In a world ever dependent on reliable, sustainable energy, the pressing question is not just how we generate power but how well we adapt our methods to a growing, demanding global landscape. This month, The Exchange dives deep into this challenge with KR Sridhar, the visionary founder and CEO of Bloom Energy, a company known for its game-changing approach to distributed power generation. What truly sets KR’s insights apart is his holistic vision: a sustainable and resilient energy future.
KR shares a journey rooted in purpose and persistence. He outlines the shifts needed in energy infrastructure, from traditional centralized grids to microgrids that offer more than mere backup power. As we discussed, he notes that “it’s not our fathers’ electricity,” a powerful reminder that evolving technologies and increasing demands call for a fresh approach.
KR speaks passionately about the six “ands” that guide Bloom Energy’s approach: reliability, availability, affordability, resiliency, safety, and sustainability. Each is a core tenet, and together they illustrate a complex but exciting road map to a more balanced energy future. His vision is to make energy as abundant and accessible as information is today while maintaining respect for our environmental values. With emerging innovations in virtual metering, demand response, and carbon capture, KR envisions a world where energy abundance could transform economic stability and quality of life worldwide.
In this issue of The Exchange, KR offers valuable lessons and ideas for leaders across sectors. I hope his insights inspire you as much as they have inspired me to think about how innovation can drive positive change globally.
In a world increasingly reliant on energy, the issue of electricity shortages and power outages hits close to home. How can we secure a stable and sustainable power supply for our future?
It’s been almost 150 years since Edison brought the electrical grid to Manhattan, and here we are in the most industrialized nation in the world. The biggest problem we’ll face in the next ten years is an electricity shortage. That comes from a variety of issues, but there are solutions. Some of those will be disruptive, and some will be doing the things we did before, but better, more efficiently, and more sustainably. Unfortunately, there is no silver bullet.
There are so many different solutions tailored to specific needs. Fundamentally, we need to understand that it’s not our father’s electricity. We have gone through digital transformation, but the mechanical-age infrastructure that was built to provide electricity still powers that digital infrastructure, with bandages around it. That has to change fundamentally and is different from the energy transition we talk about from a climate change perspective.
Multiple transitions are happening, and with some, we are doing things as we did before, but better, while also coming up with innovative ways of bringing electricity to people. The amount of electricity we use worldwide is going to increase significantly over the next few decades, not decrease.
Can you talk about the range of innovative solutions and, in that context, the role that Bloom Energy and you play in this space?
When we look at how we generated, transmitted, and used electricity, it was fairly simple. It involved large, centralized power generation because there were economies of scale. Then a transmission and distribution network—highways and surface streets—brought that electricity, generated far from where the population resided. Then you had to safely and reliably deliver that to the end point, and the electricity had to be available whenever the customer needed it. Electricity is the ultimate perishable. The moment you produce it, if you don’t use it, it’s of no use unless you can store it. Bottling electricity is not easy.
The big flywheel, called the grid, was the balancing mechanism that made sure your electricity use was different from somebody else’s and averaged out over a very large population in a large area, staying stable for most of the time. That entire model is being tested for multiple reasons.
There are concentrated uses of electricity in areas that are destabilizing the flywheel. Renewable electricity comes on and off intermittently, and in large quantities when the wind blows or the sun shines. That causes instability in this flywheel. The whole flywheel concept of stabilizing electricity as a simple yet reliable means is no longer working in a complex world where reliability is extremely important. That’s where we see the breakthroughs for innovation.
Whether it’s virtual metering, the ability to stand by, or demand response, all of these are necessary, but they all play a zero-sum game and the question is how to balance them. With that rapid need to expand, the question is, are you going to do it the old-fashioned way? Are you going to build faster horse buggies, or are you going to do something new?
As a complement to the grid—not a competitor to it—there will be distributed power generation that reliably generates electricity on-site where needed and supplies it to the customer. This on-site electricity generation as a microgrid can be an island microgrid if it cannot be interconnected in the short term. In the long term, I expect these microgrids to be connected to the macrogrid and to reap benefits from both.
This is where the world of electricity is headed. Bloom delivers on-site electricity generation, extremely reliable and sustainable, to customers 24/7, with significant ancillary benefits to the grid.
