The shift toward renewable energy as an alternative source to traditional fossil fuels has garnered considerable mainstream traction in recent years. In fact, the transition may be even more pronounced than most realize. According to Bloomberg, the world added more capacity of renewable energy than fossil fuel in 2013. That trend is expected to dramatically increase by 2030, where the amount of renewable energy capacity will quadruple. So it’s no wonder why Bloomberg has already declared the battle between fossil fuels and renewables over.
So if renewable energy is indeed the new regime, what exactly will the future look like? As always, it comes down to what’s most sustainable from an environmental and financial perspective. For any solution—be it solar, wind, geothermal, hydroelectric, etc.—to be truly viable, it needs to be able to survive without the generous government subsidies and incentives that they’re currently receiving now.
To that end, WindStream Technologies, Inc. ($WSTI) has a very compelling approach to becoming a dominant leader in this growing industry. The company has developed a highly scalable and cost effective core technology that combines both wind and solar power. Best of all, its aggressive approach to slashing excess production costs makes its products highly desirable to the end markets it serves—which is primarily emerging markets with significant need for inexpensive energy sources.
Equities.com had the opportunity to speak with Dan Bates, CEO of WindStream Technologies, Inc. ($WSTI) to learn more about the company’s flagship product SolarMill, its innovative core technology, and to discuss the future of the energy industry.
EQ: Can you provide us with a brief overview of WindStream Technologies and its operations?
Bates:WindStream was started in 2008 to build low-cost, high-efficiency solutions for generating wind energy in an urban setting. In densely populated locations, people don’t have the ability to put up a large device like the ones you would see in a rural setting.
As we moved ahead with this small wind device and prototyped the device throughout 2010 and into 2011. We then decided to put a solar panel on the device to give the user a more stable energy-generation platform. In doing so, we came up with what became the very first fully-integrated, hybrid renewable energy product of its kind. There’s nothing else out there that integrates solar and wind in a standalone unit like this.
EQ: So that was the development of the SolarMill. Which geographical markets are you targeting with this product?
Bates: Well, we set out to develop the technology so that it could be deployed in a city. As we moved forward and established our R&D facilities in New Albany, Indiana, it became clear that while the US market is very robust and one that will have great promise for the company, it is a model that is perhaps in second position to one that focuses on developing nations where energy resources are scarce or don’t exist at all.
So we then started evangelizing this product to the developing nations market. We immediately saw that there was an opportunity in places like Jamaica, for instance, where utility rates were very high. At the time, they were greater than $0.43 per kWh. They’ve since fallen a little bit with the reduction in the price of oil, but it’s still very high throughout the Caribbean and Europe.
Then you go into markets where it's not so much about price as it is about availability. That is what led us to the work we have done recently in India, where we have established our 50,000 square-foot manufacturing facility. We’ll expect units to be coming off the assembly line in a June-July timeframe. We’ll probably be building about 2,000 to 3,000 units in India and selling them there. We’ve also got sales opportunities where energy is challenged.
Africa is another huge market for us. We expect that region to be very good for the company because they lack a good, solid, stable grid that is available to everybody. It's mostly rural, so there is no grid in a lot of places, making it a great market for us.
To see WindStream’s Installations, visit http://www.WindStream-inc.com/installations
EQ: SolarMill is your flagship product, but then you also have some other very unique offerings that you've rolled out. Can you tell us about the cost savings and power output your products have to offer?
Dan Bates:The SolarMill is indeed our flagship product. That was what started this whole thing. It is an integrated solar panel and wind turbine. The cost effectiveness of this allows us to put out energy at very close, if not equal, to grid parity in many areas of the world. That’s uncommon in the renewable energy space. We figured out how to make a mass market renewable product.
Our goal was always to make it so that it was affordable and scalable, too. That’s why the core unit was built up to 750W—a solar panel of 250W and a peak power wind at 500W. But it's also modular. If you want to put more panels on it, you can make it a 1KW unit. If you wanted to put two 1KW units together by simply interconnecting one to the next in series, you now have a 2KW device operating from the same core technology.
EQ: So it’s very scalable?
