subsidies holds out.

Unsubsidized cost would be 13-14 cents/kWh, with about 9 cents/kWh from the capital costs of the Bloom box and 5 cents/kWh from natural gas costs, according to Luz Research. If natural gas prices rise or fall 50% (gas prices are often volatile), overall price would fluctuate from 11.5-12.5 cents/kWh to 20.5-21.5 cents/kWh. That unsubsidized price is still too high to compete in most markets with retail electricity without subsidy. However, this is the first generation, and if Bloom can bring prices down (and/or natural gas prices are stable/low), there could be a significant market for this fuel cell.

As far as climate benefits, supposedly it generates electricity at 50-55% conversion efficiency. CO2 emissions when running on natural gas would be just under 0.8 pounds/kWh, which compares favorably to electricity from central station coal-fired plants (2 lbs/kWh) or natural gas plants (roughly 1.3 lbs/kWh) and the national average for on-grid electricity (around 1.3-1.5 lbs/kWh). Clearly, though the Bloom Box is still not a zero emissions tech and would only cut emissions by roughly 50% relative to the national average, unless it runs on landfill gas or biogas or hydrogen from electrolysis fueled by zero-carbon electricity (which would be much more expensive as you have to add cost of electrolysis unit, higher cost electricity, and about 30% conversion losses in electrolysis).

It is also worth noting that the average emissions rate of grid electricity in some states is less than the Bloom Box's 0.8 lbs/kWh. According to EPA's eGrid database, that list of states includes Vermont, Idaho, Washington, Oregon, California and New Jersey. However, EPA does not account for imported electricity across state borders, which tends to increase the emissions rates of most of these states. California, for example, has an emissions rate of about 0.65 lbs/KWh according to eGrid - which is notably less than the Bloom Box's emissions rate running on natural gas - but more like 1.0 lbs/KWh when imports of mostly-coal-fired electricity from out of state is factored in (author's calculations). When imports are factored in, this author calculates that average emissions rates for on-grid electricity in Vermont, Washington and Oregon still fall below that of the Bloom fuel cell (but emissions rates vary within each state from utility to utility as well).

Solid oxide fuel cells have notoriously faced challenges with durability, since they operate at very high temperatures, which the Bloom box will also have to overcome to prove profitable. Todd Woddy writes:

In seven months of [pilot test] operations, Bloom has replaced a few fuel-cell wafers, but the machines have otherwise operated without a problem, Ms. Skoczlas Cole [of Ebay] 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.

The advantage of solid oxide fuel cells running so hot is that all that waste heat can potentially be put to good use. When co-generating heat and electricity, solid oxide fuel cells can reach combined efficiencies upwards of 85 percent, which is excellent, but no word yet whether or not the Bloom fuel cell will co-generate heat. At this point, it appears that it does not (particularly given it's use to power data centers and the like, which can't put the heat to very good use; cooling is more of an issue for data centers!). That's a shame, but perhaps another model of the product at some point in the future will be suited to co-generation applications (e.g. to provide process heat to industrial facilities or neighborhood district heating schemes). [Update: commenter Amazingdrx at Grist reminds me that waste heat can indeed be used to provide cooling using the common absorption refrigeration technique (which I should have recalled, since the entire campus at my alma mater, the University of Oregon - Go Ducks! - was cooled using absorption chillers run by our natural gas plant). So the waste heat from these fuel cell stacks should be used to cool the data centers they also power, increasing the efficiency and economics of the system...]

I also hear that it may require zirconium oxide as a membrane (can anyone confirm that?) and zirconium doesn't grow on trees, nor is it processed quickly, which may hamper production volumes.

So is the Bloom Box the solution to all the world's energy problems? Of course not. But could it finally move fuel cells for stationary power generation a big step forward? It looks like the chances are good. Only time, and the tests of the market, will tell...

It's worth noting though that with the idea initially funded through NASA's Mars program and initial product launch only enabled by public deployment incentives, the Bloom Energy fuel cell is another good example of how public investments in technology R&D and deployment can catalyze significant private sector investment, innovation and entrepreneurship to drive forward a new technology with potential for widespread application as costs come down.

