Bloom Energy Could Break Even

By now, there’s a good chance you’ve heard of fuel cell maker Bloom Energy. In case you haven’t, I’ll recap.

The Sunnyvale, California company isn’t that old. It started in 2001 under the innovative direction of CEO Dr. K.R. Sridhar.

Originally a plan to convert gases on Mars into oxygen for NASA, the company’s technology was soon applied to energy and electricity production.

Now, the company designs and manufactures Bloom Energy Servers, also known as Bloom Boxes, to help companies become less dependent on the grid.

The Bloom Boxes incorporate the company’s solid oxide fuel cell. The cell works similar to a battery in that it has an anode and a cathode on either side of an electrolyte.

Unlike batteries that require metals, however, the anode and cathode are made of “inks.”

Heated air enters on one side, and fuel flows on the other. The electrochemical reaction that occurs within the fuel cell creates electricity without combustion and therefore with very little emissions.

Bloom serves clients such as Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), eBay (NASDAQ: EBAY), and plenty of other tech companies that have decided to incorporate the Servers into their data centers.

And it’s not just tech companies. Bloom has also provided its service to consumer industry giants like Walmart (NYSE: WMT) and the Coca-Cola Company (NYSE: KO).

Because the Energy Servers are small enough to be situated on site, the data centers and other companies are able to receive their main power from them. And this means they don’t have to worry about outages, because while grid disruptions may be fairly common, this on-site source is reliable.

At the start of this year, Bloom rolled out an updated version of its Server: the ES5700.

This 200kW Server delivers twice the power of the company’s old unit in the same footprint. It also increases efficiency from a bit over 40% to 60%, all for about the same price.

Needless to say, this is one company that has seen success through innovation. It just recently announced that it’s halfway to breaking even – close to making a profit.

This is great news for the Silicon Valley startup. Very few clean energy companies have broken even, as the industry is still struggling with high costs and, in the case of solar, a highly competitive market.

The fact that Bloom Energy is halfway there also means that it has halfway to go. But consider the fact that the company announced it has been doubling its revenues every six months.

It also recently reported a round of $150 million in funding, which would bring its venture capital to $800 million.

But increasing revenue and venture capital is not enough to allow the company to break even. It will also have to reduce production costs. Of course, it might be alright on that account, too.

From GigaOM:

[CFO Bill] Kurtz, who says he focuses a lot on cost reduction, says “we’ve made a lot of progress in reducing costs.” NEA partner Scott Sandell, who participated in backing Bloom Energy, says the company is reducing its costs on the time schedule and at the rate that they’ve predicted.

All things considered, the company could break even in several short years.

Because Bloom Boxes can use biofuel or natural gas as their fuel source, Bloom Energy could also profit off the U.S.’s shale gas boom.

Natural gas prices are low in the U.S. – averaging about $2.92 per million British thermal units last week.

Using natural gas means you pay less for fuel. And using Bloom Boxes mean you use natural gas.

The companies that have purchased these fuel cells can reduce their costs, and this additional incentive has driven up Bloom Energy sales.

Many interested investors have been waiting for the company’s IPO. Bloom Energy officials still haven’t announced anything – not even when to look out for it, or even if the company is considering it – but one thing is for sure: If and when the company does IPO, it’s popularity will skyrocket even more.

That’s all for now,

Brianna Panzica

@brianna_panzica on Twitter

Energy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.