The state has convinced an innovative California manufacturer of electricity-producing fuel cells to build its East Coast manufacturing facility on the site of the old Chrysler plant in Newark, bringing as many as 1,500 much-needed jobs to Delaware and boosting the University of Delaware’s vision for a thriving high-tech center.
Bloom Energy of Sunnyvale, Calif., turned down more generous offers from several other states in deciding to base its first East Coast expansion in Delaware, according to Josh Richman, vice president of business development at Bloom, considered a prominent player in the emerging field of fuel cells.
Over the next five years, Bloom expects to hire about 900 workers for a manufacturing facility on the southwestern portion of the Chrysler site and predicts a minimum of 600 more jobs will follow as its suppliers open Delaware bases of operations. State officials anticipate six of those suppliers will set up shop on the Chrysler property, which qualifies as a “brownfield” given its 60-year history of automaking.
Bloom expects to break ground on its 200,000-square-foot facility this fall, and the factory should be up and running in mid-2012. Construction is estimated to create 350 jobs this year. The 900-worker goal should be attainable in just two years, said Alan Levin, Delaware’s economic development director.
The company will receive millions of dollars in incentives from the state, but must reach employment milestones within the next five years. Key aspects of the deal are contingent on regulatory, municipal and legislative approvals, which are expected to be addressed soon.
“This is something that we have been working on for a very long time — 14 months,” Gov. Jack Markell said before disclosing the deal. The deal was born with the help of some established relationships — DNREC Secretary Collin O’Mara already knew Richman, for example.
Working behind the scenes, Markell and his advisers, with some help from Sen. Tom Carper, convinced Bloom that Delaware had the right location, work force and accommodating atmosphere for the company to begin its push for East Coast business.
“Delaware at that time was not anywhere on our map,” Richman said.
“We said, ‘We think it should be on your map,’” Markell added. “We need to show companies that we understand their industries better than any other state ever would.”
Today’s announcement by Markell is a landmark in the state’s efforts to repurpose New Castle County’s two auto assembly plants, which both closed in recent years and added to the job woes of a once-robust manufacturing sector. A builder of electric hybrid vehicles, Fisker Automotive, plans to retrofit the old General Motors plant near Newport to once again churn out cars starting in 2012, utilizing more than $500 million in federal and state loans and grants and even more in private venture capital.
It’s a welcome development for Delaware’s hard-hit manufacturing sector, which lost 13,900 jobs — almost 20 percent — from 1990-2001, even before the recession arrived. In Delaware, manufacturing-sector workers earned an average of $52,500 in 2005, $8,000 more than the average Delaware worker.
It is the third major economic development coup for Markell, coming after the 2009 recruitment of Fisker and last year’s intervention to prevent the permanent closure of the refinery near Delaware City and assist in its sale to PBF Energy. Those two deals are expected to create 2,600 jobs — 2,000 at the Fisker plant, 600 at the refinery.
The Bloom Energy deal also gives a boost to the state’s ongoing efforts to cast Delaware as a center for alternative energy technology. “We’re replacing 20th century jobs with 21st century jobs,” said Richman.
Line workers, electrical engineers and sales specialists are expected to be among the positions created in Delaware.
The fuel-cell operations — including Bloom and its suppliers — are expected take of 50 of the plant’s 272 acres, which UD is working to turn into a high-tech hub for research and medicine. UD has several areas of research — including fuel cell technology, biomass fuel conversion and energy storage technology — that will bolster an ongoing partnership with Bloom, said UD President Patrick Harker.
“This fits into the whole portfolio of work that we have across the whole spectrum of energy and environmental” technology, he said. “It’s not hyperbole. This is real. We can pull this off.”
The deal also has great potential for allowing UD to leverage Bloom’s presence into wider interest in the site, officials believe.
Bloom, which was founded in 2001, builds “blocks” of fuel cells that are used by utilities and corporations as a means of electricity production. Using some type of input fuel — most commonly, natural gas — the blocks use an electrochemical reaction to convert that energy into electricity. It’s a technology that is cleaner, more efficient and less costly than many existing methods of electricity production, Bloom says.
Because there is no combustion involved in the process, 40 percent to 50 percent less carbon dioxide pollution is created, Richman said. Because its high-temperature operating regime is more efficient, it produces twice as much electricity per unit of fuel than conventional plants. The cells can run on any type of fuel, from ethanol to bio-fuels.
The privately held company, which has raised tens of millions in capital through investors, casts itself as a revolutionary in energy production, saying its technology has the potential to change the way power is produced on a truly broad scale. By generating power on a customer’s site, Bloom’s boxy “energy server” units also can offer companies increased reliability, the company says.
“Our customers generate their own electricity for less than they pay the power company,” company documents say. “These savings typically provide a 3- to 5-year payback on their initial capital investment.”
Yet Bloom, unlike Fisker, isn’t a company that is exploring a fledgling technology — fuel cells and their potential have captivated many researchers’ attention globally, and many other well-hyped advancements have failed to catch on. What Bloom seems to have captured is a particular recipe for the cells, along with a lot of attention — from the television new magazine “60 Minutes,” and from top business publications.
ecrecy and caution also has been a hallmark of the firm, which only last year unveiled its technology and goals to the public. Most of its current customers are on the West Coast, where buyers of its on-site energy units are companies at the forefront of modern technologies, and some leaders of old-school commerce, including Google, eBay, Adobe, Walmart, Coca-Cola and Bank of America.
In Delaware, the technology is seen by its proponents as a perfect fit for such big employers as the racetrack casinos, DuPont Co. and even Fisker.
Delmarva Power already has signed on to use Bloom’s fuel cells to generate 30 megawatts of power for its customers, with a goal of 50 megawatts over the next three years. Bloom’s technology will help the company reach its mandate of having 25 percent of its electricity come from “renewable” energy sources, said Gary R. Stockbridge, president of Delmarva Power Region of Pepco Holdings.
In Delmarva’s case, “Bloom Fields” of fuel-cell units located near Red Lion will be operated and maintained by Bloom for 20 years.
The Legislature must first establish a regulatory framework that includes Bloom’s fuel cells as a renewable energy source. A new rate class also must be established by the Public Service Commission so that Delmarva can bring this type of power into its “portfolio” of energy sources and pay a tariff to Bloom. That accommodation is expected to cost its customers less than a dollar a month on average.
“We see this as a starting point for a much bigger relationship,” Stockbridge said.
Bloom was attracted with the help of millions in incentives from the state:
• It eventually will get $11.2 million if it reaches the 900-employee hiring goal, but portions of that money can be “clawed back” by the state if it falls short, Levin said.
• The state also will pay up to 3 percent of Bloom’s expenditures for outfitting the facility, up to a maximum payout of $1.5 million. A minimum of 50 percent of the work on the facilities of Bloom and its suppliers must be done by Delaware contractors and subcontractors.