Clean Wind Energy Tower on March 22 announced the selection of the site of its first two Downdraft Towers, a novel, virtually zero-carbon renewable energy system that the company says will use both induced and natural wind energy to generate electricity at a utility-scale. Management has chosen San Luis, Arizona to build the first two Downdraft Towers, which they say will reliably produce a net 1,100-1,500 megawatts per hour [sic.] of clean, renewable electricity for sale on to the grid.
The news comes as the publicly-listed, Annapolis-based company is going through some financial turmoil, however. Having gone public on the Nasdaq OTC Bulletin Board (OTCBB) through a reverse merger with a defunct, already listed company, its shares have taken a nose dive on heavy volume in the past 1-1/2 months, trading from a high of 21 cents down to about 4.5 cents per share as of market close on Friday, March 23.
Utility-Scale, Zero Carbon, Dual Wind Energy Towers
Clean Wind Energy Tower intends to build two Downdraft Towers and a component parts assembly plant at the San Luis site in southwestern Arizona’s Yuma County. Each tower is projected to supply enough electrical power to supply some 1.6 million average homes.
The US Dept. of Interior and federal Bureau of Land Reclamation have given Clean Wind Energy Tower the green light to proceed with leasing a parcel of land in San Luis, according to a company press release. It’s now proceeding through the local zoning process and with site evaluations. A City of San Luis public hearing regarding the company’s application for entitlement to build the two Downdraft Towers is scheduled for March 29, while the city’s Planning and Zoning Commission has scheduled a hearing for April 10.
As envisaged, a very large, high hollow cylinder forms the core of Clean Wind Energy’s Tower’s Downdraft Tower system. Water is pumped to the top of the Downdraft Tower and a fine mist sprayed across the cylinder’s hollow interior. Now cooler and denser than the surrounding ambient air, the moisture-laden, interior air picks up energy as it rushes down the cylinder’s interior at speeds of up to 50 mph. The high-speed, man-made wind drives turbines at the base of the structure that generate electricity with virtually zero in the way of CO2 or other greenhouse gas emissions.
Adding to the Downdraft Tower’s electricity generation capacity, wind vanes may be incorporated into their exterior where “atmospheric conditions are conducive,” according to the company. The exterior wind vanes would capture natural wind energy and likewise use it to drive turbines to generate additional electricity.
Current design plans predict that each Downdraft Tower would be capable of generating as much as 2,500 MW per hour [sic.] of clean, renewable electricity. Approximately 1/3 would be used to run the tower itself. After all is said and done, a potential energy yield of 1,100-1,500 MW per hour [sic.] would be available for sale on to the power grid.
Clean Wind Energy Tower predicts the energy capacity factor for the Downdraft Tower will be 51%, with prime production periods in daytime and evening in the spring, summer and fall, which would dovetail nicely with energy usage patterns. Equipping the Downdraft Towers with External Wind Capture, which the company says would keep working 24/7 with an energy capacity factor of 75%, raises the predicted overall energy capacity of the system above 60%.
That’s the good news. The bad news is that Clean Wind Energy Tower is undergoing financial strains that jeopardize its survival along with that of the project that could prove its design and engineering concept and economic viability.
The company’s shares have nose-dived in the past 1-1/2 months, down from 20 cents to less than 4.5 cents a share. Falling below 8 cents a share triggered a default clause on a $335,000 Original Issue Discount Secured Convertible Promissory Note it had issued to Hanover Holdings I LLC, a transaction that closed on March 2.
With its shares falling fast, issuing the convertible note put Clean Energy Wind Tower in a vulnerable position, certainly from the perspective of its existing shareholders, most of whom are company insiders. Terms of the note state that Hanover has the option of converting the note into common shares at a conversion price equal to 45% of the lowest trading price for the common stock at any time during the prior ten trading days,” according to a March 8, 8-K SEC filing. A Clean Wind Energy shareholder pledged 10 million common shares to Hanover as collateral for the convertible note.
Hanover on March 8 notified Clean Wind Energy management of the default, requesting that the company’s escrow agent transfer the pledged 10 million common shares and repay $481,562.50 as a result of the claimed default. So rather than raising net capital of some $300,000, Clean Wind Energy stands to see its already strained cash base reduced by nearly half-a-million dollars, as well as the shareholder who pledged his or her shares suffering a loss of some $440,000.
Management Responds to Unusual Trading Activity
Responding to the unusual trading activity in its shares, Clean Wind Energy Tower in a March 15 press release stated “that there have been no material changes to its operations or its business affairs. The Company is not aware of any undisclosed developments that would account for the recent unusual trading activity of its shares which created downward pressure triggering the default of a Convertible Promissory Note with Hanover Holdings I, LLC.”
“Ordinarily we do not comment on atypical market activity or on market rumors. However, due to the recent unusual trading activity of our stock, I would like to take this opportunity to convey to the investment community that our operations are progressing as expected,” added president and CEO Ronald W. Pickett.
“We have recently announced that the Company has made significant progress in assessing the potential of CWET’s emission reduction on the worldwide carbon markets and estimating the expected revenue generation. The Company canceled 120,600,000 shares of common stock held by the ‘Former Employees’, which were retired to treasury stock of the Company reducing the number of outstanding shares from 329,683,408 to 209,083,408.
“We announced the final approval of our Unique Hydraulic System Patent that maximizes the capture and use of available wind tunnel energy. We have applied to a bureau of United States Department of the Interior for permission to lease a substantial parcel of property located in the southwestern United States, suitable for the development and construction of our first Downdraft Tower and we were recently notified by the Bureau of Reclamation that CWET may proceed with the local zoning process and site evaluations.
“We reported on March 9, 2012, the timely repayment of three segments of incremental project financing. We are pleased with the progress we have made on the project development aspect of our business. One of our top priorities is maximizing shareholder value and I am confident that as we head into the future, we will achieve our goals.”