GENERATING ENERGY CAN BE A BREEZE
By: Paul Davidson
Andy Kruse closes his eyes and sees windmills in backyards across America.
Well, not every backyard. Hard to imagine wind turbines on the cheek-by-jowl lots of many U.S. suburbs.
But Kruse and his partner, David CaIley, who founded Southwest Windpower 21 years ago, are determined to bring their Skystream 3.7 to semi-suburban and rural neighborhoods and millions of homes than can now accommodate windmills.
Kruse says he wants to turn the wind turbine into “residential power appliance” on a par with solar panels ---— as essential as a dishwasher in an environmently conscious age.
“It’s taking renewable energy and bringing it to the mainstream of America,” says Kruse, an easygoing, always-smiling 44-year-old college dropout. Peter Edwards, a partner in Altira Group, which invested $6 million in Southwest, likens the duo to ice crea magnates Ben Cohen and Jerry Greenfield of Ben & Jerry’s. Calley is the whiz-kid inventor; Kruse, the affable, tireless marketer.
Many small wind turbines have been snapped up by backwoods mavericks disconnected from the power grid who want to supplement the electricity they draw from solar panels or diesel generators. Most require at least an acre of land so gusts aren’t blocked by nearby homes.
However, the $12,000, 1.8 -kilowatt Skystream is largely for people with as little as a half-acre of land who are hooked to the grid but want to shave their electric bills by making their own power or selling it to the utility.
It’s built, in fact, to blend into a community: the sleek, 170-pound turbine is as short as 34 feet and works with average wind speeds as low as 10 miles an hour. Blades spin quietly so as not to rattle neighbors.
The turbine is suitable for 13 million U.S. homes and possibly up to 20 million if houses on less than a half-acre receive coastal wind, Kruse says.
A rival, Bergey Windpower, has long offered a 10-kilowatt turbine to on-grid customers, but at least a one-acre lot is needed.
Since rolling out Skystream in November, 06 , Soulwest has sold about 700 turbines. Kruse believes the No. I small wind turbine provider, with a project $25 million in sales this year, is poised to grab a big chunk of a $1 billion worldwide mrket for on-grid residential turbines.
Yet, the company faces a few speed bumps, including some wary town zoning boards and the lack of a federal tax credit that would make small turbines more economical for customers.
Skystream can reduce electric bills up to 80 % for residents of California, where both wind speeds and electric rates are high. But the average savings for turbine-equipped homes nationwide is about 40 %. That puts the typical payback period for a Skystream at 15 years, longer than many customers seek, Kruse says.
Kruse is leading a lobbying charge to include a $4,000 federal tax credit for small wind systems in the energy bill before Congress, a move that would pare the average payback to nine years. Senate Republicans narrowly blocked an effort to bring the proposal to a vote last month as part of a renewable energy package.
Not to worry . Kruse is confident of persuading lawmakers to add the tax break when a committee of House and Senate members finalizes the energy bill this fall. It’s no surprise Kruse has been compared to Don Quixote, the literary icon famous for, well, tilting at windmills, and staying optimistic in the face of all hazards. “My philosophy is be optimistic and always have a g smile and see solutions that others can’t,” he says.
While Quixote’s quests were futile, Kruse has good reason to be confident. The partners have already survived an up-and-down career. When they launched Southwest in 1986, Kruse was a purchasing agent for a Gore-Tex maker in Flagstaff, Ariz., itching to start his own business.
An avid car tinkerer, he failed in his attempt to build I a wind turbine for his in-laws’ off-the-grid ranch, where he was living, so he approached Calley, a fellow employee who was making turbines out of his father’s garage for area residents. “I said, ‘We can turn this into a business,’ and immediately thought that we could get this thing across the country” Kruse says.
They couldn’t have picked a worse time.
The Reagan administration had phased out a tax credit for small wind turbines, and most of the nation’s 25 or so small-turbine makers closed. Kruse was undaunted. You wonder if this guy’s for real or not, Calley says. “He’s not afraid of much.”
They borrowed $20,000 from Calley’s father and put $10,000 on credit cards. To cut costs, the partners bought oif-the-shelf parts, using $5 Chrysler alternators from salvage yards for turbines and plumbing-store water pipes as poles. They sold their 300-watt turbine for $600 — about a fifth as powerful than rival models but about a tenth as costly
The strategy worked. At a California trade show, they got orders for 50 turbines from dealers and hired their first employee.
After several years of modest sales, salvation came in 1991, when a large windmill company, Wind Baron, offered to buy Southwest for $250,000. Kruse quit his job at the Gore-Tex company and earned a $24,000 salary from Wind Baron. But the deal didn’t work out. Kruse and Calley ended up with no customer records, no gear and no money.
They responded with a simpler, lightweight turbine that could power lights and other electronics on sail boats . By 1999, profit had soared to $1 million on $5 million in sales, thanks both to sailboat sales and consumer fears that the Y2K computer bug would shut down the power grid.
But after the Y2K crisis faded, sales plunged. “There were times when we didn’t have enough money to buy toilet paper,” Calley says.
The company, which has about 90 employees bounced back by developing Skystream with financial and technical support from the Department of Energy and raising $18 million in venture capital to market it It wasn’t easy. More than 100 VC firms passed before a group led by Altira bought in.
“I think these guys are visionaries,” Edwards says “The Skystream will be like Ford’s Model T.”
These days, Kruse travels heavily, touting the virtues of windmills to communities and foreign governments. His biggest task is marshalling support in Congress for the tax credit. On a recent two-day offensive on Capitol Hill, his forehead was beaded with sweat as he and two lobbyists plotted strategy with a House aide in a congressman’s office.
Told by the aide that he should round up support from environmental groups, Kruse says, “We will leave literally no stone unturned.”
Even without the tax credit, the sanguine Kruse says the turbine’s economics can be improved by cutting installation costs. And he sees an unlimited horizon “We can really take this in 100 different directions We can expand into solar and fuel cell technologies Maybe this is the end, I don’t know, but when you look at the possibilities, you go, Wow, where do I start?’”
About Andy Kruse
Title: Senior vice-president of business development, Southwest Windpower.
Education: Dropped out of Northern Arizona University after a year. “There
was too much goinlg on in my life.” he says.
Family: Divorced from his high school sweetheart. Two boys, ages 14 and 17.
Hobbies: Home remodeling, rebuilding engines.
Early jobs: Ranch and rodeo hand.
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