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natural gas–fired power plants, which emit 850 pounds, and
much better than coal, at more than 1,400 pounds. Yet as
the fuel cells age, the electrochemical process degrades their
efficiency. Based on Forbes’ calculations, some of the oldest
boxes in Delaware have put out 960 pounds of CO 2 per mwh.
In California, where local utility PG&E generates power at
210 pounds per mwh, Bloom may be losing its appeal.
Then there’s the issue of hazardous waste. When Bloom
applied for its operating permits in Delaware, it answered
no when asked whether its systems would generate any
hazardous waste. When in 2014 regulators started asking
more questions, Bloom disclosed that its filtration systems
caught a host of nasties like arsenic, benzene, sulfur and
lead. Queried why it had been shipping this hazmat out
of Delaware to processors and incinerators across the na-
tion, without following rules, Bloom replied that it thought
it was exempt, because it didn’t open the canisters. Nope,
said the U.S. Environmental Protection Agency, which in
2015 reminded Delaware to enforce hazmat rules “no less
stringent” than federal regulations, with “cradle to grave”
responsibility for waste management. Bloom insists that it
does not “produce” hazardous waste, that it began to han-
dle the desulfurization units differently after the EPA issued
guidance and that it is now EPA-compliant. The agency is
still seeking to collect a $1 million fine from Bloom.
Some investors have been misled along the way. In 2012
the Securities and Exchange Commission temporarily
barred Dwight Badger and Keith Daubenspeck, the cofound-
ers of brokerage Advanced Equities, from their jobs after
they used false information
and negligent due diligence,
respectively, to help Bloom
raise $150 million. Misstate-
ments included that Bloom
had $3 billion in orders from
the CIA and a grocery store
chain, and that it was getting
a loan of up to $300 million
from the Department of En-
ergy. In emails written to the
SEC, Badger claims to possess
copies of presentations made
to Bloom’s board (including
Doerr and former Secretary
of State Colin Powell) that
prove Bloom lied to investors. In 2014, the brokers settled
for $16.7 million, much of it in warrants (the right to pur-
chase shares) if and when Bloom went public. After the IPO,
Bloom’s share price never went high enough to put Badger
and Daubenspeck in the money. In 2019 they sued Sridhar
for fraudulently inducing them to settle. Bloom contends
the suit has no merit.
On July 25, 2018, the day of Bloom’s IPO, Sridhar falsely told
MarketWatch reporters that the company was profitable as
of the second quarter and that it would be cash-flow-positive
and GAAP-profitable that year, when in fact it was still losing
money. Bloom issued a correction the next day, and assures
Sridhar “simply made a mistake.” Other investors who scooped
up Bloom shares have sued Sridhar and Bloom for, among
other things, hiding what short-seller Nate Anderson of Hin-
denburg Research estimates to be more than $2 billion in fu-
ture liabilities tied to servicing and replacing old Bloom boxes.
Bloom denied the Hindenburg report; the suits are pending. As
a former Bloom executive explains, Bloom relies on proceeds
from new boxes to help offset rising service costs on old ones:
“They have to keep selling more on the front end to pay for
the back end.” In recent months Bloom raised more than $250
million from the likes of Southern Company to swap out its old
boxes in Delaware. Bloom could see a wave of such replace-
ments before the 2023 phase-out of the lucrative federal invest-
ment tax credit worth up to 30% of capital invested. When that
credit ends, so will a reliable avenue of financing. Underscoring
the sense that Bloom may be living on borrowed time are the
exits of several executives and the pending retirement of its
CFO. Former U.S. Senator Kelly Ayotte also left its board and
was replaced by former General Electric CEO Jeff Immelt.
If there is a silver lining to this story, it is that there are
plenty of places in the world with dirtier air than California
where people may be interested in what Bloom is selling.
In Japan, the company has
partnered with Softbank on
several installations; in South
Korea, it recently built its first
“Power Tower”—a four-story
structure with open sides,
stacked with its boxes, and it
is now exploring, with Sam-
sung, how to use the boxes to
power ships.
Sridhar insists that Bloom’s
prices will keep going down
while its resiliency goes up.
He draws inspiration from
satellite pictures of the world
at night, which hang on the
walls of Bloom’s offices. The bright lights amid the darkness
represent the vast majority of the world’s population. “The
other 2 billion are basically out of grid and out of luck,” he
says. “What drove me to start the company is the same” as
what drives him now: to feel “like I have made a dent.”
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This Bloom installation at La Jolla Commons in San Diego generates
about 5 million kilowatt hours of electricity per year.
F