Bloom Energy misses salary, wages targets

Bloom Energy has fallen short of the hiring and wage targets it agreed to meet when it accepted $16.5 million in state funds to create jobs in Delaware.

The Delaware Council on Economic Finance approved the grant money in 2012 so Bloom, an energy technology company, could build a fuel cell plant in Newark. As part of that incentive contract, Bloom was required to spend $36 million on total salaries at the plant by the end of September.

Based on that combined salary number, it was estimated that Bloom would create 600 jobs in Delaware before October. However, the company has hired 224 workers earning a combined $27 million, according to a report Bloom filed Friday with the Delaware Economic Development Office.

Bloom has received $12 million of the $16.5 million the state allocated for job creation.

The Sunnyvale, California, company also failed to achieve its salary and hiring goals last year. Bloom was expected to create 300 jobs paying a combined $12 million by the end of September 2014, but only hired 208 workers earning a total of $9.5 million.

Bloom's 224 jobs in 2015 represents less than 10 percent growth from the 208 workers it employed last year.

Under Bloom's incentive contract with the state, they need to create 900 jobs producing a combined salary of $108 million by September 2017. If Bloom does not achieve this goal, they will be required to repay some of the incentive money.

Bloom blamed the slow growth on delays in obtaining regulatory approval from local governments before installing its projects. It said the lengthy approval process has created lag time between sales and receiving payment.

"The good new is that we are developing a much better understanding of local regulations and requirements in these new regions we are working to shrink the time it takes from signing contracts to deployment," Bloom Chief Commercial Officer William Kurtz wrote in the report.

Bloom's major revenue source in its incentive deal with the state is a recurring surcharge on Delmarva Power bills. In March, the Delaware Public Service Commission increased Delmarva Power surcharges for Bloom Energy. The total payments under the state-mandated subsidy are expected to generate between $35 and $36 million for the company in 2015. Since 2012 the subsidy has generated $84 million, according to data from Delmarva Power.

The surcharge agreement paid by a typical customer was $4.34 per month based on 975 kilowatts used.

Bernice Whaley, state economic development director, said she was "disappointed," but expects Bloom to increase hiring once it shrinks the time it takes to secure a government permits. But she said consequences could loom for the company if it misses next year's targets.

"Should Bloom fall short of its commitments, even as it continues to grow, DEDO will ensure the company makes required repayments of grant funds," she said.

Kurtz noted in the report Bloom will be required to return a portion of the grant fund, but asserted the company will meet its 2017 targets. Although that would require the company to hire more than 600 workers in less than a year, Kurtz said the company has hired 11 new workers since September and extended offers to 17 prospective job candidates.

"We remain committed to Delaware and creating more long-term sustainable high quality jobs in the state," he wrote.

Alan Levin was the state's economic development director when the state allocated funds for Bloom. He said the company should not be measured solely by the its failure to hit the goals established for the grant.

"Bloom is doing good," he said. "The factory is open and producing and they have contracts for the next year and half."

Levin added that he does not regret giving Bloom taxpayer funds to build up the Newark facility.



"They've created an opportunity for Delaware to be on the cutting edge of new technology," he said. "It's not just a widget manufacturer. Delaware needs this if it wants to be viewed as productive and innovative.

Despite the lower than projected job totals, Bloom employees,individually, are earning higher wages than initially forecasted. When Bloom made its pitch to the state back in 2012, it predicted the average worker would earn roughly $40,000 annually. In 2015, Bloom workers averaged nearly $68,000 in average annual salary.

Whaley said the increases average salary was a sign Bloom is moving in the proper direction.

"We are encouraged by these wages and Bloom's strong order book in recent months," she said.

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or jmordock@delawareonline.com.