Bloom Energy's "Bloom Box" is a game changer

For weeks, observers worldwide have been awaiting Bloom Energy's big announcement about its "disruptive" next-generation power alternative. Well, that announcement came Wednesday and it's big.

The company is producing the Bloom Energy Server, or "Bloom Box" a stand-alone solid-oxide fuel cells that will allow homes and businesses to generate their own electricity. The fuel cells use hydrocarbon fuel and one cell should be enough to power a home. The cells do not require combustion and therefore produces half the greenhouse gas emissions of more conventional energy sources, the company claims.

The Server is a game-changer because it creates power at the spot where it's being consumed. It's disruptive because it's a potential killer app for the electric power and utility industry.

The problem with today's distributed energy power generation is that it is very inefficient, and has a volatile cost structure. Almost two-thirds of the energy produced by coal and natural gas-fired plants is lost in heat before it's transmitted, with about another 10% lost as the electricity travels over transmission lines.

Among the Server's advantages: it's an always-on power source, unlike renewable sources such as wind and solar, which are intermittent; it efficiently converts a wide range of carbon-based or renewable fuel to electricity, while cutting their carbon footprint; it can use a wide range of fuels, such as biodiesel, natural gas and petroleum.

Bloom Energy's biggest hurdle right now is cost and scalability. The current product can power roughly 100 U.S. homes or a mid-size business and costs $700,000 each. Bloom obviously wants to shrink the box in size and cost so that a homeowner can have one for around $3,000.

With a three-to-five-year estimated payback for a business, it could recoup server costs in savings by lowering what it pays for buying power from a utility.

Bloom already has on board customers such as Bank of America, Coca-Cola, eBay, FedEx Express, Google, Staples and Wal-Mart. As a matter of fact, Bloom's unveiling was announced at eBay's San Jose, Calif. offices.

Don't believe the hype? Let's wait and see if the Bloom Box has any staying power and real growth potential as a next-stage disruptive technology.