Decentralized gas-fuelled power generation has a bright future: Bloom Energy CEO
Bengaluru: A little over two decades back, K.R.Sridhar worked on a NASA mission to convert Martian atmospheric gases to oxygen for propulsion and life support. His work was so ahead of its time that Fortune magazine called him “one of the top five futurists inventing tomorrow, today”.
Fast forward to 2016, and the Indian-born rocket scientist-turned-entrepreneur is on a completely different mission: to provide clean, reliable energy for all on Earth.
Sridhar, who founded Silicon Valley-based Bloom Energy that makes electricity from (solid oxide) fuel cells using natural gas, has finally brought the technology to India.
In an interview with Mint, he talked about how it all started, the efficiency of green technology, why India needs it now more than ever and how it will navigate a few challenges unique to Asia’s third-largest economy.
How did Bloom Energy come about?
I started out trying to figure out how to create oxygen on Mars, and then along the way, to create water, breathing air, electricity and all those things so that you can think of a sustainable habitat. So I was working on that, but clearly American interest in space exploration started waning after the Cold War because we had other interests and other places to spend our money on. So I realized that seeing a human mission to Mars is not going to happen within the time frame, maybe not in my lifetime. So I started thinking of what I could do that could be impactful. I realized that water and energy are the biggest issues we are going to face in the next 100 years, given that we will get to 10 billion people on the planet. I also knew that if I had cleaner electricity, I could always provide clean water.
What do you want to accomplish in India?
India is a perfect place for us to prove our basic value proposition: which is you need to decentralize before you distribute it. India has proven that more than any other country—both in computing and in telecom. If you think about supply of electricity and given when it is available, the extremely bad quality of that supply and the extreme environmental impact of that supply, we can take a page from computing and apply it to power and create distributed, sustainable power all over the country. It can become the model for the rest of the world to follow.
Is it hard to sell your technology in a country like India?
It is harder and easier. It’s harder because until now the gas infrastructure did not exist and there wasn’t a company like GAIL telling people, you buy this and we will provide the infrastructure for you and we will provide a reliable supply of gas for you. So it was hard.
It is easier because in a place like the US, while they are hurling towards technology and are not afraid of new technology, the grid was fairly adequate and there was enough access to power and there wasn’t a demand-supply mismatch. Whereas here, you are offering people power against not having power. So, it’s easier from that perspective.
So it is both.
There are many who think that a decentralised (generation and distribution) model will not work for gas-based technologies in India, but only in markets similar to the US. What are your thoughts?
Natural gas will be the most abundantly available fuel in the 21st century for electric power generation around the world. This abundance will result in increasingly improved economics and an expanded global export market. Add the fact that natural gas is the lowest carbon fossil fuel and you have a very attractive fuel for power generation. This is the significance of our partnership with GAIL which is committed to expanding the natural gas infrastructure for decentralized power generation in India. With this, we believe that decentralised gas-fuelled power generation has a bright future in India and will help this country make the same kind of technology leapfrog in power generation from centralized to distributed that we have seen in telephony—the country avoided the fixed infrastructure investments of landline telephones and went straight to mobile.
Your tariffs are still considerably above other alternate sources of power.
The important question is what you are providing. Do they find the value in what you are doing. You may have a (cheaper) solar power plan, but with a solar panel on your roof, if you cannot turn on the lights in the night, when the sun is not shining, that power is not of much use to you. It doesn’t matter what it costs.
You may get a (cheaper) coal power plan because of which your child can study because the lights are on, but if that child’s life is going to be reduced by 10 years because of all the pollution it puts up, you are going to wonder if that is the best alternative.
A household may think, cheap power is good enough, why do I need more. The average life of all their appliances in their house is going down so fast because of problems with voltage and stability. They are never able to calculate the cost associated with that. They sometimes don’t realize that they are paying significantly more for a refrigerator because the company had to build all these additional band-aids for that power, to make sure the warranty problem doesn’t come to them and charge them more. It is about total overall value, as opposed to the essential value of commodities. That is an education that we have to do.
We absolutely know that we have a learning curve and a cost curve. We are confident that over a few years with scale, people will use us not just because of all the positive attributes we bring, but also be cause we are the most affordable.
How do you plan to procure biogas? Though GAIL has promised you natural gas, you will need more supply.
So think of this—1.3, fast forward 1.4 billion people in the nation—the amount of human waste, the amount of animal waste that comes from supporting this, the amount of plant waste that comes from supporting the animals and the plants is gigantic and it is either a liability or can be converted into an asset. And to us, it should be an asset and that becomes the biogas fuel. In the past, it was always a problem because the power plants were very, very large and you needed to go long distances to collect the biomass, bringing it to a huge centralized base and the cost of carrying it over a long distance was incredible.
