Bloom completes financing for upgrade of Delaware fuel cells

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Bloom Energy has completed financing for an upgrade of its fuel cells in Delaware.

In June 2019, Bloom Energy Corporation entered into a transaction to upgrade 30 megawatts of fuel cell servers in northern Delaware owned by Diamond State Generation Partners, according to a filing with the Securities and Exchange Commission.

In the first phase, Bloom repurchased and removed 19 megawatts of the existing older generation Energy Servers and the Project Company purchased 17.7 megawatts of new Energy Servers to replace the older generation servers.SP Diamond State Class B Holdings, LLC, a wholly-owned subsidiary of Southern Power Company now owns a majority stake in the servers.

On Dec. 23,Bloom entered into agreements to repurchase and remove 11 megawatts of the existing older generation Energy Servers and have the Project Company purchase 9.8 megawatts of new energy servers to replace the older generation servers.

To finance the purchase of the new servers, Assured Guaranty Municipal Corporation (“Assured Guaranty”) was admitted as an equity interest member. It made or will make capital contributions of about $87.5 million to purchase the new 9.8 megawatts of energy servers.

In connection with the second phase of the upgrade, Bloom has agreed to indemnify Assured Guaranty for environmental risks, tariff damages, and certain tax events.

Bloom anticipated it would have the 9.8 megawatts commissioned by December 31, 2019, subject to unforeseen weather delays.

Bloom had earlier come under fire over the lack of disclosures to shareholders regarding the upgraded energy servers. The company said the hundreds of millions of dollars in upgrades had been anticipated as technology improved.

Energy generated by the fuel cells is feed into the Delmarva Power grid, with utility customers paying a surcharge for the added cost of the power generated through the natural-gas-fueled servers.

The power purchase was part of an agreement that brought Bloom’s main production plant to Delaware.

The added charges have been controversial, coming at a time when electric power costs have declined, due to ample supplies of electricity and natural gas as well as more solar and wind power coming online.

Critics claim the added cost of Bloom Energy server power has cost Delmarva ratepayers hundreds of millions of dollars and discouraged companies from expanding or relocating to the state.

Critics also attempted to convince utility regulators to deny Bloom’s plans for the upgrade and launched an unsuccessful legal effort aimed at voiding the power contract with the state.

Bloom has fallen far short of earlier estimates that it would hire 900 workers, with about a third of that number working at the Newark site. The shortfall has been partially offset by higher-than-expected average paychecks for the workers.

Bloom is now promoting the use of the fuel cells in mini-grids that allow key facilities to operate during extended power outages. Bloom has seen extended outages in its home territory of northern California as PG&E cut power in response to downed powerlines contributing to wildfires.

Bloom has also modified fuel cells to operate renewable gas sources from landfills and methane digesters at farm operations.

The use of renewable fuels comes after critics claimed that the use of natural gas disqualifies the fuel cells as an alternate energy source. Delaware put the fuel cells in the alternate energy category.

Bloom fuel cells are also used as back-up power systems for data systems of corporate customers like JPMorgan Chase, Adobe and Apple.

Bloom says its fuel cells are much cleaner than diesel generators that are often used for back-up power.

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