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Energy breakthrough announced -- but is it mainly hype?

Electricity is the backbone of modern industry and technology.

In fact, without a constant, reliable, affordable supply of electricity life, as we know it in the 21st century, would be significantly affected.

No evenings in front of the TV, clothes washing that would have to be done by hand, cooking would require a return to gas or wood-fired ovens and come winter, our expensive heat-pumps would be nothing more than decoration.

The problem with electricity is that it's becoming increasingly expensive and, in the case of NZ, increasingly unreliable. Our aging grid is showing the strain of suffering increased demand without an associated increase in capacity.

But what if there was a box you could place in the back yard that would provide you with an endless supply of electricity at a cost which is even lower than the price you pay your power company right now?

Well that's the promise of a US company called Bloom Energy.

At this point you're probably waiting for the Tui's ad -- but perhaps they're for real.

Why might these bold promises be kosher in an era when so many fraudsters seek to separate idiots from their money by promising all manner of fake energy products and technologies?

After all, if Bloom are to be believed, the core of their system is little more than a pile of sand treated by their special "powder to powder" process.

What makes me prick up my ears and take note is not what Bloom themselves are saying but the testimonials from recognised industry giants such as Google, eBay and others who have apparently been trialling this technology for several years with great results.

Right now there are probably a few worried power company boards meeting to discuss the threat that the Bloom Energy Server might represent to their outrageous profits.

Here in NZ we've been rorted for decades by power companies who seem to operate a cartel which ensures that all the tariffs on offer are within spitting distance of each other.

If, as Bloom are claiming, these systems can produce electricity for as little as NZ$0.12 per unit (while we presently pay $0.20 or more) then how can our traditional power companies survive?

However, all many not be as rosy as it first appears.

Firstly, although many big-names have been using the technology, it's still "early days" and the boxes currently in use are uber-expensive at around NZ$1 million.

Bloom claim that thanks to the economies of scale and improving design, that cost will eventually fall to about NZ$4,500 for a unit suitable for domestic use. That's still pretty pricey but, given the current price-per-unit for power, a cost that could be recovered by way of savings in just a few short years.

The other thing being scarcely mentioned is the fact that these are fuel cells and therefore require *fuel* to work. Right now, that fuel is natural gas but the company says it'll eventually produce devices that run on ethanol and other energy sources. That's good -- because like electricity, gas prices in NZ are very high and reliance on that gas could ankle-tap the whole value-equation.

And then there's the single largest impediment to NZ becoming a nation where every back yard has a Bloom Box quietly churning out electricity...

Here in NZ, the national grid is state-owned, as are some power-generators.

Like their private-sector peers, these SOEs churn out huge profits every year (only possible thanks to the extortionate prices they charge) and those profits are repatriated to the government's coffers by way of dividends.

If all that government revenue were to disappear, the nation's books would bleed even more red ink than they presently are. This would be an untenable situation and as a result you can bet your bottom dollar that some kind of tax or levy would be imposed on any generation system that adversely impacted the profits of Transpower, Meridian, etc.

Whether it was a tax on the fuels used or a mandatory annual "license" fee required to generate your own power, this surcharge would likely bring the true cost of generating your own power directly into line with buying it from the grid.

So what's my take on Bloom?

Well they do seem to have a piece of technology that works but (and these are *BIG* "but"s)...

Right now it's totally unaffordable -- nobody's going to spend a million bucks (plus monthly fuel bills) to save $10c/unit on their household power.

All the best aspects of the system (lower price, cheaper fuels, etc) are "coming soon" and as we all know - when it comes to technology *nothing* really exists until you can kick it. vapourware is the world's most common "new technology" and always will be. Too many companies have made bold promises that never eventuate.

And don't let the enthusiasm of Google, eBay and a raft of other "name" companies sway you...

I seem to recall some highly respected luminaries and tech-gurus proclaiming (just a few years ago) that a guy named Dean Kamen had invented this mode of transport that would completely change the way our cities were built. Steve Jobs was even quoted as saying that this new invention "would be as significant as the personal computer".

Has the Segway really lived up to the hype and earth-shattering predictions that were made for it by people who we think should have been able to level an accurate and objective opinion?

No, of course it hasn't.

Sure, Bloom boxes may have been delivering power to a number of "big names" for several years but I'm picking that many of those concerned have a vested interest in seeing the technology succeed (either as investors or otherwise) and that their endorsements are therefore perhaps not as free and unbiased as one might first assume.

I sure hope that we all end up with Bloom Energy Servers humming away in the garage and that we can tell Transpower, Meridian et al to go get stuffed.

But you know, I wouldn't bet the farm on it turning out that way -- at least not for a long, long time.

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