Bloom Energy and Data Centers – Perfect Together?

Bloom Energy dominated tech headlines this week, starting with a 60 Minutes segment on Sunday and culminating in the official unveiling of its stealthy fuel cell technology, yesterday. The company — whose pitch promises cheap, clean energy that operates independently of the grid — sounds like it could be just the thing for data-center operators. Undoubtedly, many are wondering if a Bloom Energy Server, aka Bloom Box, will satisfy their growing energy needs. Sure, it will help them meet their carbon reduction goals and may even resolve some thorny siting issues, but let’s zero in on two of the factors that matter most to the folks that run data centers: availability and cost.

Availability

In IT circles, the term “five nines” (99.999 percent) is tossed around as a measure of how long a system can be expected to remain operational, or for the sake of this discussion, available. Five nines availability means roughly five and a half minutes of downtime a year. Despite talk of continuous, 24/7 operation during the 60 Minutes piece, Google’s “Bloom Box” has an availability rating of 98 percent. Do the math, and in a year, 98 percent availability translates into just over seven days of downtime. Ouch.

So, despite the tech luminaries present at the Bloom Energy launch, the boxes aren’t ready to do any heavy-lifting at data centers just yet. Google is using its fuel cell as part of its power mix at its headquarters, not an off-site data center, so there’s no risk to the 24/7 nature of its web operations. eBay has five units providing power for its San Jose campus, which includes a data center, but so far it’s been quiet about its experience, revealing only that the 500 kW installation spared the atmosphere 650,000 pounds of CO2 in its first six months and saved the company $100,000 in energy costs during the past nine months. That brings us to our other concern.

Cost

Each “corporate-sized” Bloom Energy Server carries a price tag of $700,000 to $800,000. Not cheap, but hardly eye-poppingly expensive for corporations with deep pockets. Going by eBay’s figures — and, remember, the company has five of them — it will take decades to recoup the cost on energy savings alone. According to a rosier forecast from Bloom Energy CEO K.R. Sridhar, the units have a payback period of three to five years when state (or, at least California) and federal incentives are taken into account. That’s certainly more palatable, but reality has a nasty habit of ignoring best-case scenarios.

Furthermore, remember that each Energy Server generates just 100 kilowatts of power. For comparison’s sake, Microsoft’s massive data center near Chicago weighs in at 198 megawatts. At current prices, it would cost more than $1.5 billion to supply enough Bloom Boxes to meet that kind of demand. Even modest facilities may find it tough to venture off-grid, in whole or in part, with a Bloom Energy fuel cell.

At this stage, it’s tough to see data center operators beating a path to Bloom Energy’s door. Sure, the availability issue can be mitigated with multiple units and backup energy sources. Even so, a week’s downtime on an $800,000 piece of hardware is a bitter pill no matter how you sugarcoat it. The biggest barrier to data center adoption, however, will prove to be cost. Absent tough new carbon regulations or skyrocketing energy rates, the Bloom Energy Server is a big expenditure for companies embarking on already capital-intensive data center builds and retrofits. An uncertain ROI window certainly doesn’t help matters either.

So don’t expect Bloom Energy Server to be a fixture in a data center near you, unless it belongs to a well-heeled corporation or one that needs to build up those eco-credentials fast. Psst… I hear Facebook could use some help in that department.

Question of the week

If you had the budget to spend on a Bloom Energy Server, would you?
Relevant analyst in fuel cells
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8 Comments Subscribers to comment
  1. One bloom box may have 98% availability, but 2 boxes together have 3-nines, and 3 boxes deliver 5 nines…

  2. Pedro Hernandez Monday, March 15, 2010

    Perhaps, but $2.1 million to $2.4 million (@ $700K – $800K each) is a steep price to ask data center operators to pay to achieve five nines, particularly given the hit to output, nebulous payback period and energy generated for the price.

    Blame (applaud?) vendors for conditioning the IT community to reject tech that falls short of 99.999% :)

  3. Isn’t another benefit the fact that this is distributed power? Meaning, if the grid goes down (as it often does in Cali) businesses can switch to Bloom’s servers and run uninterrupted. Seems like this would be a competitive advantage.

    While “scrub” business models depend on subsidies, the reality is that they’re not going away, soon that is, AND California has the most expensive electricity in the nation.

    ^^^I think Bloom is lucky b/c they have tremendous backing (in VC’s Kliener Perkins and NEA) and their business model is being subsidized until they can reach economies of scale. Not all start-ups get that advantage. Still, there’s never been a Moore’s Law in Fuel Cells^^^, I don’t know why Bloom thinks they’re different. But, that’s another discussion.

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