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Detroit Goes on a Green Offensive With Plug-in Hybrids

[From Wired:]

Detroit is going on a green offensive with electric plug-in models that can run emissions-free for up to 40 miles -- at about a quarter the cost of gas -- on batteries that draw their juice directly from the grid.

GM's Chevrolet Volt and Ford's HySeries Drive, unveiled as concept prototypes for the first time last month, leapfrog current hybrid designs and could put pressure on Toyota's popular Prius by offering consumers better value [see Green Car Congress write ups here (GM) and here (Ford) for more details on the cars and drivetrains].

Although these cars are not scheduled for production until the end of the decade or later, many experts now believe plug-ins offer the best tradeoffs combination yet in terms of energy efficiency, emissions and practicality.

"Once plug-in hybrids appear, I don't know why 'mere' hybrids would be appealing," said Philip Reed, the Fuel Economy Guide editor for Edmunds. "Plug-in hybrids do everything that hybrids can do but at a lower cost to consumers."

Detroit's troubles run far deeper than next year's or even next decade's models: GM and Ford are struggling with massive pension liabilities and deep-seated labor problems at a time when Japanese rivals are making deep inroads with fuel-efficient models, including hybrids.

[Image: Powertrain of the Chevy Volt E-Flex Concept. The 400 pound Lithium Ion battery pack runs along the spine. The electric motor is mounted in the front near the electric generator that takes over when the batteries are depleted. (Click to enlarge)]

Ford last month announced a record annual loss of $12.7 billion for 2006, the result of painful restructurings that likely haven't ended. Toyota, by contrast, is coming on strong. With record net income of $3.5 billion during its most recent quarter, it is poised to overtake GM as the world's No.1 automaker, in part thanks to prescient bets on fuel-efficient technologies such as the hybrid drive that powers the Prius.

GM and Ford, by contrast, which currently sell hybrid SUVs and trucks, have seen their reputations with consumers take a beating over short-sighted strategies, culminating in GM's portrayal in the movie Who Killed the Electric Car. In a survey by Harris Interactive of consumers rating the 60 most well-respected U.S. companies, GM ranked 57th, while Ford was 55th.

Reed said plug-in hybrids would enable the companies to surpass hybrids by offering more environmentally friendly vehicles. But he added public relations may be the most practical benefit, at least in the immediate future. "The announcement of the plug-in hybrids seems designed to offset that negative publicity. However, the question is whether they really will reach the marketplace."

Plug-in hybrids will be cheaper to own than today's hybrids because they can run on battery power for up to 40 miles before needing to be recharged. The cost of propelling a vehicle using electricity is a fraction of that of gasoline, according to data from the Electric Power Research Institute.

Although the price of electricity and gasoline vary widely by state, EPRI says on average electric power is the equivalent of 75 cents a gallon gasoline, or between one-third and one-quarter of the cost of gas. Plug-in hybrid owners who drive 40 miles a day or more would save at least $900 a year, according to Beth Lowry, GM's vice president of environment and energy. Plug-in hybrid vehicles are expected to cost marginally more than today's hybrid vehicles, but relying primarily on electric power would pay back their extra cost much faster.

Plug-in hybrids are appealing to environmentally conscious people because they do not spew greenhouse gases when utilizing battery power. While the coal and natural gas power plants that would provide the bulk of the electricity would increase their emissions, the net effect would be a significant pollution reduction. Running on battery power reduces carbon dioxide emissions by 23 percent and volatile organic compounds by 92 percent, according to a recent report by the U.S. Department of Energy's Pacific Northwest National Laboratory, or PNNL.

[Image: The Ford HySeries drive. That's the fuel cell on top and the Li ion battery back below. I assume the central portion houses the electric motor. (Click to Enlarge).]

"Once (plug-in hybrids) are out, they will make many other cars obsolete, including today's hybrids," said Andy Frank, a professor of mechanical and aeronautical engineering at the University of California at Davis. Frank, who has been developing hybrid vehicles for more than 30 years, has been granted nine patents for plug-in vehicles and sees them as the inevitable successor to the Prius. Frank built plug-in hybrids that weigh about the same as today's hybrids while offering superior fuel economy.

