Published on May 21st, 2014 | by Zachary Shahan6
Digging Deeper Into The UGE
May 21st, 2014 by Zachary Shahan
Earlier this month, UGE launched its latest vertical axis wind turbine – VisionAIR3. Tina Casey’s coverage on Clean Technica sparked some lively discussion about the small wind industry, both in the comments on the article and in a separate article by Mike Barnard.
Barnard and UGE CEO Nick Blitterswyk recently engaged in a point/counterpoint on some of these areas of contention, and I was Cc’d on all of that. We decided that it would be worthwhile to publish this for a broader audience. An edited version of their conversation appears below.
Nick: First off, Mike, thank you for your article and for the opportunity to have this discussion. Your article provided a good analysis of where the technology is at, and you have every right to be skeptical given the industry’s past.
We’ve tried to be very honest over the years, even when it’s been difficult in an industry that has had a lot of unsubstantiated hype. Like any company, we’ve of course tried to draw interest to our products, but always try to stay within the bounds of reality. We appreciate you keeping things in check.
Mike: I’m glad you reached out.
Nick: One thing you mentioned in your article is the rated sound level. To clarify, 38dBA is the number that Intertek certified the VisionAIR5 unit at, which is the lowest that we know of for any wind turbine. Given the logarithmic nature of the measure, this is significantly less than one rated at 42dBA. To make two other points, first, our units’ RPM decreases as the unit size increases, and this does result in a lower sound level, so the UGE-9M measure of 38dBA we note is correct (as is the higher measure for our smaller VisionAIR3 unit). And second, I thought I would draw attention to the fact that in the certification process Intertek could not discern any measurable volume of noise below 8 m/s, something we also found impressive.
Mike: On the noise issue, please understand that I have read virtually every acoustics study related to wind turbines, as well as all the health studies, and interact with acousticians such as Dr. Geoff Leventhall globally every week in my efforts around dismissing the noise and health myths related to utility-scale wind turbines. I write on acoustics regularly and am even occasionally asked to peer review studies in the space.
The difference of noise is certainly there but is a fairly irrelevant differentiation unless the device is positioned right on top of people’s bedrooms. You can certainly highlight it as a marketing differentiator but from an empirical perspective it’s a trivial amount of noise easily mitigated. In industrial settings it’s even less relevant. And highlighting it as a marketing differentiation for VAWTS tends to tick me off because it feeds a certain class of antiwind hysteria which impacts utility-scale wind deployments.
Thanks for pointing out the slower revolutions resulting in less noise. I look forward to certified results on that as well.
Nick: Understanding where you come from on the noise issue helps me understand your point; it’s not one we’d want to muddle for sure. Like you said in your article, there is a class of customer to which this point is important, though, and that is primarily who we are targeting when we mention it is quiet. We meant no harm to the industry; our intent was not to state that a typical HAWT is loud, per se.
Mike: People have overly heightened concerns regarding noise. As my assessment of acoustic attenuation pointed out, any sensible siting will mean virtually no difference between the UGE VAWT and an equivalent HAWT. And outside of a tiny niche of acoustically sensitive commercial sites, once again there will be no appreciable noise from either device. I understand that it’s useful marketing, and that the UGE VAWT is quieter, but it’s going from really quiet to really really quiet, or to put it another way from an irrelevant level of noise to an irrelevant level of noise, for the majority of your customers. But this is a place where people are irrational, and noise is a deeply complex space that’s poorly understood and poorly explained. I’d undoubtedly be using it as a differentiator in your shoes as well.
Nick: Thanks for the clarification. On to the naming issue you raised — the “5” in VisionAIR5 is named with respect to the height (roughly 5 meters). This is in line with what utility-scale wind turbines most commonly use. Within distributed wind, Southwest for years sold the Skystream 3.7, where 3.7 was the diameter in meters of its rotor. By no means are we trying to confuse anyone into thinking it is rated at 5kW.
Mike: There isn’t a standard per se, just some observable patterns and some potential for confusion. Regarding the number 5 and the impression it leaves, I have looked at specs on a lot of wind generation devices and the majority have output as a numerical qualifier on the name, especially in utility-scale wind. It might be different in the small wind category, especially historically, but that’s more the observed reality that I see. Point taken that it’s not intended to imply output, but I trust you see why it could be misconstrued as well.
Nick: Interestingly enough, when we used to use the kW rating it actually caused a lot more confusion, as 1) people just didn’t understand what it meant, and 2) you’d find companies using any range of rated wind speeds to, in essence, cheat the system. When speaking with our customers we stress the kWh output according to the SWCC certification, which we find a much more useful measure for both ourselves and our customers.
Mike: Fair point. I’m working up more material on real innovation in the wind industry. I’m interested in more information on the levelized energy agreement and your focus on developing nations. Can you share more on that?