Bate: Correct. They’re renewable energy building blocks that can be stacked like Legos. We’ve done installations for customers with as little as a 750W capacity, which is our smallest unit, all the way up to an 80KW unit on a law firm in Jamaica. The technology is very scalable and incredibly cost effective when you put this in an area that has a good wind and solar resource.
As for the core technology itself, the SolarMill has led to a couple of different product offerings. The first one was the MobileMill, which you can see in action in a video we have on our website. The MobileMill is essentially a portable device using the same core wind and solar technology utilizing vertical access turbines and solar panels. We package that all up into a trailer so that government agencies like the Department of Homeland Security (DHS), for example, can roll this trailer out to training sites.
EQ: That’s an innovative approach. How would they deploy the MobileMill out on the field?
Bates:It’s very simple. With just the push of a button, you'll see the panels and turbines deploy and begin charging batteries to power their command and control center, which is completely set up inside this trailer. You can take the deployment time down from 6 hours to 1 minute, which is a huge win for DHS. We’re rolling that out to other agencies like FEMA, the Red Cross, and others. Anyone looking to be able to make a rapid response to a disaster is taking a very interested look at what we're doing. We’re even starting to get to the point where we’re building custom products for them.
The MobileMill is more of a premium product than it is a scalable one. It’s essentially a deployable SolarMill. The MobileMill does have some additional functions as well. For instance, we put a fuel driven generator onboard so that it can still function reliably if conditions are cloudy and without wind. If battery voltage falls below a certain level, the generator kicks in and keeps those batteries charged so that the system is always up, 100% up time.
EQ: You also have the TowerMill. Can you tell us more about that product?
Bates:The TowerMill is designed for telecom owner-operators all over the world that have remote or off-grid telecom towers. Those towers have to remain live 100% of the time, which can be challenging if there’s limited access to grid electricity. So we’ve created a solution by taking that concept of deployable remote access technology.
We take the MobileMill electronics that offload the priority of battery charging to wind and solar and then a generator or even the grid, if available, as a backup to keep the batteries charged. That telco operator can assure customers that their tower will be functioning 100% of the time.
The SolarMill, the MobileMill, and the TowerMill are all based on our core technology, and they’re all being deployed as we speak.
EQ: It looks like you have various end markets all in need of your technology. You have developed markets that need to move away from high-cost legacy energy infrastructures, and then emerging markets are in the process of building brand new infrastructure. Then you also have telecom and government contracts in both places. What would you say right now is your primary targeted market? Or are you approaching all of them with an equal focus?
Bates:As a small company, we have to maintain laser-like focus on what could drive the most revenue for our shareholders. I would consider the SolarMill market in developing nations our primary target. In parallel to that is the SolarMill market we’re anticipating in India, where we're bringing on additional manufacturing capabilities. Still the same product, still focused on the emerging economy where people need power. That is first and foremost.
The TowerMill will probably follow, then the MobileMill. The reason for that is because when we're in a market like India and we're selling SolarMills to either residential customers, small business customers, or even the government sector; potential TowerMill customers see the effectiveness of our technology and are familiar with our brand.
The telecom operators in India know that they need to do something about getting energy to these remote locations because of the operating expenses incurred with keeping a diesel generator fueled. Those are huge. When we can come out there and deploy renewables at the foot of the tower, it offsets their need to have to send a fuel truck out once a month or every other week, whatever it might be. We can delay that need for fueling and maintenance. That is a huge win. There's 40,000 off-grid towers in India that we're in discussions with companies about.
EQ: The core technology that you have is really impressive in that it creates a lot of possibilities. Once you penetrate any market, there’s other areas that you can grow into. What other competitive edge does WindStream have over your competitors in addition to the technology?
Bates:Price. Aside from the fact that we're the most efficient, most scalable and most deployable, I think the biggest differentiator is price.
That’s where we spend all of our time. How do take a turbine that would typically be made out of an injection-molded plastic and make it cheaper? We invented a stamping process to make a turbine blade out of steel so that this one blade could be made for a couple of dollars as opposed to the $30 or $40 to make the plastic or composite material.
The electronics that govern the system are another place where we found a lot of cost savings. We spent a great amount of time and energy coming up with what is called Maximum Power Point Tracking (MPPT) that would harness every available watt in the wind so that we can load the generators, adjusting them differently based on wind speed and direction.
