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E.ON invests in fuel cell company - a Bloom-ing good idea?

As part of a wider programme of venture capital activities, E.ON has recently announced that they have bought a stake in Californian fuel cell developer, Bloom Energy.

Bloom Energy has forged a name for itself by securing high-profile clients such as Google and Coca Cola for its large fuel cell products. Now, it seems, E.ON wants to get in on the act.

The deal undeniably demonstrates a willingness within E.ON to build momentum in the field of decentralised energy following last month's announcement of small-scale CHP installations in Germany and Russia. The move is likely to open the door to bringing larger, stationary fuel cells to Europe over the coming years, and E.ON is well positioned to establish routes-to-market throughout the continent. Recent Delta-ee analysis suggests that the European market size for 100 to 200 kWe distributed generation products is currently less than 1,000 unit installations per year. Presently, this is dominated by the incumbent decentralised energy technology in this size range, the gas engine. So the big question is: How will this market evolve over time and what share of the market can E.ON hope to capture with this new venture?

Today, larger fuel cell installations are likely to be limited to demonstration projects and some ‘early adopters’ who are not put off by the upfront costs or longer pay-back periods. Over time, though, with energy efficiency increasingly high on the agenda, rising electricity prices, tighter emissions controls within some built up areas and product costs gradually coming down, the market could shift in favour of fuel cell technology within some applications. Indeed, fuel cells could open up new opportunities which are not currently accessible by  gas engines. So, E.ON may have been savvy here and seen a long-term opportunity to capitalise on first mover advantage. We shall certainly be keeping a close eye to see how this develops over the coming months and years.

Coming back to Bloom: Delta-ee has been observing fuel cell developments on the other side of the Atlantic for some time. Certain states like California have support mechanisms in place which have served to jump-start the industry. This state funding, coupled with deep-pocketed blue chip companies who are willing to pay a premium to be 'seen to be green', has enabled Bloom to build up an enviable amount of venture capital –  $1.1 billion over the last decade. And last month, it was announced that Bloom Energy had raised a further $130million in VC funding from Credit Suisse and other sources. 

 

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Sunday, 20 October 2019

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