Sage Supplier: SW manufacturer makes on-site wind power accessible, affordable

Route 66 road trip nets energy freedom

August 12, 2011

Distributed wind turbine manufacturer Southwest Windpower makes onsite wind power accessible, affordable and adorable. Co-founder Andy Kruse also took it to the Hill to get Small Wind a piece of the tax incentive pie in the form of an investment tax credit.

Flagstaff, Ariz., is the most elevated city on historic Route 66. It also is headquarters to Southwest Windpower, a pioneer in the development of wind technology and leading supplier of distributed wind generators. Being the highest rest stop on the Mother Road is a metaphoric location for the manufacturer, which is itself at a technological apex of an age-old energy source (see Figure 1).

"In optimistic post W.W. II America, Route 66 defined a generation looking for adventure and freedom on the open road," wrote Guy Randall (www.theroadwanderer.net). The era in which Southwest Windpower was begun may not have been an optimistic one for renewable energy, but for Andy Kruse, Southwest Windpower co-founder and senior vice president of marketing, launching the venture represented adventure and freedom as much as the Mother Road itself.

Windy, Winding Road Trip

"Call me naive; I founded the company in '87. This is the same year President Reagan let all the tax credits for renewable energy expire and even removed the solar panels from the White House roof. It was also the year of the great stock market crash. It wasn't exactly a good time to start a renewable-energy business," Kruse said.

"In the mid-'80s I was living off the grid—not by choice—on a working cattle ranch in a remote area of northern Arizona," Kruse said. "We used diesel and propane generators for lights for about six hours a night. I knew there had to be a better way, so I did some research and built a small, 200-watt solar energy system. It was incredible! For the first time, the ranch had lights 24 hours a day. I decided I needed a wind generator to charge the batteries at night and built one out of a car alternator. I failed miserably, but that is when I met David."

"David" is David Calley, a hobbyist who built his first wind turbine at age 12 with a bicycle hub generator and a motorcycle battery. He was building wind generators in his garage for his neighbors who also lived off the grid.

Kruse asked Calley to build one of his machines for the ranch. It worked so well that Kruse thought they could develop a business making and selling the wind generators.

"Rather than doing some sort of market study, I thought we should take it to a national tradeshow to measure the level of interest. We brought back orders to build more," Kruse said, "I thought, this is great. There is a business opportunity here with this little wind generator."

The two entrepreneurs rubbed their credit cards together, along with a small amount of family money, and the two became de facto partners. Kruse wrote a business plan, and over the next several years, friends' and families' investments, along with growing sales, lifted the company off the ground.

"The late 1990s was a significant time for the industry, as technological advances helped the renewable-energy industry move into the grid-connected market. These advancements primarily centered around inverter technology, which made connecting to the grid easier," Kruse said.

He and Calley leveraged the concept and got more financial help from the U.S. Department of Energy. They were awarded a contract to build a commercially viable small wind generator that was designed for small businesses, homes, and schools, which they introduced in 2006. During that time they received more significant investments from venture capitalists.

The company still is privately held, with investments from Chevron, General Electric, RockPort, and Altira (see Figure 2).

Calley left the firm in 2009 to follow his original dream of building special electric motors for electric bikes.

Today Southwest Windpower has emerged as the world's largest producer of battery-charging small wind generators (400 to 3,000 W). Its products are manufactured at its Flagstaff headquarters (see Figure 3 and Figure 4), with additional operations in Cologne, Germany, and Boston. It has a joint venture in Ningbo, China. The manufacturer has designed, built, and shipped more than 170,000 wind turbines to more than 120 countries since its inception.

Small Wind, Big Wind

Kruse distinguishes between big wind and small wind by their application and their relationship with the power grid more than by their operation.

"Technically, utility-scale wind and small-scale wind are the same," Kruse said. "They both use a large propeller driven by the wind that converts kinetic energy into electricity (see Figure 5). So in that context, they're identical. But that is where it ends.

"Where they really differ from each other is on the market side. Small-scale wind energy is used for what we call on-site, or distributed, generation [see lead image]. We actually prefer to call ourselves on-site or distributed wind, rather than small wind. We provide power for an application right on that site, rather than large-scale, or utility-scale, wind, which generally comprises very large-megawatt machines that are grouped together on wind farms, designed to produce bulk power for a city."

How Wind Systems Work With the Grid

Instead of storing the energy the wind turbines produce, Southwest Windpower's systems are set up to use wind energy in conjunction with power from the electric utility.

When the wind blows, the energy that is being generated by the turbine's spinning blades replaces energy that manufacturers otherwise would pay for in their monthly bills. When the wind is not blowing, it is business as usual with the customer's electric utility.

Kruse expounded. "Distributed wind systems work just the same as any other renewable-energy technology, whether it's solar or combined heat and power systems. The energy—in this case, kinetic energy—syncs the electricity that the turbines generate right with the grid.

"They do not require batteries unless you want them for backup. If the wind is not blowing or if it is not strong enough, the business receives the rest of the energy from the utility. When the wind generator produces more energy than what's needed, the excess energy goes onto the grid, spinning the meter backwards. It all works seamlessly."

Other than meeting safety standards, it's really a simple process, Kruse said.

"The company and the utility would have what's called an interconnection agreement which includes the price and the value of the electricity that will get credited some other time. Sometimes it's at retail price, which is net metering; sometimes it's at wholesale, which is net billing. Forty-two states have net metering laws now. Net metering is very common," Kruse said.

