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1 Megawatt Bloom Energy Fuel Cell System
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Agenda
Xilinx Inc.
Fuel Cell Basics
Self Generation Economics
Economic Incentives
Financial Analysis
Construction
Gas Purchase
Operation
Economic results
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Fuel Cell Basics
Fuel Cell Fed With Natural Gas
Hydrogen derived from natural gas is utilized in a chemical
reaction which produces electricity in the fuel cell
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How a Fuel Cell Works
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(Basic) Economics for Natural
Gas Fueled Self Generation
Constant Electrical Production
o 24x7 constant operation
o Sized to offset as much load as possible
Minimize Cost of Generating Equipment
Sparkspread
o Best economics when natural gas prices are low
and electrical prices are high
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Electrical Use- 24hrs
• Approx cost of utility electricity: $0.14
• Approx cost of fuel cell electricity: $0.11
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Economic Incentives
Self Generators Incentive Program ($3.15M)
Federal Incentives
o Investment tax credit ($2.7M)
o Accelerated Depreciation (MACRS)
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Natural Gas Resource
Natural gas is plentiful & cheap
Many options for the purchase of natural gas
o Spot market
o Long term purchase contracts
o Hedging options- physical/financial
Contractual arrangements- NAESB
PG&E delivers 3rd party gas
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Electricity Future Cost of Electricity
o Electricity costs will rise, in part, driven by California Law mandating
increasing renewable electricity generation and restrictions on
greenhouse gas emissions
o The utilities can’t tell you how much
• 3%-?% annually
• No hedge for future elec costs
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Bloom Energy Customer
Economic Payback Model Capacity
Equipment & installation costs
Cost of gas
Cost of electricity
Federal and State taxes
Fed tax credit, incentives & depreciation
Cost of capital
Warranty & service
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Project Economics Overview
Cost of Electricity (COE) Using BE’s SOFC
Co
st
pe
r
kW
h
Grid COE
$0.225
$0.075
$0.300
$0.150
$0.000
2022 2016 2014 2012 2020 2018
Bloom
Capital
Purchase
3 - 5 year payback
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Financial Model Results
Multiple versions of model with various combos
Simple payback in the fourth year of operation
Positive NPV (net present value)
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Approval Hurdles
Bloom Energy as a “going concern”
Confirm conservative case for electrical cost
escalation
Understand the gas market
Confirm “baseload” for 10 year project life
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Implementation Proposed Location
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Implementation
Demo some fencing & ½ basketball court
Trenching, compaction, below grade utilities
Precast concrete pads
Set down fuel cell modules
Tie into electrical main
Natural gas supply
Communication
Interconnect and start up
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Operation
Operating for 13 months
Exceeding the performance guarantee
Monthly gas purchase
Routine maintenance & service
Internal effort to validate the gas hedge and
qualify for “hedge accounting”
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Economic Results
First 10 months net savings ~$810k
Projected net savings going forward~$580k/yr
o Net of fuel and warranty & service costs
Performance reflecting amortized cost of system
o $3.15M incentive easy enough to understand
o Tax benefit is baffling
o Depreciation benefits
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Appendix
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Economics- Future Costs of
Electricity
Monte Carlo simulation
assuming a 3% annual
escalator shows that a
zero NPV event is 11.85
standard deviations from
the mean