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A Promising Bloom

State and UD officials hail beginning of work on new factory in Newark

1:30 AM, May. 1, 2012

NEWARK -- Standing on a concrete slab where auto production once flourished, Bloom Energy officials on Monday celebrated the start of construction on a factory that could one day employ 900 and serve as a magnet for economic development.

Bloom, state and University of Delaware officials pulled the cover off a ceremonial sign, rather than drive shovels into the concrete on the plot along Christina Parkway, west of South College Avenue, in Newark.

The factory projected to rise over the next year will occupy about a quarter of the site where Chrysler assembled cars for the better part of 60 years until closing the plant in 2008.

The Bloom plant is scheduled to begin producing solid-oxide fuel-cell generators by the third quarter of 2013, company officials said Monday. It will serve as the company's East Coast production and sales hub, and is the first piece of redevelopment on the site owned by the
university.

For Delaware, the promise signified by the start of construction centers on jobs.

The state agreed last year to provide up to $16.5 million in direct incentives, and Delmarva Power residential customers are expected to pay an average surcharge of

$1.34 a month on their electric bills over the next 21 years to support the project.

"If we create the jobs, if we create the staff, are you spending money on us?" Bloom founder and CEO KR Sridhar asked in a rare interview before Monday's event. "I would say you're investing. You're investing in yourselves."

Bloom announced its first batch of East Coast customers on Monday: Washington Gas, which installed a 200-kilowatt Bloom Energy server at its new operations center in Springfield, Va.; and Urban Outfitters, which will place 600 kilowatts of Bloom power at its headquarters at the
Philadelphia Navy Yard.

Bloom also confirmed earlier reports that a new Apple Inc. datacenter in North Carolina would be powered by 4.8 megawatts of power from "Bloom Boxes."

The company also announced more business in California from AT&T and Owens Corning. Both companies say they are speaking with the company about purchases for East Coast facilities.

However, there are fewer subsidies for fuel cells available in this region.

Additional East Coast accounts are "all but signed," said Gary Convis, Bloom's chief operations officer.

Gov. Jack Markell aggressively courted Bloom in an effort to revive the state's manufacturing sector, which suffered from the closing of the Chrysler factory and the subsequent closing of General Motors Corp.'s assembly plant near Newport.

State lawmakers and the Public Service Commission acted quickly last year to allow for the Delmarva Power subsidy.

On Monday, Markell and others noted that cooperation.

"Delaware is a small state with big ideas and huge potential," he said.

Sen. Chris Coons, D-Del., likened the mysterious catalyst in the Bloom Boxes to the political environment that made the deal happen.

"In the end, I don't know what the catalyst is in that box, but I do know what the catalyst is in this room," Coons said.

Just outside the tent where the ceremony took place was a line of silver Bloom Boxes that will soon be placed near a Delmarva substation close to Newark to generate

power for sale to the regional grid. The fuel cells use natural gas in an electrochemical reaction to generate electricity, producing fewer emissions than burning the gas.

Delmarva is buying 30 megawatts of power from Bloom's Newark site and a larger site outside New Castle. Most of the Bloom Boxes that will generate that power represent the first orders for the Delaware factory, although up to a third will come from California.

Bloom's electrical projects in Delaware will use its second-generation, more efficient 200-kilowatt Bloom Boxes, which produce twice the energy using the same amount of space as the originals.

Sridhar, wearing no tie and a clip-on microphone, stepped out from the podium and addressed the hundreds of attendees, including numerous Bloom employees.

Sridhar praised Delaware's "very business-friendly climate." He described the company's "no-nonsense" communications with Delaware officials, who he said asked what it would take to bring Bloom to the
state.

"It was a can-do attitude, political entrepreneurship," Sridhar said of the talks.

Pointing to the open space all around, he said Bloom's supply chain partners, some of whom were in the audience, could take the opportunity to "negotiate some land and space."

Sridhar noted fuel cells are not new, and that his company is working to make them available to the mass market.

He likened the effort to pioneers of mobile phones, personal computers and the Internet. Before the Wright brothers made their airplane fly in 1903, many before them tried and failed, he said.

"This is how innovation happens," said Sridhar, who noted the state did its due diligence before it signed on to the project.

"I can't write them a guarantee that Bloom will succeed in the marketplace," Sridhar said. But the state will be meeting its environmental and energy needs and will "get a good shot at economic growth."

"I think it was a very smart move of a politically savvy and an entrepreneurially bent governor wanting to do this," he said.

Newark City Councilman Jerry Clifton said people in town sometimes ask him about the risk involved.

There's some "edginess" out there, but Clifton said he thinks the Bloom project will be a special one for Newark and the state.

"This is real, this is happening and it's going to be tremendous," Clifton said.