But, in the distributed Bloom model, people can take their own bio-waste and put that into their own bio-mass plant, generate their own biogas and produce their own power. And, in a true Gandhian way, can have a completely sustained solution.
Are you happy with GAIL’s infrastructure in Bengaluru (where Bloom is powering technology company Intel’s R&D lab)?
I don’t think GAIL will say they are happy with it because they are aggressively trying to get into Bangalore, and as you know, in any big city like Bangalore, there are issues of being able to lay a pipeline quickly and all that. However, what I am extremely impressed with is the aggressive speed and passion with which they want to get it done, in spite of obstacles.
What incentives are you offering to get more companies to sign up?
You do that when you don’t believe in your product. Our product more than speaks for itself. We are satisfying an unmet need. Those corporate customers have a root canal. I am offering them a pain killer. I don’t need to discount it.
But, if you look at the US, places where it worked were states where there were incentives or subsidies. Isn’t it?
True, there are different ways to look at it. If it were a level-playing field, we would require more subsidies. Because everyone else is subsidized. Not giving a subsidy to us puts us on an uneven playing field. That is the reason we need subsidies in the US.
Could you eventually think of powering individual homes too?
It may not be the best thing because if you think of individual homes, the evenings and mornings, when you do all these things, that (is when) you may be consuming power. It may be capital inefficient for you to have a piece of equipment that is not working for you all the time. It will better for a cluster of homes and businesses to be in a little micro-grid. I think that’s a better solution than having a little box in every home.
Where exactly will your fuel cell packs be installed?
It should be right where you use it and where it’s under your control. Typically, you never did that because these power generators were noisy, they vibrated and so you liked to put it far away—out of sight, out of mind. Here is a beautiful looking piece of equipment, children can play around it, people can have a picnic table around it. You can put it on a rooftop, on a basement or next to a parking lot. For the same amount of energy that you can produce, we require 120 times less land. So, (while) land use is a big issue usually (with respect to power generation), this is a non-issue for us.
When are you going public?
Going public is just a step of a long process for a company. It is not even the beginning to the end, it’s just one small step. When we are ready, we will do it. We are definitely closer to it than we were.
People can think what they want. It is a private company and our stakeholders—our investors, customers and employees—are all happy with the path we have taken.
Are you profitable?
We can state with no uncertainty that if we don’t find a path to make our own company sustainable, we cannot make the planet sustainable. We have a path for sustainability, both for us and our planet. Being a private company we don’t discuss these things.
Can you tell me about your energy capacity? Where do you see it in five years?
We are very actively engaged in building a pipeline for customers. We have actively started engaging with prospective customers. Obviously in the regions where natural gas is available like Delhi, Mumbai, Bangalore and Hyderabad. Places like that where there is both an availability of natural gas and a supply-demand mismatch, where electricity is a problem. Hopefully, next year, when you see me, the numbers will be impressive.
Could you possibly look at local manufacturing of fuel cells to bring costs down?
We already manufacture some component systems in India and make use of supply chain partners which also contribute “Make in India” manufactured goods which are incorporated into our systems. As the market develops in India and volume justifies it, we expect more Make in India content in our systems.
Will Bloom Energy seek to source biogas from local plants for generation of electricity if enough natural gas is not available?
This is among the options we are considering, especially in more rural areas.
How do you plan to raise funds?
As a private company, we don’t discuss our funding requirements. We are a very healthy company, well-positioned to execute our business plan.
Costs associated with building and maintaining fuel cells are pretty high. How can you change that?
We are already economically attractive for certain types of customers—those commercial or government entities that have significant business critical operations that cannot suffer interruption of power. Like any new, transformative technology, Bloom’s technology is riding a steep cost-down path as innovation and market volume forces come together to bring down cost. We are extremely confident that this trend will continue for many years.
How do you rate India companies when it comes to sustainability initiatives?
We applaud that sustainability is an increasing focus for India Inc. Much is left to be done and the challenge is significant to improving the sustainability of business operations in India and for the society.
What are the three biggest problems with India’s power infrastructure?
We see the three biggest challenges as lack of access and adequate supply of electric power to fully support the society, challenges with power reliability and power outages, and still high CO2, high nox (oxides of Nitrogen), sox (oxides of sulphur) and particulate emissions relative to what is possible today with an advanced technology such as Bloom.
What’s your advice to young entrepreneurs?
Pick something you are passionate (about), because there are so many ups and downs. To be able to still go ahead, that passion needs to be strong. It should be yours and not someone else’s.
(There’s) nothing wrong in being a capitalist, nothing wrong in wanting to make money. But money is a lot more satisfying, if you also find something that has a social impact.
Gireesh Chandra Prasad in New Delhi contributed to this story