Delaware Fuel Cell Factory Challenged With Lawsuit

Environmentalists and tech heads were delighted when Silicon Valley fuel cell maker Bloom Energy broke ground on its first East Coast factory in Newark, Delaware last month. But now the non-profit government watchdog group Call of Action is trying to throw a monkey wrench into the machinery.

As first reported by tech industry trackers GigaOm, COA has filed a lawsuit charging Delaware Gov. Jack Markell and the regulatory Delaware Public Service Commission with cronyism. More specifically, with "unconstitutionally discriminating against Bloom's competitors and taxing a segment of Delaware residents to subsidize the crony company."

Filed on behalf of a utility customer named John Nichols and one of Bloom Energy's fuel cell maker competitors, COA says utility customers will subsidize the project through $133 million in tariffs. It also charges that the Delaware Renewable Energy Portfolio Standards Act was "modified solely to accomodate the state's deal with Bloom."

It should come as no surprise to anyone that new energy tech requires serious investments at first, far exceeding what the developers can earn back in the marketplace. And of course the state of Delaware made a special deal with Bloom, to attract the company and gain 900 factory jobs in Newark. 

The taxpayer tariffs were actually spelled out in the first announcement of the project in 2011, though couched in a less offensive "70 cents per residential customer per month" estimate.

As such, VOA's new accusations seems rather disingenuous to Gizmo Guy, reminiscent of that classic moment in "Casablanca" when Captain Renault tells Rick "I'm shocked, shocked to find that gambling is going on in this establishment!"

Fuel cell technology normally uses natural gas or bio-gas combined with oxygen to create a chemical reaction to produce electricity. Bloom's variation is even more eco-friendly. It uses a ceramic-based chemical catalyst rather than burning to separate the electrons from the hydrogen and carbon in the gas, resulting in zero emissions. Bloom also claims to have greatly improved the efficiency of its newest 200 kW fuel cells, producing double the output of older stacks with the same footprint.

A major justification for Delaware's Delmarva Power & Light deal to buy 30 MW worth of fuel cells from Bloom was to reduce emissions as demanded by federal guidelines. GigaOm said this purchase is "a game changer for Bloom, and the largest fuel cell purchase from a utility in the U.S. to date."

Other east coast customers who've committed to using Bloom's fuel cells include Urban Outfitters and Washington Gas.