There will be challenges depending on geography. What do you see happening in the US versus Europe and Asia? What kinds of macrotrends do you see?
Let’s start with the US, the world’s largest producer and consumer of electricity, aside from China. For the amount of electricity we generated and used over the past 40 years, the growth rate, the CAGR, has been roughly 0.5 percent annually.
Consider the AI growth loads in data centers, the electrification of transportation—even by modest amounts—and all the industries that are brought to our shores to provide levels of resiliency, from chips to steel. Then consider electrifying everything from heat pumps to water heaters, and account for expected population growth and economic growth that require electricity. If we account for all those factors, it’s double-digit electricity growth rates for the next few decades.
Policy drives the electricity and grid industries, and you have to factor in the scale of what you do. To suddenly go from a half-percent yearly growth rate to a 2.5 to 3 percent annual growth rate would be really difficult. That’s what you see in the US: there will be shortages in pockets. Additionally, if you factor in the sustainability of what you use, it will become extremely difficult to find any pathways other than using natural gas in the short term and increasing nuclear power in the long term, ultimately reaching a zero-carbon economy. But that’s far away, based on supply and demand.
The same is true in Europe. Berlin, Frankfurt, and Munich are experiencing power shortages today. If you want to build a ten-megawatt data center, the local utility cannot provide that power because nuclear power plants have been shut down. The large baseload was shut down in Germany. France is better off because of its nuclear facilities. In Ireland, where many data centers are located, there is an acute power shortage today.
Asia is a very different story. I’ll focus first on non-China countries. These countries, including India, can become viable competitors, serving as second or third alternatives to China for the rest of the world. However, this will depend on access to abundant electricity, and that capacity simply isn’t there yet.
The biggest challenge is in South America and Africa, where roughly one billion to two billion people need to go from abject poverty to the lowest of the lower-middle class. That alone will require an astronomical increase in their electricity needs. How can we enable them to improve their lives and become slightly more prosperous while not ruining the planet from a climate perspective? Offering them viable solutions that are economically viable and environmentally viable—that’s the “and” that will be the biggest issue in those places.
You talked about the ‘and’: economically viable and sustainable. Talk about Bloom’s use of analytics and data as a means of getting to the ‘and.’
When we founded the company in 2001, we created a model that said everything we do should be remotely monitored and operated. Yes, you can put a small microgrid in place to power your local grocery store or, one day, even your home. But who among us, as owners of a home or a business, wants to operate a power plant in our backyard? We don’t. We want an appliance that automatically provides that power. So we wanted to monitor and operate all those things remotely, and that’s how we set it up.
Starting in 2008, our first systems went out over the gigawatt of deployed facilities. Today, across more than 1,000 sites, in every fuel cell stack—which is every kilowatt of that gigawatt, millions of them—is wired and connected to our remote monitoring sites, which provide us with health data every second.
So we get billions of data points, and there’s a digital twin. Using that, we can monitor and ensure, number one, that we provide the most reliable, efficient, and the right amount of electricity for our customers. That’s the easiest way to optimize not only for dollars and cents but also for the environment. So that’s an “and.”
Through that process, you learn about customers’ electricity use and can tell them, “I’m watching how you consume your electricity, and I can show you better pathways.” That’s an “and.”
If you’re generating the electricity right where you are with the molecule, while we are the most efficient way to convert a molecule to electricity, our Bloom Energy systems still generate heat. That’s the law of nature. To be able to use that heat—either to provide hot water or heating or use it in an absorption chiller to provide cooling, whether it’s for a hot home in India or in a data center—cooling is going to be super necessary.
Now you can improve that too. Then you say, “If you’re using natural gas in the short term, you have some CO2 emissions.” It’s the least of any other technology, but it still emits CO2. Is there a way to capture that carbon dioxide and sequester it? So you create an “and” for sustainability.
For us, it’s about reliability and availability and affordability and resiliency and safety and sustainability. It’s all those six ‘ands’ that ultimately provide a solution to a customer.
Can you talk about your leadership philosophy as the company founder? How did you envision Bloom Energy from the start? What was the nature of the institution you were trying to build up here? And where do you stand on this journey today?
