In Bloom Energy’s latest fundraising round of $130 million, it was revealed that one company alone – E.ON – invested €91.5 million ($120 million at the going exchange rate). Setting aside the fact that this takes Bloom Energy’s private investment levels to an eye-watering $1.2 billion for a company that has yet to make a profit, the signal that E.ON is sending is staggering.
The skeptics continue to sharpen their knives on the future of the fuel cell industry, pointing out that no U.S. fuel cell company to date has made a profit, but serious players like E.ON clearly see a strategic play in the sector. Here, the Navigant Research fuel cell analyst team of Lisa Jerram and I hypothesize what this could be.
In our white paper, “Smart Energy: Five Metatrends to Watch in 2013 and Beyond,” we pointed out that the role of the traditional utility was changing and that the energy sector had the potential to be democratized through distributed generation. The traditional role of utilities centered on the control of two types of assets: power generation and grid control. With the development of small-scale generation, microgrids, and virtual power plants (VPPs), the control of power generation was starting to shift away from the utility to the hands of, well, anyone. Traditionally, solar and small-scale wind systems were not powerful enough to fundamentally disrupt this model – then fuel cells came along. From ClearEdge’s 5 kW residential / light commercial systems to Bloom Energy’s 100 kW system, right up to FuelCell Energy’s 400 kW system, these are all available to plug into your home/building /school/campus/swimming pool to generate power – and feed excess into the grid when you are not using it. And “you” refers to anyone with enough money or determination to control their own power generation, from homeowners to hospitals to office managers. In theory, as long as you were in the right geography, you could buy a system. That essentially had the effect of throwing the utilities into a head spin and raised the all-important question: What is the future role of the utilities in this emerging energy economy?
E.ON, which will at least have bought one seat on the board with this investment and some direct control into the direction of the company, seems to be taking a punt of carrying on along the traditional role – ownership and critical control of generation assets. Control, or partial control, of the company is a step in the direction of controlling generation assets. Is it an out-and-out technology land grab? Not yet. Could it be? Yes. Whoever controls the flow of technology into the marketplace will control the use of the technology. But E.ON’s war chest is actually not bottomless. A growing number of stationary fuel cell companies have low enough costs to potentially ship a serious number of systems over the next 5 years. This market will not be controlled by any one company. The game is still afoot!