United wind bets leasing will transform the 'small wind' market

In September, I wrote about how certain wind technology and fuel-cell technology companies are borrowing a page from the success of companies like SolarCity SCTY -0.48% that pioneered the solar leasing model responsible for an explosion of residential installations over the past year.

To close out 2013, one of those players, United Wind, just signed a deal with one of the more established U.S. makers of small wind turbines, Bergey WindPower.

“Small wind” is defined technology that includes turbines in size from 1kW to 100 kW. As of the end of 2012, there were approximately 154,000 turbines of this size installed in the United States, according to data from the American Wind Energy Association (AWEA). Globally, AWEA projects compound annual growth of 20% for this market segment from 2015 to 2020.

Under their new relationship, United Wind will provide financing options for Bergey’s 10-kilowatt wind turbines — intended for residential or agricultural installation — through its WindLease program. The idea is to remove the complexities of processing, permitting and installations – as well as the upfront capital expense for property owners.

“This will be great news to the thousands for homeowners, farmers and small businesses that have wanted to install a Bergey 10 kW wind turbine, but who couldn’t afford the upfront costs,” said Mike Bergey, president of Bergey WindPower, in a statement. “United Wind’s WindLease program will unlock a huge segment of our market that we’ve been missing.”

What makes Bergey’s technology interesting (aside from the fact that the company has been around for 30 years) is that it consists of only three moving parts, which makes for a better maintenance proposition over time. That’s one reason that United Wind opted to team up with the company.

When I spoke with United Wind executives about its business model earlier this autumn, CEO Russell Tencer estimated that his company will handle approximately 125 projects throughout 2014.

The company’s $25 million financing fund backed by GSG Energy Finance is targeted at installations of 100 kW or less in generating capacity, and is centered on activity in Maryland, Massachusetts, New York and Oregon. These states were selected not only because the electricity costs are relatively high there, but because they also offer incentives to residents and commercial organizations for using alternative energy. United Wind is already looking forward to 2015, when it comes to have another $50 million to $100 million in financing in place.

Tal Mamo, founder and president of United Wind, said that the installations his company is financing can cost anywhere from $70,000 to $100,000, depending on generating capacity. For perspective, the turbines can offset from 60% to 90% of the electricity load required for a home; often about 80% for a farm. (For especially big agricultural options, however, the offset can be far more limited, maybe 5%.)

“We try to focus where we can offer the most savings,” Mamo said.

Aside from its financing, United Wind is relying on a fairly unique offering to help build its credibility. Called WindSight, it is a big data analytics service that helps interesting wind investors determine whether or not their property is suitable for an installation, along with roughly how much power they can hope to generate.

Once the permits are arranged — which can easily take two months for a farm or six months for a home or business, given that pretty much every county, state and municipality has unique rules — it takes 30 days to 45 day to finish an installation. “The biggest time factor is waiting for the concrete to cure,” Mamo said.

United Wind combines two companies that previously were focused on small wind installations on their own: Talco, which specialized in sales for farms, homes and businesses, and Wind Analytics, which developed the technology used to help assess property for its wind potential. The two merged in early 2013.

http://www.forbes.com/sites/heatherclancy/2013/12/23/united-wind-bets-leasing-will-transform-the-small-wind-market/?ss=business%3Aenergy