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GATIONlast October, more than a million northern Californians suffered through blackouts, their electricity cut in order
to reduce the likelihood of high winds sparking new conflagrations. In smoke, KR Sridhar smelled opportunity.
His company, publicly traded Bloom Energy, sells fuel cells—steel boxes that generate electricity using natural
gas. The boxes, which it calls energy servers, emit a nearly pure stream of carbon dioxide, a major greenhouse
gas, but they are supposed to make much less of it than traditional power plants and do so without generating
lots of smog ingredients like nitrogen oxide and sulfur oxides.Even better, Bloom’s units get their fuel via under-
ground pipelines unaffected by the Diablo winds that
threatened California’s high-voltage wires and led to
the power outages that Sridhar considers intolerable
in any modern society, let alone in Silicon Valley.
“Every time there is a disaster your power price
is going to go up, because somebody has to pay for
the damage,” Sridhar says. “That is the catalyst for
change.” Bloom is capitalizing on the outages by woo-
ing potential customers in fire-risk zones to protect
against grid failure with Bloom-powered “microgrids,”
like its 26 so far in California, which carried custom-
ers through last year’s blackouts.
Over its 19 years in business, Bloom has installed sev-
eral thousand of its 15-ton boxes worldwide for big tech
companies including Apple, AT&T and Paypal, which
are willing to pay up to guarantee 24/7 power for data
centers where the cost of downtime is nearly $9,000
per minute. A lot of its customers are in states with the
highest power prices and big clean-energy subsidies,
like New York, where Home Depot has installed them
as backup generators “wherever they make economic
sense,” says the chain’s U.S. energy chief, Craig D’Arcy.
Bloom boxes have been operating nonstop at Caltech
for over a decade, providing nearly 30% of the power
to its Pasadena campus. “Having stable power is very
important to scientists,” says Caltech facilities director
Jim Cowell. “The grid has been disintermediated.”
This should be Bloom’s time to shine. “The natural
gas, thanks to fracking, is already there,” Sridhar says.
And yet, despite big promises, Sridhar’s boxes are high-
ly unlikely to transform the grid in California, or any-
where else. The reasons are manifold, but boil down
to this: Bloom’s technology is too dirty and too costly.
Bloom has never generated a profit, despite at least
$1.7 billion of invested capital, some of which wasraised on the back of false statements. It could soon
be out of runway as lucrative tax credits phase out and
financing dries up. Sridhar has already enlisted in-
vestment bank Jefferies to help restructure over $300
million of debt coming due at the end of this year.
Shares are down nearly 50% since Bloom raised $282
million in its 2018 IPO. And now regulators and even
local politicians are clashing with the company. Cities
like Berkeley have turned against natural gas for not
being green enough. A court recently blocked Santa
Clara County, in the heart of Silicon Valley, from essen-
tially banning new Bloom installations unless they are
fueled, for instance, by exorbitantly expensive “biogas”
siphoned from manure ponds or landfills.A
decade ago, Sridhar envisioned
that by now his fuel cell technology
would be in every home, costing
$3,000 a pop. In reality, not a single
home in America has its own Bloom
box, not even Sridhar’s $7.6 million house in Woodside,
California. Instead, his boxes are used mostly for indus-
trial and commercial customers, costing approximately
$1.2 million each. Without subsidies, they generate
power at a cost of roughly 13.5 cents per kilowatt hour
versus 10 cents per kwh for grid power nationally.
Truly renewable power is now much cheaper than
Bloom’s. Without subsidies, solar and onshore wind
both cost 4 cents per kwh, according to asset manage-
ment firm Lazard.
Don’t think for a second that Sridhar, 59, is discour-
aged. “This is a pretty amazing pace of progress,” he
says, especially compared to where he got his start.
He grew up in India, where power outages are com-
mon, and attended the National Institute of Technol-
ogy Trichy, in the southern Indian state of Tamil Nadu,