When it comes to energy, GE is all about big: big coal plants, big nuclear plants, big wind towers. So why would the $183-billion a year industrial conglomerate bother to invest a small amount of money—just a few million dollars – in a small company that makes wind turbines so small they can be erected in your backyard?
Perhaps because, under the right circumstances, homeowners can make their own wind-generated, low-carbon, electricity for less than it costs to buy power from their local utility. This could turn small wind into a big deal.
Southwest Windpower, the company backed by GE, has made quite a few of those small turbines–more than 140,000 since the company was started back in 1987. The company manufacturers the wind turbines in Flagstaff, Arizona, and in a 50-50 venture with a Chinese partner in Ningbo, China. Revenues were about $24 million last year.
I met Frank Greco, Southwest Windpower’s CEO, last month at the GE research center in Niskayuna, N.Y., where GE Capital was showcasing some of its venture investments. GE invested in Southwest Windpower early this year, along with Altira, Rockport Capital Partners, NGP Energy Technology Partners, and Chevron Technology Ventures, Chevron’s venture capital arm. Collectively, they invested $10 million.
Greco told me he is grateful for the infusion of cash–particularly since it comes at a momentwhen raising money is very, very hard–but he is even more pleased about getting access to GE’s technology and relationships. “They’re already working with us on a blade coating,” Greco says. “There’s a natural synergy between the two companies.” Besides, he added, “GE owns billions of dollars of commercial real estate. There’s tremendous potential for commercial deployment where it makes sense.”
Two factors are now driving Southwest Windpower’s growth–generous government subsidies for small wind and a product called the Skystream (above and below, in various settings) that the company introduced three years ago that ties to the electricity grid.
Before then, most small wind turbines were sold for use off the grid. “The market was remote homes, telecommunications sites, offshore oil platforms, even sailboats—for charging batteries,” Greco says. “We’ve done pilot programs as far away as the Maldive Islands.”
Now the uses are much more varied. Wind turbines can be found in backyards, beside small businesses that buy one to attract attention and in parking lots where they are used to power lighting that’s on all night. More than 100 elementary and middle schools in Kyoto, Japan, installed Southwest turbines to teach their students about wind energy.
The economics of a backyard turbine look something like this: Fully installed and operational, a 2.4 kW Skystream costs about $12,000 to $15,000. Buyers get a 30% federal investment tax credit as well as state tax credits or rebates that, in some places, bring the after-tax cost down to as little as $5,000 or $6,000. (More than 20 states offer some subsidies.) In places where there are high winds and high electricity prices, that’s a bargain.
“In some cases, the payback is less than five years,” Greco says.”In places where the utility rates are low and the wind resource is low, the payback can be 10 years or more.”
Designing small wind turbines is not simple. “The challenge for small wind is that it needs to be productive in relatively low wind environments, where most people live, and on a relatively short tower, about 30 to 45 feet,” Greco said. “Plus the turbine is living in an environment where people live. So you have aesthetics and noise emissions that you have to be very aware of.”
What’s not clear to me is how the costs of generating electricity from small wind turbines compares to the cost of building large wind towers or solar thermal power plants. Wouldn’t the utility-scale plants be more efficient, even after the costs of transmission lines are taken into account?
Then again, take a look at the small wind turbines below. They’re awfully attractive. You can justify them as kinetic sculptures, with a little electricity thrown in.
And here’s a video explaining how the Skystream works.