March 22, 2016 President Michael Picker California Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94102 VIA Email Dear President Picker, There have been questions in the Self-Generation Incentive Program (SGIP) proceeding regarding the performance and value relative to program goals of Bloom Energy’s all-electric fuel cells. Given that the full and in-depth proceeding may not be easily accessible to all interested parties, we would like to provide relevant information in a transparent manner that will address these questions, fully respecting that this issue is part of an open proceeding. Bloom Energy meets all program goals established by the California legislature, which include reductions in greenhouse gases (GHG) and criteria pollutants, load reduction, increased reliability and market transformation. Bloom’s emissions are in fact clearly lower than grid emissions in California, per the Commission’s own analysis, and have materially helped to achieve program goals.1 To evaluate performance of our Energy Servers against new program goals it is important to use performance data from our latest generation of technology, which is what we are shipping to customers now and would be the basis for any new SGIP applications. We are proud that every new generation of Bloom Energy Server builds on our rapid technology progression and significantly improves performance against program goals. The Staff Proposal comparing Bloom’s prior products to future emissions goals is speculative and fundamentally flawed by failing to factor the performance of our latest technology, which has significantly improved from the past generations upon which the Proposal’s recommendation is based. Bloom has performed the needed testing to ensure that the current generation of systems qualify as GHG reducing under the new program metrics, and stands ready to provide the test results as part of any new application, per the program protocol. Our current generation Energy Server features the highest electrical efficiency of any commercially available distributed technology today, allowing it to meet all of the program goals. We are also confident that subsequent generations will continue to rapidly improve, keeping pace with progressively more ambitious program requirements in the future. Bloom Energy’s all-electric fuel cell systems contribute to a better California by reducing GHGs every hour of the day, all year long. As to cost effectiveness, or the value of incentivizing a new technology such as Bloom’s, the Commission staff has employed a Cost Effectiveness Report that includes a “societal total resource costs” (STRC) model. The STRC model is intended to provide a cost/benefits analysis of each technology. Unfortunately, the model the Commission used relied upon outdated data corresponding to past 1 See 2013 SGIP Impact Evaluation Report, Figures 7-1 and 7-5. 1299 Orleans Drive, Sunnyvale CA 94089 T 408 543 1500 F 408 543 1501 www.bloomenergy.com generations of Bloom Energy Servers, coupled with other imprecise input assumptions, resulting in inaccurate conclusions. It has been publicly acknowledged by the Commission that the preliminary report did not include current data inputs.2 Even though the cost effectiveness test is not an SGIP eligibility requirement, if the Commission wants to utilize this measure it should be done accurately. In the absence of this critical update of inputs into the STRC model, preliminary comments in the report have caused great confusion not only to stakeholders, but to customers using the program, the press and even the Commission’s own staff. When a model is not based on accurate inputs, using it to make recommendations causes real harm. As noted, the Commission and the report authors admitted no stakeholder input was taken to verify data assumptions. The Commission later held a workshop to better inform the model assumptions, but this was after initial recommendations based on inaccurate data were already made public.3 In our formal comments4, Bloom has clearly outlined some of the appropriate corrections to provide an accurate basis for evaluation. The Commission should be responsive to these comments and create an updated and accurate analysis as the basis for any conclusions. Bloom is proud to be a California headquartered innovation company, developing and manufacturing an advanced, clean energy technology that continues to improve and positively impact California’s ever more stringent environmental goals in a cost effective manner. We applaud the good work the Commission is doing in ensuring program goals are met. It is in this spirit that we address these important issues with you. Please do not hesitate to contact us if we can answer any further questions. Respectfully, Erin Grizard Director, Regulatory and Government Affairs cc: Commissioner Mike Florio Commissioner Catherine J.K. Sandoval Commissioner Carla Peterman Commissioner Liane Randolph Service list Rulemaking 12-11-005 Nick Chaset, Chief of Staff for President Picker Sara Kamins, Supervisor Neal Reardon, Senior Regulatory Analyst 2 See the Opening Comments filed on the Staff Proposal Jan 7, 2016. The CPUC called a workshop on December 21, 2015, after the Staff Proposal, which relied on the Cost Effectiveness report, was released on November 23, 2015. 4 Opening comments Jan 7, 2016: http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=157542147 Reply comments Jan 22, 2016: http://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=157887019 3 1299 Orleans Drive, Sunnyvale CA 94089 T 408 543 1500 F 408 543 1501 www.bloomenergy.com