Bloom Energy sues Santa Clara over permits—for a second time

Bloom Energy filed suit against Santa Clara last week—marking the second time the San Jose-based energy company has sued the city to issue permits for its fuel cell boxes.

“Climate change is rearing its ugly head,” Santa Clara Councilmember Suds Jain told San José Spotlight. “My main opposition to Bloom Energy is that their carbon footprint is much higher than Silicon Valley Power’s carbon footprint.”

A key metric determining whether Bloom Energy’s fuel cell boxes can be used in Santa Clara is their source of fuel, Jain said. Most Bloom Energy servers are fueled by natural gas or methane, which makes them incompatible with Santa Clara and California’s climate goals. The state requires municipal grids to move to 100% renewable energy by 2045.

“If somebody were to install a Bloom box, it would continue to run on methane forever… it would continue to keep us addicted to fossil fuels,” Jain said. “Methane is a huge contributor to climate change.”

In 2019, Bloom Energy sued the city for requiring self-generating power sources to use renewable fuels, including solar, wind, geothermal and fuels cells using biogas. Because Bloom Energy’s fuel cells run on natural gas, they couldn’t connect to the electrical grid through Silicon Valley Power, the city’s own electrical utility.

After the Santa Clara County Superior Court ruled the city needed to conduct a California Environmental Quality Act study before enacting the law, the city re-classified Bloom Energy’s fuel cell boxes as power plants, which allows Santa Clara to issue permits at its own discretion.

In its most recent suit, Bloom Energy says the city simply found another way to block its fuel servers, prompting the company to sue in order to compel the city to issue permits.

“The city has refused to issue ministerial permits for new Bloom Energy server installations, in direct violation of its own zoning code,” Bloom Energy spokesperson Jennifer Duffourg said in a statement to San José Spotlight. “After cooperating in good faith with the city to find an amicable solution, we have decided to pursue judicial intervention to protect our ability to provide clean and resilient energy for businesses in Santa Clara.”

Santa Clara spokesperson Lon Peterson said the city is aware of the pending litigation but declined comment.

This isn’t the first stroke of controversy for the San Jose energy company as it pushes to install its technology in Bay Area cities.

A San José Spotlight investigation in April revealed how the company lobbied heavily to win a last-minute exemption from a natural gas ban in San Jose, allowing the company to skirt the landmark rules. Carl Guardino, the former CEO of the Silicon Valley Leadership Group, and a close friend of Mayor Sam Liccardo, was at the center of the lobbying efforts. He now works as Bloom Energy’s executive vice president of government affairs and policy.

In Santa Clara, Jain said Bloom Energy could configure its fuel cell servers to run on biogas, but that fuel remains prohibitively expensive. He added that if Bloom Energy’s servers operate off the grid, they can be installed in Santa Clara.

“The fundamental problem arises when they want to use the grid as the backup power,” Jain said.

But Duffourg said Santa Clara’s true motive for blocking Bloom Energy’s fuel cells is protecting Silicon Valley Power from competition.

“The city of Santa Clara discovered that the advantages and popularity of the Bloom Energy servers were attracting substantial new customers away from the city’s own municipal electric utility, Silicon Valley Power, causing SVP to lose market share and profits,” Duffourg said.

She added that the removal of the municipal grid as a source of backup power for Bloom’s fuel cell boxes forces customers to rely on diesel generators for backup power.

“The city is pursuing a flawed strategy that encourages and proliferates the use of diesel generators, which pose a hazard to community health and the environment and undermines efforts to deploy cleaner, more efficient and reliable forms of energy,” Duffourg said.

Jain said Santa Clara has not banned Bloom Energy—it has simply banned the natural gas-fueled energy servers from being connected to the city’s electrical grid.

“If they’re going to use our grid as their backup, we have put restrictions on it,” Jain said. “We have to get to zero carbon, and using Bloom boxes with methane is not going to get us there.”

Contact Sonya Herrera at [email protected] or follow @SMHsoftware on Twitter.