Nick: We launched our Levelized Energy Agreement Program last August. Similar to the United Wind model you referenced in your article, it involves project financing, though our fund is dedicated to the telecoms industry in developing countries. The problems of course are well known — expensive, variable, and unreliable diesel, without really any good alternative. What we do is look at the operator’s current costs and lock in the same rate for a 10-year contract. We then upgrade the power equipment on the site (including RE), thereby lowering its OPEX and benefiting over the project lifetime. Because we’re making the primary energy source, diesel, the back-up, and adding RE and batteries, it’s clearly a more resilient solution as well, addressing another key concern.
Mike: The part that appeals to me is the business model innovation of going after developing countries as a market. It will be interesting to see how that plays out as many countries have small wind generation manufacturing shops of their own, with folks reverse engineering the common designs to create adequate, local and usually very cheap offerings. As adequate eggbeater VAWT blades can be made with pretty much aluminum siding and some wire, it will be interesting to see how that plays out.
Nick: Part of how we’ve been able to raise financing for this market is to separate the country risk as much as we can by targeting large telecom operators with a safe parent, often one based outside of the country our project is in. I’m sure you’ve looked at this too, but the economic returns of DRE projects in developing countries is often very strong, so it’s a nut we’ve at least partially cracked, for one (sizeable but somewhat niche) market.
Mike: Once again, I continue to like UGE as a business and wish you every success. Given your model of multiple technologies as a system, it’s unclear why you wouldn’t offer a horizontal axis device as a component to people who want more output for less footprint as well as your vertical-axis device but I’m sure that’s a debate you’ve had internally many times. At least right now UGE is differentiated in part by offering the VAWT, but I suggest to you that business model and channel differentiation are now more important to your future than adherence to a singular wind generation technology.
Nick: We understand that the Cp of our vertical axis wind turbines is currently lower than that of leading horizontal axis wind turbines, though we have been making significant progress over our company’s history to increasing the efficiency and very firmly believe we have the most efficient VAWTs available, with further improvements in the works. Like you said in your article, we benefit from aesthetic and noise considerations despite the lower efficiency; we believe there are durability advantages as well, though admit that is still being proven. This is where the industry is at, and we’re happy to be able to lay the facts bare.
You mentioned in your article that we imply someone could or should place a wind turbine on top of a home. If we say this anywhere I apologize, though I don’t believe we do and would be embarrassed if so. The picture you show in the article was from a very temporary exhibition in Spain, circa 2010, that displayed the unit not unlike one would install a wind turbine indoors at a trade show.
Regarding offering a HAWT, we’ve considered it many times, and we actually offer a 10kW unit in limited volumes. We continue to consider making it a mainstay of our product offering, but for two factors. First, we wouldn’t want to design and manufacture one ourselves unless we felt very confident we could clearly differentiate ourselves in that market. Maybe we could, but it would take years and millions of funding, and we don’t think the pay-off would be there. Which leads me to the second point — unfortunately, very few of our customers are asking for it. The way the solar market is going, we are growing very fast on the solar side, but get very little interest for a horizontal axis wind turbine. We wish that wasn’t the case, but unfortunately it is. Most of our customers wouldn’t consider installing a Bergey-like wind turbine (as solid of a product as it is), but quite enjoy using our VAWTs, so we continue to focus on making that technology as strong as possible for those customers, while also investing additional R&D resources on the rest of the DRE solution, including our SeamlessGrid line of power electronics, battery storage, and site optimization software. So while not married to the VAWT technology, we are happy with how our business model is evolving, but remain open to considering other technologies down the road.
Mike: My external response to people not approaching you asking for HAWTs is that right now your brand is fairly tightly tied to the helical VAWTs. It’s in practically every picture published, it’s visually distinctive and the tiniest bit of Googling leads people to the supposed advantages of VAWTs over HAWTs (and to Gipe’s and my material on the two as well). Good marketing, but not necessarily what’s best for all of your customers. I would bet that if you replaced your graphics stock with 50:50 VAWT and HAWT instead of 100% VAWT, you would get a lot more people asking for HAWTs, or about them. After all, your real innovation isn’t the technology, although you are strongly identified with it right now. UGE really is a small renewables solutions firm whose sole wind component happens to be a VAWT. There’s a chicken-vs-egg thing here, and I think you are ignoring a big part of your potential market, but I’m also sure you’ve had these debates a million times.
To your point about building vs OEMing, I get asked fairly often about how to become a manufacturer of small wind turbines, and I invariably answer, “Don’t.” OEM them and build your own distribution and installation firm, or become part of the distribution channel of an existing company. Designing a new small wind turbine in the USA for manufacturing is a route to bankruptcy, not riches. The products are stable, refined and mostly commodotized. It’s the business model that differentiates these days. There are good choices out there. Given your success, I wouldn’t be surprised to see an outright acquisition strategy at some point.
Nick: Completely agree. On issues like noise, selling a HAWT, etc., it’s clear you know the industry extremely well as you touch on many of the same points we have mulled (and continue to) over the years. In terms of what the future may hold, I look forward to discussing further and keeping you updated! Thanks again for the opportunity to discuss.
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