Plug-in hybrids would also be attractive because they substantially reduce U.S. oil imports, an objective touted by President Bush and many national security experts. Plug-in hybrids would save hundreds of gallons of petroleum per vehicle each year, according to PNL. If 84 percent of the light-duty vehicle fleet were plug-in hybrids (the theoretical maximum that the electric grid could support), the United States could eliminate 61 percent of foreign oil imports, according to the PNL report.

Plug-in hybrids would likely find an instant market with municipal fleets across the country. The U.S. Conference of Mayors has endorsed the technology, and many cities have joined with utilities in the Plug-In Partners (.pdf) consortium to promote their adoption.

Honda and Toyota are also considering production plug-in hybrids, while DaimlerChrysler is testing 20 plug-in Dodge Sprinter vans to learn more about the technology's commercial potential.

Hybrid cars, despite taking years to pay back their premium through fuel savings (if at all), have sold well for Honda and Toyota, which plans to increase hybrid vehicle production by 40 percent in 2007. The Energy Policy Act of 2005 instituted a federal tax credit that can refund consumers most of the additional cost of buying a hybrid.

In 2007, GM will introduce its first two hybrid sedans, the Saturn Aura Green Line and Chevrolet Malibu, eight years after the first hybrid sedans were sold in the United States. GM is aggressively pursuing plug-in hybrids "because of the tremendous potential to significantly increase fuel economy," according to spokesman Brian Corbett. He said GM is developing plug-in hybrids now so "when the advanced batteries are ready for production, our plug-in vehicles should be ready, too -- which means we'll be ahead of the curve."

Lowery said there will still be a place for hybrids and the market will support both types of vehicles. She said plug-in hybrids are appropriate for urban residents with shorter commutes, while larger hybrids serve people who take longer trips and "who want a certain class of vehicle but with added fuel economy."

However, the current limitations of battery technology could stall the commercialization of plug-in hybrids. Manufacturers of plug-in hybrid vehicles, including GM and Ford, are pinning their hopes on lithium-ion battery technology to provide the 20-plus miles of vehicle range without a significant increase in weight and cost.

Dave Alexander, a senior analyst at ABI Research, believes battery technology will not advance enough in the next two or three years to suit commercially viable plug-in hybrids. "The first plug-in hybrid vehicles will have more limited range than we have been led to believe," Alexander said. Cost could also be a factor as Alexander estimates that lithium-ion batteries for a plug-in hybrid currently cost about $10,000.

[This article in the MIT Technology Review is much more optimistic than that, arguing that battery technology is sufficient to get a working prototype on the road by the end of the year. Given GM's existing contracts with Cobasys/A123 and Johnson Controls/Saft for Li ion battery packs, as well as the progress being made by ZAP, Pheonix Motorcars, Tesla Motors and others outside of Detroit to commercialize Li ion-powered full EVs, I find GM's skepticism about battery technology a bit pessimistic as well.]

They're growing by several hundred thousand units each year, but hybrid vehicles made up only about 1.6 percent of the U.S. market in 2006, according to Alexander. He said because of the battery challenges "we won't see a big impact on hybrid sales" when plug-ins first go on sale.

Nick Cappa, a spokesman for DaimlerChrysler, is also skeptical, saying plug-in vehicles would require "a significant leap in battery technology." He said his company has not committed to commercializing the technology because of the concerns about battery weight and reliability.

Interest in plug-in hybrids could also be limited to people with garages or other ready access to charge their vehicles through electric outlets. Consumers recharge the vehicle's batteries -- preferably during off-peak hours -- by plugging the vehicle into a standard 110-volt outlet. After the batteries are depleted, another energy source such as petroleum, alternative fuel or a hydrogen fuel cell takes over propulsion.

Plug-in hybrids "may not be for you if you live in an apartment or condo," said Sherry Boschert, the author of Plug-In Hybrids: The Cars that Will Recharge America. Outlets must be added to parking garages to provide public charging stations, and a metering system to charge vehicle owners would have to be developed by power companies, according to Boschert.

Power companies in states like California, where demand occasionally outstrips grid capacity, would have to find ways to discourage or prevent cars from being recharged during peak demand periods. Until the infrastructure is created "it is going to be a bumpy ride" for plug-in hybrids, Boschert said.

