Monday, April 11, 2011

Bloom Energy Plays the Subsidy Game Like a Pro

Greentech has been dogged on the Bloom story.
Ever since the appearance on 60 Minutes in February, 2010 Greentech has been asking the tough questions. Here's the latest:

Bloom Energy and its customers received $218.5 million in subsidies in 2010 from California’s SGIP program. 
You can't fault a company for using government subsidies, politics, and politicians to their advantage. Corporations are in the business of maximizing shareholder value and whatever they do, within the bounds of the law, is fair play. Oil and gas companies have done it for a century. Now greentech companies are doing it and they are becoming adept at the game.
Bloom Energy (although debatably greentech) is a high-profile fuel cell manufacturer, and the firm is using all of the tools at its disposal -- including, in this case, California's SGIP subsidy --  to advance its business.
The SGIP (Self-Generation Incentive Program) is a subsidy established by California's PUC to support existing and emerging distributed energy resources -- providing one-time, upfront rebates for distributed energy systems installed on the customer's side of the utility meter. 
Qualifying technologies include wind turbines, fuel cells, and associated energy storage systems.
Bloom and its customers received $218.5 million in subsidies in 2010 from the SGIP, dominating the program, according to an article in the Sacramento Bee. A total of $327.7 million was awarded by the program in 2010. As we noted in January, total subsidies can climb to $8.25 a watt when biogas supplements and all federal and state programs are added.
The CPUC claims that these funds benefit all ratepayers whose utilities have a reduced need to invest in expensive transmission and distribution infrastructure.

As of December 31st, 2008, the SGIP had over 1,299 on-line projects and over 337 megawatts of rebated capacity. Bloom is not the only fuel cell firm to avail themselves of this subsidy -- ClearEdge Power, Fuel Cell, and UTC Power have gotten their share, as well.

Utility customers pay for the program through a charge on their electric bills. PG&E's residential customers pay about $5.00 per year, industrial customers pay an average of $3600 per year, according to the CPUC. The fees generate more than $80 million per year....MORE
Previously (a lot of these posts link to Greentech)
Bloom Energy on 60 Minutes: "Can You Believe the Hype" (BLDP; FCEL; PLUG; GE; SI)
Is the Bloom Energy Payback Period 15 Years? 
"If Bloom takes off, it could be a disaster for the costume jewelry industry." and "10 Fuel Cell Startups Hot on Bloom Energy’s Trail" 
The Company you Keep: "Bloom, Fisker and Serious Materials Raising Cash from Advanced Equities" 
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"
count the Kleiner backed co's.