Is Bloom Energy just hype?

Bloom Energy came out last Sunday with a spiffy name, and a bunch of promises, but it seems to me their numbers aren't quite stacking up. Their promise of "payback" seems completely made out of thin air.

First lets look at the natural gas aspect of this. The Bloom Device uses about 2/3 of an MMBtu per hour to produce 100 kw of electricity. If you are a utility that is buying huge quantities, that's only 2 cents per kwh. For industrial you will be closer to 3 cents per kwh, but for residential customers, it will be about 7 cents per kilowatt hour at today's prices. Just that last number pretty much kills the idea of ever getting a Bloom into your house. Unless you are in California (or Texas because Texas' electricity comes mostly from natural gas) your utility cost will be cheaper than owning one of these boxes.

Second, lets look at the payback. I don't understand how the device can pay for itself in so little time. Assuming that the Bloom is free to run, and you are in California, and you are paying residential prices for electricity, it will take about 7 years to pay back. However, when you throw in the cost of running the Bloom, it jumps out to 9 years. Throw in cheaper cost of electricity to large consumers you are looking at 12 years. Take it Alabama where electricity is only 8 cents to large customers and it won't pay back for over 40 years.

Nuclear power plants cost only about $4000 per kilowatt and take 8-10 years to pay back and have less expensive fuel costs than natural gas by an order of magnitude. Natural gas is under $500 per kilowatt installed and also has a lengthy payback. But Bloom has a $7000 per installed kilowatt and claims that it can payback in just a few years...no way.

The only way this would work is if there were massive government incentives. Even with a 5 year payback, you would need over $500,000 in government incentives in the first few years. I could see some of that happening in California, but not anywhere else. In order to get that type of money, you would have to convince people that this is the next super-green technology. They have done this but convincing does not make you right.

Bloom isn't even that green. It's twice as efficient as Natural gas combined cycle turbines so it makes half as much CO2. That does mean it's about 3 times better than coal, but pretty much everything else out there (solar, wind, nuclear, hydro) is going to be about 100-1000 times less CO2. So it produces 30-300 times as much CO2 as other renewables. This should not qualify for ANY sort of tax break.

Second, lets talk about stability of natural gas prices. And now lets look at this graph.



That doesn't look very stable to me. It looks like gasoline prices doesn't it? Are those stable? No. And what if the whole country went to natural gas? Could we even supply it? Probably not. Those are not stable prices and they never will be because natural gas wells produce most of their gas in the first couple years then taper off. Therefore natural gas has boom and bust cycles. That's how T. Boone Pickens got rich and poor several times over. He tried to guess the cycles. We are in a cheap phase so it's a great time to push natural gas technology. Wait 5 years and it will be out of vogue again.

I really don't know what Bloom has been thinking, but my guess is that it has been thought up by a close conversation between marketers and scientists without a business mind in the middle to check their numbers.

What's with our current obsession with origin stories?

It's pretty obvious right now that we have a huge obsession with origin stories. Batman, Superman, Spiderman, even Star Wars, have recently put forth stories about their origins, and for the most part, they have been quite successful. It isn't limited to movies and super-heroes either (though it does show up there the most). The "phenomenon" which was and I guess still is LOST is fundamentally an origin story. Even the recent Battle Star Galactica which completely ran out of steam at the end, has begun anew in a prequel. Even the Lord of the Rings is going to be doing a a backstory sometime soon (based on the book which started it all.)

The strange part of it for me, is that even though this seems like and feels like a fad to me, I love it. These coming of age stories which are so popular now, they pull on my heart and my emotions much more than the older stories which have clearly defined good guys and bad guys. So somehow they really affect me why is it? Right now I have couple of theories.

First and most obviously, a dynamic character who represents myself is much more interesting than someone who has already achieved the top. This generation is acutely aware of our limitations in a way that I think many before us were not. In some way we have lost hope of progress, of ultimately achieving greatness. But these stories are hopeful in a true sense of the word hope. We know the ending, we know it will all turn out more awesome than any of these characters could ever expect. I want that for myself, and it thrills me to see it.

What else drives this desire to understand the past of characters? It's the very thing that is making me think about this post. A desire to understand and to know so that I can progress. Right now as a society based on science, if we know the rules and the intial conditions we can predict and control the outcome and even understand our presence. We have learned the majority of the rules, now we just need to know the beginnings. Then we can understand where we are today, get a real grasp on what is going on and repeat the success of our heroes.

Finally, I just think that it might be our hearts crying out for history. We live in a time where so much information is about the here and now, with an eye towards the future. Money, fame, riches are all about predicting the next big trend. If you can do that, the world is yours to play with. In this flood of analysis of information about the present (go look at twitter, facebook, buzz, or pretty much any other site) the information will all be about the present. It used to be most books that you could get your hands on were written in the past. But today everything is online, and it's all about today. I see so little history online that I think there is a gaping hole in my understanding of the world. We need our history, and we know it even if we don't know it.

So why the prequel then? We need hope, understanding, and history. And that is all part of the prequel.