Wind-turbine maker pitches home energy generation

Every week Techvibes republishes an article from Business in Vancouver. This article was originally published in issue #1070 – April 27 – May 3, 2010.

While some wind energy project developers in B.C. wade through years of permitting and price negotiations only to have their projects fall flat, a three-year-old Surrey firm has quietly been erecting small wind turbines across North America.

And Endurance Wind Power is developing a more diverse customer base – including cranberry farmers and universities – than wind-farm developers that typically have a single customer in a jurisdiction: utilities such as BC Hydro.

Last week, Endurance, which has sold or has purchase orders for 250 wind turbines, was at a trade show in the United Kingdom, which the company believes could be its largest market in the mid-term because of a new incentive program that encourages Britons to generate their own power.

Because of the limited energy generation capacity of Endurance’s 5 kw and 50 kw turbines, complex and lengthy approval processes aren’t required to install them.

Endurance’s customers generate their own power and pump any leftover back into the grid.

That excess energy is only enough to partially supply the branch of distribution lines that the turbine is connected to, so it doesn’t add to the load carried by the larger transmission lines that support the distribution lines.

If you were to install 100 small wind turbines evenly across the grid, they wouldn’t require any upgrades to transmission lines, whereas a single wind or solar farm might.

Many countries, particularly those in Europe, are looking to renewable distributed power such as that created by small wind turbines and solar panels to help solve their energy capacity and environmental problems.

To encourage growth of the distributed power, many jurisdictions have established feed-in tariffs through which utilities buy back excess power generated by consumers or businesses.

However, debate continues over whether such government incentives are the way to attain energy self-sufficiency.

B.C. has thus far chosen a different path: there is no feed-in tariff in the province, although through its net metering tariff, BC Hydro credits customers $0.0816 per kilowatt-hour for energy they put into the grid.

Glenn Johnson, Endurance’s president and CEO, estimates that it would take the average homeowner in B.C. about 20 years to break even on the $42,000 it costs to install one of Endurance’s 5 kw turbines (a 50 kw turbine costs $285,000 to install).

There are other reasons to install your own wind turbine or solar panel, but a lack of financial incentive in B.C. is part of the reason that Endurance has sold only one turbine in this province.

“If you’re putting one up in B.C., you’re doing it because you want to be less reliant on the grid,” said Johnson. “You’re hedging against increased energy costs and you want to do the green thing.”

In the U.K., which launched a feed-in tariff on April 1, utilities pay Endurance customers about three times the retail rate for the power they generate.

Endurance estimates that a British customer could generate up to $400,000 in net income over 20 years by producing wind energy.

Endurance’s business model isn’t entirely proven yet.

The company is in its first year of full production, it’s still establishing a dealer network and many of the turbines it has sold are sitting in its dealers’ inventory awaiting re-sale and installation.

“We’re having months where we are cash-flow positive, but we haven’t hit what I call the Mendoza line where we’re right into profitability,” said Johnson.

Government incentives such as the U.K.’s feed-in tariff are a big factor in Endurance’s growth forecasts: it anticipates selling about 250 wind turbines this year and 500 in 2011.

In the U.S. last month, a real estate developer in a small Iowa town convinced city council to adopt an ordinance that allows for wind turbines of a certain specification – Endurance’s – to be used to power a 120-acre industrial park that is in development.

“In almost every U.S. state, there is some sort of rebate program, subsidy or encouragement for people to get involved in renewable energy,” said Johnson. “It’s a little bit slow in Canada, but it is happening.”

Endurance, which was created by Johnson and colleagues through the purchase of two separate businesses that owned the intellectual property behind its turbines, has raised $4 million and is raising $6 million in its first venture capital round.

Entering the realm of venture capitalists adds another level of pressure for Johnson, but he already has high expectations from investors: more than 70% of the 50 employees at the company assembly plant have invested a total of $700,000 into Endurance.