Plug-in hybrids will probably cause confusion in the market as the distinction between electric and hybrid vehicles will be obliterated, Alexander said. "You can't rigidly segment the market" so vehicles will be competing with one another, he said.

Auto manufacturers are adding to the confusion as well, Alexander said. General Motors describes the Chevrolet Volt as an electric vehicle, even though it uses a gasoline generator to recharge the batteries. Most companies agree on the term "plug-in hybrid" to indicate a vehicle with multiple power sources that runs part time on externally rechargeable batteries.

Plug-in hybrids would also likely temper, but not eliminate, interest in electric vehicles, according to Edmund's Reed. Tesla Motors has a waiting list for its $100,000 electric car, and some consumers would want to buy vehicles that avoid using fossil fuels altogether, Reed said. However, he added, "Plug-in hybrids have clearly broken from the pack" in becoming the front-running technology as cleaner and less consuming vehicles.

[More pictures of the Volt at Wired here.]


There'll be more on the promise of plug-in series hybrids soon. I promise....

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How to Live With $5.00 Gas - Japan a Model of an Energy Conscious Society

[From the New York Times:]

In many countries, higher oil prices have hurt pocketbooks and led to worries about economic slowdowns. But here in Japan, Kiminobu Kimura, an architect, says he has not felt the pinch. In fact, his monthly energy bill is lower than a year ago.

A reason is his new home fuel cell, a machine as large and quiet as a filing cabinet that sits in front of his house and turns hydrogen into electricity and cold water into hot — at a fraction of regular utility costs. But even with the futuristic device, which is available for now only in Japan, Mr. Kimura has not let up on the other shortcuts that leave him unscathed by last year’s oil squeeze.

Energy-efficient appliances abound in the many corners of his cramped home. There is the refrigerator that beeps when left open and the dishwasher that is compact enough to sit on the kitchen counter. In some homes, room heaters have a sensor that directs heat only toward occupants; there are “energy navigators” that track a home’s energy use.

And then Mr. Kimura, 48, says there are the little things that his family of four does to squeeze fuel bills, like reusing warm bath water to wash laundry and bicycling to buy groceries.

“It’s not just technology, it’s a whole mind-set,” said Hitoshi Ikuma, a specialist in energy issues at the Japan Research Institute. “Energy conservation is almost an obsession here among government, companies, regular citizens, everyone.”

Japan is the most energy-efficient developed country on earth, according to most specialists, who say it is much better prepared than the United States to prosper in an era of higher global energy prices. And if there is any lesson that Japan can offer to Americans, they say, it is that there is no one fix-all solution to living with oil above $50 a barrel.

[Image: Japanese homes use less than half the energy, on average, of an American home. Click to Enlarge. (Source: New York Times]

Rather, as Mr. Kimura shows, it is a combination of many things, from the most advanced technologies to the simplest frugality in everyday life — and an obsession with saving energy that keeps his family huddled in a single heated room during winter.

Japan tops most global comparisons of energy efficiency in wealthy nations. Its population and economy are each about 40 percent as large as that of the United States, yet in 2004 it consumed less than a quarter as much energy as America did, according to the International Energy Agency, which is based in Paris.

Japan’s obsession with conservation stems from an acute sense of insecurity in a resource-poor nation that imports most its energy from the volatile Middle East, a fact driven home here by the 1970s shocks. The guiding hand of government has also played a role, forcing households and companies to conserve by raising the cost of gasoline and electricity far above global levels. Taxes and price controls make a gallon of gasoline in Japan currently cost about $5.20, twice America’s more market-based prices.

The government in turn has used these tax revenues to help Japan seize the lead in renewable energies like solar power, and more recently home fuel cells. One way has been a subsidy of about $51,000 for each home fuel cell. This allowed Mr. Kimura to buy his cell last year for about $9,000, far below production cost. His cell, which generates one kilowatt per hour, provides just under half of his household’s electricity, and has cut his electricity bill by the same amount, he said.

The device works by converting natural gas into hydrogen, which the fuel cell then uses to generate electricity. Heat released by the process is used to warm water.

