Can the price of a green revolution get too high?

I was doing some research for an article about a relatively new green energy phenomenon the other day and talking to various sources I started to think about the price of a greener world.

The technology I was writing about is called Bloom Energy and converts fuel cells “into electricity through a clean electro-chemical process rather than dirty combustion”. A lot of industry spectators have announced Bloom Energy as a revolution in green energy and major companies such as Coca-Cola, Google, Adobe and FedEx have already installed the so-called Bloom Boxed that works as the energy servers.

Bloom Boxes are independent of natural phenomenon like sun and wind and that makes a huge competitive advantage in comparison to wind power and solar plants. Furthermore, it is an on-site energy server so it is more reliable and can be used 24 hours a day.

It all sounds really good and maybe it is too good to be true as well. Not that the technology behind the Bloom Boxes isn’t efficient, but the costs for this new green tech revolution seems to be an exorbitant price.

Electricity cost with a Bloom Box is $0.13/kWh to $0.14/kWh according to strategic advisor Lux Research, which is a high price to pay for energy when then average electricity costs in the U.S. are approximately $0.11/kWh.

Furthermore, the price of a Bloom Box of 100 kW is $750.000 whereas a diesel engine that produces the same power costs $50.000. Of course there’s an environmental advantage in Bloom Energy, but there has got to be just a tiny economic incitement as well. Or just a more competitive price.

All but one of the Bloom Boxes are installed in California where the price is subsidized both on a state and federal level and that makes the energy type more affordable. The founder KR Sridhar estimated according to Gigaom.com that customers get payback on their investments in three to five years in energy saving costs, but that the payback is calculated based on both subsidies.

So in order to spread the boxes to other states with fewer incentives Bloom Energy needs to be able to drive the prices down. The company has announced that it will be able to significantly reduce the costs over the next five years and maybe that can help the revolution move along. Otherwise the revolution will be too expensive.