White House Chronicle

News Analysis With a Sense of Humor

How Crowdfunding Brought a New Wind Technology to Market

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A California company, Wind Harvest, is in high gear to change the dynamics of wind energy and to vastly improve the economics of wind farms. 

But the company wouldn’t be marketing to large energy users and wind farm operators today if it hadn’t used crowdfunding for its recent rounds of financing. Crowdfunding can get a startup over the hill.

Kevin Wolf, Wind Harvest co-founder and CEO, explained that developers of hardware face a double problem when it comes to financing: The banks won’t finance their customers’ projects until the technology has been certified and, in Wind Harvest’s case, dozens of their unique wind turbines have been operating for at least a year which requires money.

Wolf said, “It takes about two years to complete a ‘technology readiness level,’ unless a company is well-funded. Six months to have all the components arrive, six months to a year to install and fully test the prototype, and then another six months to complete the new design.” Meantime, a team of engineers and the bills have to be paid.

Venture capitalists have shown a decided disinclination to finance hardware, preferring computer-related software products, he said.

But with crowdfunding, often through a special-purpose company, thousands of individuals have become venture capitalists in companies like Wind Harvest. Many of those investors have hit it big. 

Two standout companies which grew into multi-billion dollar ones: Oculus VR and Peloton.

Oculus, the virtual reality technology company, used crowdfunding to raise $250,000 in 2012. Two years later, it was acquired by Facebook for $2 billion.

Peloton, the fitness company, started with crowdfunding of $307,000, achieved a valuation of $8.1 billion its initial public offering, and rose to astronomically high valuations during the Covid pandemic. It has now fallen back considerably, after many difficulties in the fitness industry.

Wind Harvest is essentially offering new infrastructure which, should it catch on, would give it a steady and fairly predictable path forward as both a wind turbine Original Equipment Manufacturer and as a renewable energy project developer.

The company’s product, trademarked as Wind Harvester, is a vertical-axis wind turbine (VAWT): The drive shaft and the electrical generator are aligned vertical to the ground. In traditional wind turbines, those components are horizontal to the ground. 

The most famous vertical-axis wind turbine is the Darrieus, named after a French engineer who patented it in 1926. It has an elegant, eggbeater shape almost like a fine outdoor sculpture. But it ran into problems with vibration and other technical drawbacks and wasn’t a commercial success.

At the outset of the energy crisis in 1973, Sandia National Laboratory in New Mexico, one of the jewels in the crown of the national laboratory system, did considerable theoretical work on wind turbines, concentrating on vertical-axis designs. But when the research was moved to another laboratory, the horizontal-axis wind turbine (HAWT) became the focus.

The codes developed at Sandia are foundational to the Wind Harvest design. Wolf explained that the choice between VAWTs and HAWTs isn’t an either-or choice, except where wind shears are high and wind near the ground slows down. Then tall, horizontal-axis wind turbines have the advantage.

Wind Harvest turbines are designed to capture the wind on ridgelines, hills and mountain passes where wind funnels and accelerates turbines under the tall horizontal-axis turbines. VAWTs can take advantage of the powerful wind that swirls around near the ground. This turbulent wind at the surface is an unused resource now.

With the bottom of their blades between 25 feet and 50 feet off the ground and installed in pairs 3 feet apart from each, Wind Harvest turbines can double the output of electricity from a wind farm while still leaving enough clearance for agriculture, whether it is grazing animals or growing crops. So, add efficiency to the virtues of these turbines: better use of the wind resources, land and infrastructure. 

Thanks to crowdfunding in four tranches, Wind Harvest is now ready to go to market with utility scale installations.

Wolf listed these additional virtues for VAWTs: 

  • They can be entirely made in America. Right now their blades are extruded by Step-G in Germany.
  • They are designed to withstand the 180 mph wind gusts from a Category 5 hurricane.
  • Because they are short, they can use larger permanent magnet generators (PMGs) not made of rare earth magnets. For example, their PMGs can use ferrite magnets which are iron-based. 
  • Wind Harvest installations have a fatigue life of 75 years with maintenance and periodic refurbishment. Most turbines now in use must be replaced after about 25 years.

The first Wind Harvesters to be put into service are planned for a dredge spoil-created peninsula on St. Croix, the largest of the U.S. Virgin Islands, located in the Caribbean Sea. The entire output of the first phase of the project will be bought by the oil refinery adjacent to the project site and replace the burning of costly propane for generation.

Big ideas now have funding sources besides “Shark Tank,” venture capital, and the banks.

The Back Story of the Breakfast Banana

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To you, the banana may be a fruit that you slice onto your cereal at breakfast. To me it is a slice of history, an examination of a moral dilemma, and an explanation of why the government grows bigger. It is also a tale of mortality because the banana, as we know it, is facing extinction.

Let us begin at the end: The banana that we now enjoy, called the Cavendish, has already been wiped out by Panama disease–a lethal fungus prevalent in Asia and Australia. In the near future, that varietal is expected to be under attack in the large growing areas of the Caribbean and Central America.

The trouble is that the banana cannot fight back: It cannot mutate to meet the new threat in the normal way of plants because the cultivated banana is a clone. Evolution interruptus.

Before the Cavendish was the choice of exporters around the world, there was the Gros Michel banana. But in the 1950s, it fell victim to Panama disease and the Cavendish, in many ways an inferior fruit, had to be substituted.

Bananas, which originated in Asia thousands of years ago, somehow made their way to Africa, and Arab slave traders brought them to the New World. The global banana trade got underway in the 1870s, when entrepreneurs found that they could pick bananas green and they would ripen on their way to market.

American foreign policy in Central America became captive to the banana companies, most famously the United Fruit Company. While the banana trade was a blessing to the campesinos of Central America, it enslaved them to the companies. To support the banana trade the United States invaded, threatened, cajoled and buttressed dictators. The governance of Colombia, Costa Rica, Guatemala, Honduras, Nicaragua and Panama reaped the trade benefits, but paid the price of banana dominance. The banana traders, particularly United Fruit, now known as Chiquita, were vilified in Europe as America’s neocolonial exploiters.

But the truth is more complicated.

In his masterpiece “One Hundred Years of Solitude,” Gabriel Garcia Marquez, the great Colombian novelist and Nobel laureate, wrote poignantly about the Colombian government’s massacre of striking banana workers. But in his memoirs “Living to Tell the Tale,” Marquez also refers to the hope in rural Colombia that United Fruit would return after it had ceased operations in the aftermath of the massacre.

The banana, a nutritious fruit, has often had a bitter harvest. While the United States placed the so-called banana republics of Central America as in its sphere of influence, Europeans, particularly the British, became possessive of banana producers in their Caribbean colonies. As these colonies gained their independence, Europe sought to assist development in the Caribbean by establishing floor prices for bananas. This led to a trade war with the United States, which began in 1993 and ended in 2001.

The banana wars may not be over.

Large fruit exporters, like Dole and Chiquita, with assistance from U.S. laboratories and universities, are seeking to bioengineer the banana to protect it from Panama disease and other lethal attackers that can threaten it at any time. But Europe opposes bioengineered foods and bans their import. Will the Europeans turn their backs on the bioengineered version of a banana that they have known for 140 years? Will they fight U.S. fruit companies that want access to European markets?

The banana, seemingly so benign, illustrates the complexity of foreign relations, the unintended consequences of commodity dependence in poor countries, and why the U.S. government grows like Topsy. Before the banana crisis is resolved, the government will hire more scientists, let more research contracts, and beef up the diplomatic corps with banana trade experts. Banana policy is a slippery business.