The one thing that hasn’t changed about Bloom since the day we began is our mission statement: to make safe, reliable, affordable, accessible electricity available for everybody on the planet. That’s a lofty mission for five people gathering in a garage and saying, “I’m going to start a company.” That’s how big ideas get started. We have been steadfast on that mission.
Every time we make a decision in the company, I ask, “Is that going to move us closer to that mission statement or does it play in the margins?” That one leadership philosophy has helped us in who we recruit. You can find very smart, skilled people in many places, but can you find someone who is super skilled, has strong team skills, and believes in that mission? That drives our hiring philosophy.
When we try to solve problems daily, if it cannot meet that affordable, scalable, and available goal for everybody, even if there’s a shorter pathway to a solution, we don’t take that shortcut. We only take the longer pathway because otherwise it would not meet the mission; it only solves the problem of the day.
That’s been a leadership guiding principle: being a mission-driven company. When we sit there looking at our options, we always say, “Which one meets the mission the most?” It’s so simple that it becomes crystal clear.
As you look ahead, what are you most excited about?
Let me start with 25 to 30 years from now for our kids and our grandkids. It will be a phenomenal time. I’m a believer in abundance. Electricity is key to every other abundance. There is no economically rich country that’s energy poor. There is no energy-rich country that’s economically poor. So energy, the economy, and, therefore, life standards, health, and all that are super connected.
Thirty years from now, we will have created energy abundance worldwide, wherever you live. Between hydro, solar, wind, geothermal, and similar sources—since at least some of these exist no matter where you live—we can generate electricity. We can then harness that electricity and store it: bottle it in a molecule such as hydrogen, store it in a battery for the short term—creating an abundance of energy no matter where you live.
The vision is that every part of the world, from an energy abundance standpoint, feels like Saudi Arabia and oil. That vision will unfold over the next 25 to 30 years, and it will not be incongruent with our values for sustainability. Our world and humanity will be in a very different place. I’m super excited about that opportunity.
Final thoughts
As our conversation wrapped up, I was struck by KR’s optimism for the future. His faith in an energy-abundant world is not just an ambitious vision—it’s a practical path where sustainability and technological innovation intersect. Bloom Energy’s mission to “make energy accessible for all” is a beacon in the quest for a more equitable global infrastructure. In a world grappling with energy shortages, KR offers a refreshing perspective: We don’t need to choose between progress and preservation. Instead, we can embrace both.
KR’s emphasis on distributed power generation and the potential of microgrids reminds us that impactful change often happens close to home. His approach to leadership, a steadfast focus on mission-driven choices, challenges us to think about our roles within our organizations. For those of us navigating the complexities of business, KR’s message is clear: the path forward lies in our commitment to resilient and sustainable solutions.
Thank you for joining this edition of The Exchange. I look forward to hearing your thoughts on KR’s insights and exploring together how we can drive meaningful change in the energy landscape and beyond.
KR Sridhar, PhD, is the founder, chairman, and CEO of Bloom Energy. He is a visionary engineer, professor, and entrepreneur. In 2001, he cofounded Ion America, which later became Bloom Energy, a solid-oxide energy platform company with a mission to make clean, reliable energy affordable for everyone on earth. KR serves on the Board of Directors for C3.ai Inc., the External Advisory Board at Caltech’s Resnick Sustainability Institute, and the Board of Visitors at the Grainger College of Engineering at the University of Illinois, Urbana-Champaign. Additionally, he has served as a strategic limited partner at Kleiner Perkins Caufield & Byers and as a special adviser to New Enterprise Associates.
Asutosh Padhi, senior partner and global leader of firm strategy, is responsible for driving the strategic vision, accelerating the firm’s pace of innovation, and strengthening the partnership model for the next century. He was previously the North America managing partner, leading the firm across the United States and Canada, and was a member of the Shareholders Council, the firm’s equivalent of a board of directors.
He is also a coauthor of The Titanium Economy, a book that explores the industrial tech sector and the bright future that it can help create.
Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.
This interview was recorded on October 28, 2024.
This piece was originally posted on LinkedIn.com on December 16, 2024 as part of Asutosh Padhi’s interview series, The Exchange.