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Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

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The Next Big Trend In Wind Energy?

The Next Big Trend In Wind Energy?

A new take on wind energy is starting to emerge and it could fill the sails of wind power backers. Traditional wind energy relies on turbines to create power from wind, but a new group of companies is increasingly looking at variations on an old children’s toy to generate power; the kite. Proponents of the new technology are looking at using batteries of kites flying offshore to generate power.

Kites present a number of important advantages over turbines. First of all, despite the general interest from environmentalists in alternative energy sources, many environmental groups also have a NIMBY attitude and oppose specific green energy projects from solar arrays to win turbines in their specific areas. Thus wind power companies often face protests about installing new turbines with complaints ranging from despoiling scenic views to hurting birds. Kites could still face some protests of course, but since they would generally be tethered far offshore, those protests are likely to be correspondingly less vociferous.

Even more importantly though, kite-based wind power represents an opportunity to save money, and decrease power costs by rethinking the wind energy supply chain. Traditional wind turbines have to be installed offshore using expensive boats and massive amounts of steel and concrete to secure the tower. Kite wind power in contrast is likely to be much less costly to install. Related:The New Cartel Running The Oil Sector

While methods differ between the various firms involved in the nascent technology the basic idea behind kite wind power is that the kites fly offshore in offsetting positions attached to a mooring. The premise is that “The cost target for the … technology will allow onshore and offshore kite arrays to be developed without Government subsidies and offers a technology that can be deployed in locations where conventional wind can’t,” according to Kite Power Solutions (KPS), one of the firms in the area.

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KPS is not the only firm working on this idea though which speaks to the fact that the concept may actually be economically viable. Competitors in the space include, Altaeros Energies, Ampyx Power, and SkySails. Interestingly, many of the companies in this space are European firms (Altaeros is an exception – the small start-up is based in Massachusetts), which raises questions about whether America is giving up a lead in innovation in next generation wind powered technologies. With the UK Department of Energy and other national bodies backing KPS and its peers, it’s possible the U.S. may not be investing enough in what could become a major source of wind power in the next decade. Google is backing a company called Makani that is also working in the space, but historically disruptive breakthroughs in technology often come from upstarts rather than established firms that don’t have the same level of pressing need to see a new technology succeed. Related: What Comes After The Commodities Bust?

Kite wind power technologies make a lot of sense, but the biggest challenge for them versus conventional turbines will be proving that the kites are durable enough to be an effective infrastructure investment. Turbines with their steel and concrete substructures present an aura of permanence that is consistent with an industry set up to make investments that pay off over decades. In contrast, kites are likely to last a much shorter period of time.

This doesn’t mean that kites cannot be cost effective even if they have to be replaced every year or so. But it does mean that the hurdle to establish the technology as economically viable is greater. Kites need to be cheap enough that even if the sails and other components have to be replaced frequently the system is still profitable. This means not only material, but the labor as well to replace or repair an offshore system needs to be taken into account. That issue is not a death knell for the technology by any means, but from a financial standpoint it does present a barrier to widespread acceptance.

By Michael McDonald of Oilprice.com

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  • scotto on January 07 2016 said:
    The article says that "environmentalists" oppose wind power but these people are a tiny minority -- Audubon, The Sierra Club, NRDC, ... are all strong wind power supporters.

    The vast majority of wind power opposition is funded and promoted by shadowy fossil fuel interests protecting their decaying industry.
  • Jenny Sommer on January 25 2016 said:
    The real heavyweight in the pack us missing!
    That's KiteGen. The one that has a 3MW industrial demo plant and is ultimately developing GW scale machines.

    http://kitegen.com/wp-content/uploads/2015/05/KGV-S.p.A.-Presentation-ENG-1.pdf
  • Alan on February 11 2016 said:
    Quote: scotto January 07 2016 said:
    The article says that "environmentalists" oppose wind power but these people are a tiny minority -- Audubon, The Sierra Club, NRDC, ... are all strong wind power supporters. The vast majority of wind power opposition is funded and promoted by shadowy fossil fuel interests protecting their decaying industry.

    Alan: You probably live in a city and haven't done enough studying. I'm next to a wind farm and the deep infrasound vibrations make me feel lousy. Infrasound (AKA subsonic) is used by the police and military to radiate 8hz or lower frequencies which will disperse crowds because it makes people feel tired or ill. The closest turbine adjacent to my property is only 1/4 of a mile away ! That's TOO close. Wind turbines need to be at least 6 miles from any residence. BIRDS: Our species Cannot live without ENOUGH birds. They're already up against stray cats, auto collisions, pesticides etc. Now you add wind turbines. Birds eat pests that cause DISEASE. For example, owls and hawks eat disease carrying rodents. You'll remember my words when you get sick. In theory wind energy is an excellent idea. Instead of being so greedy they need to make wind turbines that are friendly to people and birds. Look at a site called Wind Watch.

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