Subject: UFTO Note – Next Generation Wind Turbine
Date: Thu, 12 Dec 1996 17:03:33 -0800
From: Ed Beardsworth
| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| NOTE NEW EMAIL ADDRESS: email@example.com
This Summary was prepared for UFTO by the Wind Turbine Company. Complete details on their business plan and technical approach are available from the company. The company is seeking business partners and equity investment capital.
THE WIND TURBINE COMPANY December 12, 1996
WTC’s 2-blade, downwind turbine design holds the promise of reducing the cost of wind generated electricity from its current level of 5¢/kWh to less than 3.5¢/kWh without resorting to available subsidies. WTC has significantly refined and improved upon the downwind design, incorporating proprietary technology, in a quest to reduce the initial turbine cost, the primary cost driver of wind energy, without sacrificing reliability. WTC’s turbine will weigh 60% as much as a comparably rated 3-blade, upwind turbine. Its lighter weight will permit WTC’s turbine to operate higher above ground (100 meters or more) than is economic for upwind turbines, thus exposing it to higher winds resulting in more energy production. Lower weight and higher energy capture combine to provide a substantial reduction in the cost of wind generated electricity.
WTC was selected by the Department of Energy’s National Renewable Energy Laboratory (DOE and NREL) to participate in Stage 2 (the hardware building stage) of the “Next Generation Turbine Development Project.” This is a $20 million project with the DOE picking up 70% of the cost. It will last 5-6 years. Two commercial wind turbines, the WTC 250 and WTC 1000, will be developed. As the result of its cost sharing, WTC will own all hardware produced.
A contract with NREL permitting work to begin on this project is expected by the end of December, 1996. To begin work, WTC needs to obtain initial funding for its share of the cost. WTC has identified two outside sources of funding and would like to identify one or two additional sources, one of which is ideally a strategic partner that can help commercialize the wind turbines when they are available.
The project will be executed in three phases corresponding to the development of three wind turbines:
In the “proof-of-concept” (POC) phase, WTC will manufacture and begin testing the POC 250, a 250 kW turbine. This turbine will demonstrate the technology that is novel to WTC’s design-WTC’s proprietary, hydraulically operated system in the turbine’s rotor that permits the cone angle between the blades to adjust depending on wind speed. Building the POC 250 will take approximately 12 months with an extended testing period to follow.
In the second phase WTC will develop the first full-scale 1000 kW turbine. This phase will begin in the second quarter 1998. During this phase, WTC will also develop an all new wind turbine blade for the 1000 kW turbine.
Concurrently, and independent of the NREL contract, WTC will refine the POC turbine with the intention of having the WTC 250 commercially available in early 1999.
3. The second full-scale turbine, the WTC 1000 production prototype, will be manufactured in the third phase. This turbine will be a commercial product.
To execute the project, commercializing the WTC 250 in parallel, WTC will have to raise approximately $12 million in equity funding over the next 5-6 years before reaching a break-even cash flow. This fund raising occurs in stages corresponding to the turbine development phases. Presently, WTC is raising $2 million by selling equity representing approximately 40% ownership of the Company. This will permit execution of the POC phase.
One of WTC’s current shareholders will participate in this financing, and WTC also expects a newly formed, electric utility-funded venture capital company to participate. Together these investors will account for a minimum of $1 million of the required initial funding, and could easily account for more. Both would like WTC to identify a strategic partner.
Markets for the WTC 250 and WTC 1000
The opportunity for the WTC 250 is in developing countries and in installations that are not grid connected. For example, the standard WTC 250 would be ideally suited for islands in the Caribbean, the Azores, etc., as well as mainland-based installations in Latin America and Asia. Primary considerations for this turbine are climates where fully weather protected maintenance is not critical, and where existing infrastructure such as roads, as well as the unavailability of large-size erection equipment, prohibit the installation of large wind turbines.
Many such installations are currently served by diesel generation units or are candidates for such units. Even in locations where diesel fuel is low cost, integrated wind/diesel systems will emit less pollutants and therefore should be viewed favorably by customers.
One modification to the WTC 250 which has been considered is the development of a cold weather version. Though the market for this wind turbine is a subset of the market for stand-alone systems, it is a high value opportunity. In many remote, cold weather locations, the cost of delivering diesel fuel is high.
WTC believes it can sell a limited number (20+/-) WTC 250 wind turbines in early 1999, generating its first revenue from commercial sales. Specific customers for these turbines have not been identified, however, a number of opportunities exist including the DOE/Electric Power Research Institute sponsored Turbine Verification Program. The US military is also known to be considering use of renewable energy technologies.
The opportunity for the WTC 1000 is large scale, grid connected applications. At present, and for perhaps the next 5-10 years, this market will be primarily in North America and “off-shore” in Europe. If the WTC 1000 achieves its cost and energy production targets, it will be competitive in the deregulated North American marketplace. Initially, it will displace higher cost sources of electricity from the grid when the wind is blowing. Storage technologies will eventually improve to the point where wind energy will become a major contributor in the North American electricity system.
During the next 3-5 years, however, there will be limited opportunities for new wind energy projects in North America as the generation industry deregulates and excess capacity is absorbed. This is the period during which WTC will be developing its new technology. By the time the WTC 1000 is available for commercial sale in the year 2000, the US market for low-cost wind energy will be rebounding.
The immediate opportunity for wind energy will be presented by the closure of aging nuclear power facilities. WTC believes the public will not accept a lessening of air quality as the price for a more competitive electricity market. Thus, in spite of an abundance of coal in North America, natural gas will to continue to be the fuel of choice. If the WTC 1000 achieves its cost objectives, electricity generators will turn their gas turbines off when the wind is blowing.
For more information please contact:
Larry Miles, President
The Wind Turbine Company
515 – 116th Avenue NE, Suite 263
Bellevue, WA 98004 USA