[Image: Kiminobu Kimura of Tokyo uses a home fuel cell, a machine that resembles a filing cabinet and sits in front of his house. (Source: New York Times]

The first two fuel cells were installed in the prime minister’s residence in April 2005. Since then, some 1,300 have been sold, according to the trade ministry. The ministry forecasts that as sales pick up, production cost will fall to about $5,000 by decade’s end. Experts say that Japan is far more willing to embrace new technologies than the United States, where opposition to hydrogen storage tanks in Tarrytown, N.Y., forced General Motors to scrap an experimental filling station for fuel-cell cars last year.

Higher energy prices have also created strong domestic demand in Japan for more conventional and new energy-saving products of all sorts. That has spurred the invention and development of things like low-energy washing machines and televisions and high-mileage cars and hybrid vehicles, experts say. Japanese factories also learned how to cut energy use and become among the most efficient in the world.

Companies like Mitsubishi Heavy Industries are now reaping the benefits in booming overseas sales of their highly efficient electric turbines, steel blast furnaces and other industrial machinery, particularly in the United States. The environment ministry forecasts that exports will help turn energy conservation into a $7.9 billion industry in Japan by 2020, about 10 times its size in 2000.

“Japan has taught itself how to survive with energy prices that are twice as high as everywhere else,” said Kouichi Iwama, an economics professor at Wako University who advises the Japanese Parliament on energy policy.

But with a few exceptions like cars, many of Japan’s efficient consumer products have yet to make their way overseas, according to corporate executives. Partly, that is because while more energy-efficient, they are also more expensive. But another reason is that many appliances here are designed for Japan’s conservation-conscious lifestyle, which includes things like smaller homes and a lack of central heating.

Mr. Kimura says he, his wife, and two teenage children all take turns bathing in the same water, a common practice here. Afterward, the still-warm water is sucked through a rubber tube into the nearby washing machine to clean clothes. Wet laundry is hung outside to dry or under a heat lamp in the bathroom.

“In Japan, it’s natural to think about saving energy,” Mr. Kimura explains. “We learned not to waste from our parents, who had learned it from the hardship of the war and after,” he said.

The different approach is also apparent in the layout of Mr. Kimura’s home, which at 1,188 square feet is about the average size of a house in Japan but only about half as big as the average American one. The rooms are also small, making them easier to heat or cool. The largest is the living room, which is about the size of an American bedroom.

During winter, the entire family, including the miniature dachshund, gathers here, which is often the only room heated. Like most Japanese homes, Mr. Kimura’s does not have central heating. The hallways, stairwell and bathrooms are left cold. The three bedrooms have wall-mounted heaters, which are used only when the rooms are occupied, and switched off at night.

The living room is kept toasty by hot water running through pipes under the floor. Mr. Kimura says such ambient heat saves money. He says the energy bill for his home is about 20,000 yen ($168) a month. Central heating alone would easily double or triple his energy bill, he says.

“Central heating is just too extravagant,” says Mr. Kimura, who is solidly middle class.

The government has tried to foster a culture of conservation with regular campaigns like this winter’s Warm Biz, a call to businesspeople to don sweaters and long johns under their gray suits so that office thermostats could be set lower. It has also encouraged development of energy-saving appliances with its Top Runner program, which has set goals for reducing energy use.

Products that meet the goals are awarded a green sticker, while those that fail get an orange sticker. Japan’s trade and industry ministry says consumers heed the stickers, pushing manufacturers to raise the energy efficiency. The average air-conditioner now uses two-thirds less electricity than in 1997, and the average freezer 23 percent less, the ministry said.

The savings add up. The average household here used 4,177 kilowatt- hours of electricity in 2001, the most recent figure, according to the Jyukankyo Research Institute in Tokyo. In the same year, the average American household consumed more than twice that, or 10,655 kilowatt hours, according to the Energy Department.

“The Japanese use less energy, there’s no doubt about that,” said Alan K. Meier, a scientist specializing in energy efficiency at Lawrence Berkeley National Laboratory in California. “Some of it is more efficient appliances, but these are only part of a different lifestyle and one that’s more energy-conscious.”

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