Applications in Manufacturing Plants

Distributed wind systems have great applicability for manufacturing plants (see Figure 6), as well as residential homes in rural and remote areas, commercial properties, and microgrids.

"On-site wind systems have been used in industry for many years, helping factories to reduce their energy consumption from the grid," Kruse said.

Some of the more unique applications are telecom transmitters, water pumping stations, sailboats, and even nomadic herding in Mongolia for basic lighting. Governments, Greenpeace, NASA, the U.S. Geological Survey, oil companies, and other organizations around the world use the company's wind turbines for monitoring sites or supplementing their energy at a facility.

Ironically, in some sort of poetic justice, some of Southwest Windpower's biggest applications are on offshore oil and gas drilling platforms. Nearly 500 oil platforms in the Gulf of Mexico use small wind or hybrid solar/wind systems to provide power for supervisory control and data acquisition (SCADA) systems and platform lighting.

Rather than consuming oil with thermal-electric generators to provide power to the rigs, these applications use Southwest Windpower's small wind generators.

"The oil industry traditionally had used thermal-electric generators, and they would burn the oil or natural gas as it was coming out of the well. They realized that was pretty valuable stuff they were burning, and so they studied a lot of different technologies to reduce their overhead costs. One of them was with renewable energy. Wind is ideal because it provides a lot of energy and doesn't take up very much room," Kruse said.

How Big, How Much?

So what does it mean for a wind turbine to be rated 100 kW, 200 kW, 600 kW. "We use those references as an indicator of size to compare them. It's more of a way of categorizing our different sizes of turbines. Each of them is designed for different applications," Kruse said.

"The Skystream is a 2.4-kW-rated machine, capable of reducing or eliminating a small business's electric bill. But that all depends on how much energy is consumed and what the average wind speed is. The best way to know if wind will work is to look for a dealer in your area and have a site assessment done," he said.

Smart Grid-Enabled

One of Southwest's most recent innovations is a wind energy system that works with the so-called smart grid.

"How consumers pay for electricity is changing. Many utilities are moving to time-of-use metering. This means the price of electricity will vary over the course of the day, depending on demand," Kruse explained. "The rate could change hour by hour—or as often as utilities want to."

Millions of smart grid-enabled meters have already been deployed, Kruse said. The device can measure exactly how much electricity is consumed and then relay that information to the utility in real time.

"So how Skystream operates in that environment is that it can communicate with a factory's computer system, which also has the capability of turning loads on and off, depending on the electricity rate. The computer then communicates with the wind system to either feed the electricity to the factory or into the grid, depending on where the electricity is more valuable. In small load demand systems, you could either apply the power into the electrical grid or use it internally in the factory."

Accessible, Reliable, Efficient

Kruse said he believes that for the use of wind energy to grow and gain acceptance in the long term requires innovation to improve performance and reduce the levelized cost of energy.

Technology advancements have empowered the company to produce machines that are more reliable and with a lower cost of energy than ever before, Kruse said. The company's Skystream 3.7 cut the cost of energy for small wind systems in half in 2006, earning it notable accolades, including the Best of What's New Award from Popular

Science and recognition by TIME as one of the Best Inventions of 2006.

Kruse said the company's continous effort to reduce cost is in line with the reality that tax incentives are likely to be offered only for the short term. "You have to look at the future. What are you going to do in five to 10 years when Congress pulls the incentives? What is the long-term fix?"

Its cost-reduction approach combines technology innovations with production techniques used by the automotive and appliance industries.

Reducing Production Cost. Southwest's most recent product upgrade, Skystream 600, has reduced the levelized cost of energy by 30 to 40 percent by reducing production costs because it has no gearbox; it has direct drive instead.

The manufacturer drove cost out of production by redesigning the turbine to reduce the number of components. There are about 1,500 components in a small wind turbine, he said (see Figure 7). "You take cost out by designing it to operate with fewer components and fewer moving mechanical parts," Kruse said.

In addition, the company explored new processes to manufacture the components. Kruse said the blades are now made in a compression molding process rather than the standard, labor-intensive hand lay-up method.

Most blades are made from layers of fiberglass that are applied by hand, Kruse explained. "The molds are not that expensive, but it takes a lot of time to produce a blade. Compression molding is the opposite. The mold was $600,000—but it cuts the cost of the blade by 70 percent," Kruse said.

Reducing Installation Cost. The kilowatt-hour cost depends on the total installed cost plus maintenance, not just the cost of the turbine, Kruse said. "How tall is the tower? What type of foundation is there? What is the cost to deliver the equipment to the site? We spend a great deal of time studying and researching this."

The trick is to reduce cost without sacrificing durability. "The wind system has to withstand very high winds. The number of rotations the blades turn is comparable to traveling 5 million miles in a car, so the turbines must be very durable," he said.

Almost There

Southwest Windpower recently received a Globe Sustainability Innovation Award recognizing the company's economic, social, and ecological innovations that contribute to a sustainable society. "Receiving this international recognition demonstrates Southwest Windpower's ongoing commitment to make renewable energy accessible, reliable, and efficient," a company official said.

The manufacturer's long-term goal is for its products to reach grid parity—in other words, to produce electricity at or below the average cost of electricity in the U.S.—without incentives. It is getting close, Kruse maintains.

"Currently that is about 11 cents per kilowatt-hour," Kruse said. "The good news is, we're about there."