51.5 F
Laguna Hills
Thursday, Mar 28, 2024
-Advertisement-

Wind Wonder

A local manufacturing startup backed by an influential Silicon Valley venture capital firm has signed its first commercial deal to produce giant blades for wind power at its Huntington Beach headquarters.

Modular Wind Energy Inc. will produce a set of blades at its 168,000-square-foot industrial building for an undisclosed turbine manufacturer. A set consists of three blades.

Financial details weren’t disclosed, but the deal is believed to be valued in the low to mid six figures.

The company is in negotiations with the initial customer, and three other turbine and blade manufacturers for additional orders, Chief Executive Gregor Gnaedig said.

“We want to take our share of this growing market,” Gnaedig said.

Modular Wind expects to deal exclusively through turbine and blade manufacturers worldwide. Filling a typical wind-farm order easily could involve the production of more than 200 sets of blades, an $80 million price tag and a three-year contract, officials said.

Modular Wind’s first set of blades should be hoisted into place by October, likely at a wind farm in the Midwest, officials said.

Wind farm turbines convert energy from wind into mechanical power, which can be run through generators or for specific tasks such as pumping water. One turbine can power about 400 homes annually at optimum capacity.

The company’s inaugural deal marks a significant breakthrough for Modular Wind, as it moves from research-and-development into production.

The company has gotten upward of $25 million in funding from Menlo Park-based Kleiner Perkins Caufield & Byers during the past four years. Massachusetts venture capital firm General Catalyst Partners is another investor.

Modular Wind markets its products as lighter, cheaper blade systems that can be easily transported by a traditional flat-bed truck.

Wind-turbine blades can span 120 feet or more. They generally have been built in one piece and typically require police escorts or other special arrangements, with hefty transportation costs and delays.

Modular Wind’s engineers—many veterans of Boeing, Lockheed Martin, NASA and McDonnell Douglas—developed a blade consisting of three equal-length parts. Its blades are pieced together at the point of installation into a single blade. They comprise the internal skeleton, or “spar,” and are encapsulated by an outer sheath that also ships in three parts.

Its blades are 20% lighter than traditional fibre glass blades, easing transportation and production costs that are passed on to manufacturers.

“Huge Advantages”

“We see huge advantages,” Gnaedig said. “We can do this faster and cheaper than anyone else.”

It can cost as much as $100,000 to ship a conventional wind-turbine blade system made in China to Australia, he said. By contrast, a manufacturer recently estimated the cost of shipping a Modular Wind blade set from Huntington Beach to Australia at $30,000.

It took Modular Wind two weeks to manufacture its first blade set, running two daily shifts. At full production, the company will be able to produce one blade set per day.

Modular Wind has a five-year lease—valued at $5 million when inked in 2010—on its expansive headquarters and manufacturing facility on Skylab Road, situated near some of Boeing’s local operations and other aerospace and manufacturing outfits.

Huntington Beach offers a talented work force and good proximity to the Port of Long Beach and major airports, Gnaedig said. The company has about 100 employees companywide, including a small global sales team, as well as some at a testing facility in Rialto.

Rival blade manufacturers include Gamesa in Spain, Suzlon in India, Vestas in Denmark, Mitsubishi in Japan and Siemens in Germany, though some could figure as customers for Modular Wind’s blades.

Modular Wind, with its first order, enters a marketplace fraught both with opportunity and peril.

Industry Forecasts

Yearly global sales for the turbine industry were forecast to grow at a 6% clip through 2014, to $133 billion, according to Cleveland-based Freedonia Group Inc. But the projection now is thought of as a bit optimistic, as it appears certain U.S. government production incentives will expire at year’s end.

“Wind in the U.S. is going to have record installations this year, and next year we could see that disappear with the production tax credit expiring,” said Matt DaPrato, senior analyst at Cambridge, Mass.-based IHS Emerging Energy Research, a unit of IHS Inc.

Wind energy, similar to nearly every other clean technology, has seen adoption steadily increase with the help of government subsidies. But longer-term viability for the sector is considered a risky bet, particularly with ongoing economic uncertainties in the U.S. and a lingering financial crisis in Europe.

IHS estimates the U.S. generated 12 gigawatts of new wind power this year, up from 6.7 gigawatts of wind power growth in 2011. Next year the figure for growth in wind power generation is forecast to drop to less than 1 gigawatt.

One gigawatt provides enough energy to power about 750,000 homes.

“Modular Wind has a growing opportunity in the space,” DaPrato said. “But it could be hard times, regardless.”

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-