Bloom Energy, whose fuel cell technology was featured last Sunday on 60 Minutes, is making a real splash in alternative energy. While still little more than a start-up, it has secured funding from some very impressive sources, making Bloom a company to follow with a new technology that may reveal the future of home electricity.
Bloom Energy, based in Sunnyvale, Calif., uses fuel cells, a very old technology that has a very green pedigree. In short, fuel cells are a kind of battery that makes electricity, but instead of being an enclosed source of energy, they use outside fuel continually to produce electricity, like a small, self-contained power plant.
The fuel that fuel cells can use can be almost anything, but the most well known type of fuel cell uses hydrogen to power it. Hydrogen-powered fuel cells continue to be developed for electric cars and buses, with some notable prototypes of cars and some fuelling stations already built and being tested, notably in California and up the West Coast into Vancouver, Canada.
Fuel Cell Winners
Bloom Energy cells use natural gas and are ultimately designed to replace the standard electricity grid in consumers' homes -- you would only need the natural gas to be piped in to make electricity on your own. This is obviously stunning and revolutionary, and its why the Bloom Energy project is getting so much press and excitement.
And Bloom Energy, although just a start-up, has a very distinguished pedigree of financing. It has received a reported $400 million of development capital from perhaps the most famous technology venture capital firm in Silicon Valley: Kleiner Perkins Caufield and Byers.
KPCB has a long list of successful technology investments, having delivered initial start-up capital to such monster success stories as
( PALM) among many others.
Not every investment in KPCB's arsenal works out so well as these, but Bloom energy is KPCB's first investment in the green energy space, and its 400 million investment is large compared to other tech start-ups it has funded. That implies some serious confidence in this project. KPCB has also recently added Al Gore to its list of partners and former Secretary of State General Colin Powell to its board.
There have already been many stumbles for Bloom Energy and there are likely to be many more - the fuel cell technology and its potential have been around, and have been pursued, for decades. But we may be nearing more practical applications of fuel cells soon.
If you're looking to get in on the fuel cell potential, Bloom Energy is still a private company, although an IPO is always the end game of venture capitalist firms like KPCB. But there are other public companies to look at today.
Fuel Cell Energy
manufactures commercial fuel cell generators using carbonate and solid oxide technology, an older type of fuel cell than the newer tech of Bloom, but no less promising. Looking at FCEL as an investment proves how difficult it is to time a good buy of a new energy technology company, however. Often, the enthusiasm totally swamps the value: FCEL was a $50 stock in 2000, a $20 stock in 2004 and now trades just under $3. Similarly,
Ballard Power Systems
, a manufacturer of hydrogen- based fuel cells, boasted a stock price of close to $120 in 2000, yet now trades for about $2.25 a share. The Obama administration has indicated that it will remove incentives for hydrogen-based fuel cells, believing that this technology will not deliver the goods fast enough compared to others.
Still, these two companies are now so cheap that they could be worthy of a speculative look for your portfolio, if you want some exposure to this "old" technology made hot again by the buzz surrounding Bloom Energy.
And as for Bloom? Its blockbuster coming-out party for its new technology will happen today, when the talk of an inevitable public offering will also begin. No matter when that will be, it's likely to be incredibly overhyped and overpriced. It's exciting stuff to watch, but as an investment, fuel cell start-ups have been only exciting if you like losing money.
Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 20 years' experience. He is a licensed commodities trade adviser. Dan's recognized energy market expertise includes active trading in crude oil, natural gas, unleaded gasoline and heating oil futures contracts; fundamental analysis including supply and demand statistics (DOE, EIA), CFTC trade reportage, volume and open interest; technical analysis including trend analysis, stochastics, Bollinger Bands, Elliot Wave theory, bar and tick charting and Japanese candlesticks; and trading expertise in outright, intermarket and intramarket spreads and cracks.
Dan also designed and supervised the introduction of the new Nymex PJM electricity futures contract, launched in April 2003, which cleared more than 600,000 contracts last year alone. Its launch has been the basis of Nymex's resurgence in the clearing of power market contracts over the last three years.
Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts as an analyst of the oil markets on CNBC, Bloomberg US and UK and CNNfn. Dan is the author of many energy articles published in Nymex and other trade journals.
Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.