US Renewable-Energy Incentives Help Bloom Energy To Expand Sales
By Cassandra Sweet Of DOW JONES NEWSWIRES
Wall Street Journal
JANUARY 20, 2011, 4:23 P.M. ET.
SAN FRANCISCO (Dow Jones)--Federal and state incentives for renewable energy are spurring growth of Bloom Energy's fuel cell business, just as they have helped wind and solar-power technologies.
Privately held Bloom Energy, which makes fuel cells that generate emissions-free electricity, has expanded into the electricity sales business because of government incentives. For example, the Sunnyvale, Calif.-based company now offers such customers as Wal-Mart Stores Inc. (WMT) the option of buying the power generated by a fuel cell installed on its property rather than the fuel cell itself.
The model is already in use by solar-power providers, such as Solar City Inc. It's become increasingly popular since the 2008 financial crisis as customers became less inclined to pay the large upfront cost of buying a renewable energy system, even though the appetite for renewable energy has continued to grow.
The economics of the leasing, or power-purchase, model are attractive to lenders because of a basket of government incentives, including a federal investment tax credit worth 30% of the cost of a system, and various state incentives for property owners that generate their own renewable or emission-free power.
Credit Suisse Group (CS) and SVB Financial Group (SIVB) are providing financing for Bloom Energy's power sales business, said Bill Thayer, vice president of sales and marketing at the company. He added that since starting the power-sales business about a year ago, it has grown to roughly half the company's sales.
"It certainly does open the market up and it allows some customers, like Wal-Mart, who purchased the first few systems, to scale the service across more stores without having to buy the systems," Thayer said in an interview.
Other customers of Bloom's power-sales service include Kaiser Permanente, a nonprofit hospital and medical service provider in California, and the California Institute of Technology in Pasadena.
Bloom likes to point out that its fuel cells, unlike solar panels or wind turbines, generate electricity around the clock. Each unit is about the size of a vehicle parking space and generates 100 kilowatts of electricity, enough to serve about 100 homes or a small office building, according to Bloom, which is backed by venture capitalists including Kleiner Perkins Caufield & Byers, and New Enterprise Associates.
To date, the company has installed about 300 systems, all in California, Thayer said.
Most Bloom fuel cells run on natural gas, but customers who want to be completely green can pay a premium to use biogas, a renewable fuel made from such biodegradable materials as sewage, animal manure, municipal waste, plant material and energy crops.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com
online.wsj.com |
