## Tuesday, February 23, 2010

### Is the Bloom Energy Payback Period 15 Years?

Because of the stealth approach that the company and its financial backers have chosen, this analysis is as good as any. From The Oil Drum (Australia):

...One of our staff members, Rembrandt Koppelaar, made the following rough cost calculations of the return on investment for the Bloom Box, excluding the cost for grid connection. Based on his calculation, it takes 15 years to get back the investment cost. (The time would be longer, if the cost for grid connection were included.)

Conservative assumptions based on the video: (All amounts in US \$).

- \$800,000 for a Bloom Box that generates power for 100 American Households
- American household energy usage is 10,000 kWh per year (10,600 in 2001)
- Bloom Box hence generates 1 million kwh per year at an investment cost of \$800,000
- Production costs US for electricity from natural gas for residential use is \$ 0.10 per kwh (http://www.eia.doe.gov/cneaf/electricity/epm/table5_3.html)
- costs for 1000 cubic foot of natural gas for residential use is 12 dollars (http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm)
- 1 cubic foot of natural gas has an energy content of 1,034 BTU
- 1 kWh is equivalent to 3413 BTU spent in an hour
- Bloom Box can turn natural gas into electricity at an 80% conversion efficiency

Calculation:

- Costs per year for 1 million kWh from natural gas from centralized power sources is \$100,000.
- 1000 cubic foot of natural gas gives 1,034,000 BTU which can be converted at 80% efficiency, hence 827,200 BTU of power which is equivalent to 242 kWh, costing \$12 for the fuel. So 12/242 = \$ 0.05 per kWh incorporating fuel costs only. Which amounts to a total fuel cost of \$50,000 for 1 million kWh.

At an investment cost of \$800,000 dollars it would take approximately 15 years (800,000 / 50,000) to pay back investments, excluding the costs of connecting to the grid.

The grid tie would presumably providing considerable services--including metering the electricity, doing the billing, and maintaining the grid wiring, so the cost would not be insignificant.

The text below repeats an Oil Drum post on the cogeneration / fuel cell industry from March 2008 - Cogeneration At Home: Ceramic Fuel Cells And Bloom Energy.

Cogeneration At Home: Ceramic Fuel Cells And Bloom Energy

The Engineer-Poet recently had a post on The Cogeneration Stopgap at the Oil Drum, which looked at how the combination of cogeneration (generating combined heat and power - CHP - using natural gas) and heat pumps could be used to heat North American homes much more efficiently and extend the life of North America's dwindling natural gas reserves for a period of time while houses are retrofitted to make them more energy efficient and natural gas use is replaced with electricity. The only example of cogeneration technology touched on in the article was from Climate Energy, whose CHP unit is made by Honda.

An Australian company working in this area called Ceramic Fuel Cells was in the news recently after landing a \$240 million deal with Dutch energy company Nuon to supply 50,000 CHP units by 2014. The company still needs to meet a number of commercial requirements set by Nuon - in particular improving the durability of the cells from two years to four.

The company is hoping that production will begin by June 2009 in a new €12.4 million factory in Heinsberg, Germany, which aims to produce 10,000 2 kW units per year. The cells are expected to emit 60% less carbon dioxide than traditional combustion generators. The company is also partnering with Britain's Powergen, Germany's EWE and Gaz de France.

Ceramic Fuel Cells

Ceramic's fuel cells have been under development for several years, listing on the ASX in 2004 and the AIM shortly after. The company specialises in solid oxide fuel cells, which convert natural gas (and presumably biogas) into power and heat without burning the fuel. The cells convert about 50 per cent of the energy in the fuel to electricity - traditional gas-fired power stations manage around 30 per cent - with another 35 per cent of the potential energy captured as heat from the catalytic process.>>>MUCH MORE

If you have time the comments are always interesting.

Previously:

what the hell happened to kleiner perkins? (john doerr et al [gore])

al gore: "there are a lot of great investments that you can make"

Can Al Gore Be A Profiteer Without Profits?

Al Gore: Venture Capitalist ( Kleiner, Perkins, Caufield & Byers)
A major piece from Fortune
Clean energy will make Gore rich
A good follow-up piece from the co-author of the 3400 word(!) Fortune exclusive on Mr. Gore and Kleiner Perkins...
More on Al Gore, Venture Capitalist

John Doerr as Presidential Advisor on Climate and Economics

Psst: Do You Want to Know the Future of Renewable Energy Investing?

Why Venture Capitalists Don’t Want You to Have a Sex Life

Carbonista*: "Gore’s Dual Role: Advocate and Investor "