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.