Last week, Charles Fox of fuel cell vendor Bloom Energy appealed to Massachusetts lawmakers to "make non-combustible fuel cell technology eligible" under a 2010 renewable energy program, according to the Worcester Business Journal. Fox is the Director of East Coast Regulatory Affairs and Business Development at Bloom Energy and was formerly Deputy Secretary for Energy and Environment under New York Governor George E. Pataki.

Bloom Energy has not deployed its natural-gas-powered fuel cells in Massachusetts. That's because Massachusetts does not provide financial incentives to fuel cells. Massachusetts does provide incentives to wind, solar, energy efficiency and other renewable sources of energy. But natural gas, which powers Bloom's fuel cells, is not categorized as a renewable fuel.

Bloom has developed a large fuel cell business in Delaware, New York, Connecticut and California with a roster of customers including Adobe, FedEx, Staples, Google, Coca-Cola, and Wal-Mart. All of those states provide generous incentives for fuel cell technology. But Bloom fuel cell economics does not seem to pencil out in unsubsidized markets.

Bloom Energy is now asking Massachusetts' Telecommunications, Utilities and Energy Committee to reverse an earlier determination and find Bloom Energy eligible under the Commonwealth's renewable incentive policy. In the same article, Fox "appealed to lawmakers for quick action to enable time for solicitations to be completed before contracts are awarded under the state program." The article goes on to report that Fox, in a letter to the Department of Energy Resources in May, wrote that "Massachusetts simply has no programs in which natural gas powered fuel cells are eligible to compete."

Bloom is backed by more than $1 billion in venture capital from GSV Capital, Apex Venture Partners, DAG Ventures, KPCB, Mobius Venture Capital, Madrone Capital, NEA, SunBridge Partners, Advanced Equities, and Goldman Sachs. The firm's solid oxide fuel cell aims for distributed, combustion-less power with low emissions and grid-competitive pricing without subsidies. It has not yet achieved all of those goals.

Although Bloom Energy could be an IPO candidate in 2014, investors will surely want to see a fuel cell firm that can have a viable business without subsidies.

Scott Sandell, a partner at NEA and Bloom board member, was quoted by Reuters as saying that Bloom will likely attempt an IPO in late 2013 or early 2014. Bloom is Kleiner Perkins' first cleantech investment, and, at more than twelve years old, something of an old maid in VC terms. A successful IPO from the company would be a testament to the viability of capital-intensive, VC-funded cleaner energy breakthroughs -- and the virtue of investor patience and distributed power generation.

Tags: bloom energy, fuel cells, natural gas, subsidies