A Silicon Valley start up is moving forward with its mission to provide clean and affordable energy to the masses. Bloom Energy recently unveiled new fuel cell technology designed to power commercial office buildings, but envisions residential units, about the size of a bread box in the upcoming decade. Fuel cells have often been seen as the holy grail of alternative energy as they have the potential to provide some of the cleanest power around. Bloom, which has raised more than $400 million from investors, has spent nearly 10 years developing solid oxide fuel cells. This variety of cells, a product of 30 years worth of innovation, is considered the most fuel efficient.
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Bloom Energy's proposed technology allows users to create their own electricity as opposed to buying from their local utility. The real potential for these fuel cells is those emerging markets that do not have traditional energy infrastructure and power systems. Using air and a fuel source, such as natural gas, ethanol or landfill gas, fuel cells cause oxygen ions to interact with the fuel and produce electricity. Since the fuel isn't burned these cells are nearly two-thirds cleaner than a traditional coal plant. While, I wouldn't sell my shares of Southern (NYSE: SO), there is quite a bit of potential for the units. And some major corporations are taking notice of that potential. A consortium of companies, including Wal-Mart Stores (NYSE: WMT), Coca-Cola (NYSE: KO) and Staples (NASDAQ: SPLS) have been snapping up the $700,000 commercial sized Bloom boxes to add to their operations. EBay (NASDAQ: EBAY) has been using five Bloom units since July and estimates it has shaved more than $100,000 off its total energy bill so far.
Adding Cells to a Portfolio
While Bloom Energy isn't currently a public company (although based on its venture capital investors previous history it will be), there are several fuel cell manufacturers that are. As demand for these cells has been increasing, cost, the major issue for all forms of energy, has been steadily decreasing to around 15 cents a kilowatt hour. Looking towards the future, these kinds of devices could find their places in more municipalities, remote off-grid locations and automobiles such as Honda's (NYSE: HMC) new FCX Clarity. Adding a speculative dose of fuel cells to a portfolio may do it some good.
As a former tech darling during the dotcom days, Fuel Cell Energy (NASDAQ: FCEL) has seen its share price slide from almost $50 to just under $3. The company produces carbonate and solid oxide generators, an older, but similar styled version of the Bloom Energy cells. The company produces large-scale units, and has installing a few on Yale University's campus. However, the company still loses money on every unit sold.
The Obama administration has hinted at removing incentives and subsidies for hydrogen-based fuel cells as they believe that the technology still has a far ways to go before becoming commercially viable. Both shares of Ballard Power Systems (NASDAQ: BLDP) and Plug Power (NASDAQ: PLUG) have fallen accordingly. However, continued interest from the auto industry and industrial equipment providers still could give the shares a long term boost.
For investors wanting more of a fuel cell "sure thing", both industrial giants Siemens (NYSE:SI) and United Technologies (NYSE:UTX) have large business lines dedicated to commercial fuel cells. Investors gain the safety net of dividends and a diverse product lines to help cushion the blows.
The Bloom Energy announcements can only be seen as a positive for the fuel cell market. As one the cleanest forms of electrical power available, fuel cells could potential be the panacea need to help cure climate change and our energy addiction. Only time will tell, if the industries efforts pay off. In the mean time, investors who are feeling speculative could place their bets with one the publicly traded companies in the sector. (For more, see Ten Ways To Save Energy And Money.)
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