Fuel cells have been with us since the early days of the space program, but limited applications, high costs, and a long history of overpromising and underdelivering have provided plenty of ammunition for an army of skeptics.

Maybe that is finally changing. Last year, Amazon’s purchase of $70 million worth of fuel-cell forklifts from Plug Power hinted that a billion-dollar market for fuel cell technology might be possible.

Bloom Energy’s recent successful IPO suggests a second, much larger market may be emerging.

Many in the energy and environmental sector are skeptical that fuel cells are a viable tool for further decarbonization. However, with electrical efficiency increasing dramatically, product lifetimes extending, and costs decreasing rapidly, the technology deserves a second look.

Here’s another reason to take a second look at fuel cells: According to Bloom, its Energy Servers are now deployed at 25 of Fortune 100 companies. And each of those systems is either displacing diesel generators or helping utilities avoid costly substation upgrades.

Bloom makes and installs all-electric fuel cell systems that can scale from 200 kilowatts up to tens of megawatts. Like all fuel cells, its "energy servers" generate electricity without combustion, which eliminates NOx, SOx and particulate emissions. Bloom now claims the highest efficiency of any commercial fuel cell technology, and its servers don’t need any water to generate electricity.

Of all the important details revealed in the company’s IPO filing, five things stand out the most.

First, Bloom’s costs have come down 75 percent since 2009. Bloom Energy reached scale through the use of over $400 million of incentives from California's $1.4 billion Self-Generation Incentive Program. In fact, Bloom’s commercial adoption has increased even after the company graduated from the state incentive program.

Second, Bloom’s system electrical efficiency has improved dramatically. While its first systems had an electrical efficiency of 45 percent (the rate at which fuel is converted into electricity), the latest systems have a beginning-of-life efficiency of 65 percent, representing the highest delivered power efficiency of any commercially available power solution. The newest systems also have a 5x better power density than the systems the company was shipping at the beginning of this decade.

Third, as mentioned, customer adoption is real. Hospitals, data centers, microgrids, big-box retailers and telecom providers are all using this technology.

Fourth, an interesting and very important trend relates to the increasing use of the technology by utilities themselves, often as a means to strategically locate these very reliable systems to dramatically reduce the cost of expensive transmission and distribution system upgrades. In Brooklyn, for example, several Con Ed-supported Bloom deployments have helped the utility mitigate the risk of brownouts this summer, and helped avoid a massive billion-dollar investment in new transmission infrastructure. Among those projects is the largest fuel cell deployment in New York City, which took half of SUNY Downstate Medical Center's load off the grid.

And in a Bloom-powered community microgrid in Hartford, Connecticut, fuel cells provide 24/7 power to an elementary school, library, senior center, health center, convenience store and gas station. In the event the city has another catastrophic storm and grid outage (as it did in 2011), the microgrid will support a powered emergency response center.

Fifth, Bloom is now integrating its systems with batteries and PV, and can now run its systems on onsite biogas where available, providing a unique way to generate and integrate additional renewable resources.

While Bloom still depends on the 30 percent federal Investment Tax Credit currently enjoyed by solar, geothermal and other technologies, fuel cells are finding their place in the electricity ecosystem. Bloom’s American-invented, American-manufactured technology could provide export growth as its customers set up data systems and other infrastructure around the world. This is especially true in places like India where grid power is extremely carbon-intensive and local air pollution presents a massive threat to human health and the environment.

As we continue to decarbonize and modernize our electricity grid, we will need more established technology deployments at scale, creating more local clean energy jobs, and unlocking more wealth creation to validate further investment in this sector. Many skeptics never thought we would include fuel cells in the discourse on decarbonizing the energy sector, but companies like Plug Power, Bloom, Fuel Cell Energy and others are proving them wrong. And that’s good news for all of us.


Jigar Shah is the co-founder of solar power developer SunEdison and current partner at the clean infrastructure investment firm Generate Capital. He does not own shares in Bloom Energy.