Tonight, I need to bring a somewhat untraditional Mapawatt post to the site. It's not a "how-to" on residential energy efficiency but I think you will see that what is about to be announced next week could change the way you think about and use energy in the very near future. Please bare with me as I set the stage for this potentially ground-breaking technology announcement.
A couple of years ago, I read an interview with John Doerr, a dot-com investor from the nineties that I have always respected for his knowledge and insight into technology investing. He mentioned that he had put a large stake in a Silicon Valley clean energy startup that he believes could "revolutionize the energy industry." At the time, I assumed it was some type of battery technology but there wasn't any information on the internet about who this company was and what they were building.
About a year ago, I heard rumblings that Doerr's investment was in the hundreds of millions of dollars. This peaked my interest. Why would he invest hundreds of millions of dollars in an idea when he made much smaller investments that started companies like Amazon and Google?
He had to be on to something really big.
In 2008, Doerr said this about the energy industry, "The energy market is $6 trillion. I like to say it's the mother of all markets. Compared to the Internet, which is a big deal, this is much bigger, much more exciting. But the challenge is much larger. Going green--solving that problem will be largest transformation on the planet."
Most venture capitalists only invest big money in startups when they see a "ten bagger in five years." This is referring to a ten-fold return on the initial investment in a five-year term. Could Doerr be on to something that could return $4 billion dollars on his $400 million investment? Could it be more since Sridar, the CEO of the startup, told Doerr that it would take ten years to build the company?
Let's take a look at what Doerr invested in and whether his almost half-billion dollar investment will pay off
The Bloom Box. What is it?
In order to understand the Bloom Box, you need to understand more about the man behind the technology: K.R. Sridhar. While working as the director of the Space Technologies Laboratory at the University of Arizona, the Indian-born co-founder of Bloom Energy, was asked by NASA to come up with a way to make life sustainable on Mars. The result of his initial project was a device that would use solar energy and Martian water to power a reactor that generated oxygen to breathe and hydrogen to power machinery and vehicles.
After reflecting on his research, he realized that by reversing the reaction (i.e. feeding oxygen and hydrogen back into the reactor to generate electricity) he could change the way people generated and consumed energy. Our understanding today is that this reversed reaction is at the heart of the Bloom Box that Sridhar will unveil next week.
Sridhar's invention appears to provide a way to capture and store energy from any source: clean or fossil-based. One of the biggest challenges for the renewable energy industry is storing power when the energy source isn't available. For wind power, it's for when the wind stops blowing; for solar energy, it's for when it's cloudy or the Sun goes down at night. The Bloom Box uses energy when it's available to store it as hydrogen and oxygen. When the energy source is no longer available, the Bloom Box reverses and starts generating electricity from the hydrogen and oxygen.
Update - 2/21/10 - After watching the piece on the Bloom Box on 60 minutes we have a little more insight into the company. When asked what will power the Bloom Box Sridhar basically said natural or renewable gas (as in landfill gas). When asked about solar, he nodded his head, but didn't really elaborate. The 60 minute post also focused solely on the power generation capabilities of the Bloom Box, and not energy storage. This leads me to believe that the current version of the Bloom Box is only meant to generate power and not store. Greentech Media's article on Bloom Energy talks a little about whether a reverse reaction will occur and is a good read. Another key point to mention is that the Bloom Box is still going to use some form of gas, and this is usually going to be natural gas. While it will be much more efficient than the current grid, there are still two issues by using natural gas in the fuel cell that you don't face with traditional renewable energy (wind and solar):
- It is still a fossil fuel which means there is a limited supply
- Natural gas is subject to price fluctuations just like the price of oil is
What is Different about Bloom Energy?
One of the most interesting facts about Bloom is how secretive the company has been about what they are building. Typically, companies that are trying to raise money or capitalize on hype, leak out details about their technology hoping to drive buzz in the Venture Capitalist community. Bloom hasn't done this.
Sridhar went to Doerr in 2002, pitched his technology, got funding and has been secretive ever since. He has been busy at work building the technology and he says he is also building a new industry for power storage and generation. According to Vinod Khosla, Sun Computer founder and venture capitalist, Bloom has used some of their funding to build a massive facility in Mumbai, India to produce the Bloom Box. They have already produced and installed their devices at some of the largest companies in the world including Google, Walmart and Fedex. According to Sridhar, they are only coming out and announcing their technology now because of pressure from these companies to announce the results of their tests.
What are the Challenges of the Bloom Box?
Sridhar claims to have found an affordable way to manufacture his technology. Traditional fuel cells require the use of rare-earth metals such as platinum or palladium for the catalyst that helps drive the reaction. In order to make his system affordable and prolific, he must come up with a new type of catalyst that is abundant and affordable.
If Sridhar has found the "holy grail" of energy storage and generation, how will he keep it from being duplicated by anyone and every one in the world? Hopefully, Bloom has patents on the technology. I have to believe that Doerr would not have made such a large investment in the company if he didn't believe they would be able to capitalize on the technology at least for a long enough period of time to make his investment worthwhile.
In a Nutshell?
I am optimistic. There appears to be a great mind behind the technology and it has been peer-reviewed by great minds in the technology investment industry. Not only was this peer-review positive, one of the greatest technology investors has backed up his review with a gargantuan investment of funds and resources.
Let's all hope that it's not too good to be true.
See our post on the unveiling of the Bloom Box to learn more!