Another unique aspect involves something as simple as interconnects. We’ve spent a lot of time trying to find and build our own so that they were more cost effective.
How do you hook this all up to an inverter or battery bank so that the user who generates clean energy can use that energy when and where it’s needed? We're continually researching best practices so that we can improve. It’s not enough to be able to put something up and generate energy, the question is: how do you use it? That’s the differentiator.
This stuff could literally come right out of a box. In fact, in India we sell something called “A Kilowatt in a Box". It literally is a 1KW generator that comes with the inverter, a battery bank, and all the interconnects in a single carton. It’s a big carton, but it comes self-contained. No one else is doing anything like that.
EQ: There’s a lot of momentum right now with the general renewable energy markets, especially over the last several weeks we’ve seen experts proclaiming that the renewable movement has even overtaken fossil fuels going forward. Do you agree with that?
Bates:I totally agree. In our country, renewables are less attractive than in other countries. A lot of that is driven from politics as we have a huge number of people in this country who are climate change deniers. The rest of the world knows that this is the problem that needs to be addressed and needs to be addressed quickly. People are realizing that we can do something other than burn fossil fuels, and that we need to.
The question is how do you do it cost effectively? It’s not just a question of whether or not you want polar bears to be around in the future, like I would think we all do. The question that a lot of people have to ask themselves is: am I going to get my money back? What is the return on our investment if we're going to put the capital into a SolarMill system or any of these other renewable technologies? It needs to be financially sound before any of these will take hold. Once that happens, then you'll really see the momentum change.
It also needs to be done so that it could be cost effective without government incentives. That is a key differentiator for what we do. We never factor in incentives when we model out the ROI for a customer. Incentives come and go; they move with the political winds.
Right now, there are good incentives in Europe. The same is true in Japan. I believe the tariff in Japan for wind is $0.48/kWh. It’s a lot, even greater than solar. But will it be here next year? Who knows?
We build a product that is cost effective without incentives and the customer can avail themselves of those extra dollars. It just shortens the ROI and makes our product that much more appealing.
EQ: Going forward, what metrics and/or milestones should anyone watching WindStream be on the lookout for?
Bates:I have to be careful not to be too forward-looking as we are a public company. We are, of course, challenged by our cap table right now. And, of course, anybody can see that there are some convertibles. They’re just about done, and we expect to have a cleaner cap table going forward, so you should see our share price start to rebound.
Right now, I believe the company is undervalued. That’s just my opinion, but we would like to see this thing straightened out and see investors look at the company as a long-term growth opportunity. We’re not here to make this thing happen in two years or three years. It's a long play for us. We expect that we will add significant value to the company and the shareholders over time.
EQ: Can you tell us about the leadership at WindStream?
Bates:I have a background in technology startups as well media and entertainment. I’ve done a lot of work in that space. I love startups, I’m really passionate about them. I think I have a knack for building great teams, and I think I’ve done that on this project.
All of my key players come from, believe it or not, the Tier 1 automotive sector. We’re in this business of building cheap, inexpensive, renewable energy products. I wanted a manufacturing process that was scalable, and there's no better test ground for scalability than the auto industry. By locating our manufacturing facility in New Albany and then hiring folks from within that community, it allowed me to pick the best and brightest of Tier 1 automotive manufacturers.
Our product is pretty similar to what a car is, in many ways. It’s got a motor, bent metal, injection moldings, and electronics. But we need to be able to have a process to reach the kind of volumes that we expect to see in the near future. The whole team comes from that environment of “Okay, we've got to scale up and get moving.” That is what is great about the team that I have in Indiana.
EQ: Do you have any final takeaways you want to share with our readers?
Bates:We've got an exciting product that’s unique in the marketplace. I defy anybody to go out there and find an integrated, hybrid wind and solar unit that could be deployed and scaled as easily as ours at the price we’re offering. Some of these viewers will do some research and find companies that do hybrid solutions, but nothing at our cost level and ease of deployment. That is really the key to what we do.
As I said earlier, price is a big differentiator. But the ability to open up a box, assemble and install a unit in an hour, and have one up on a roof and running so quickly? That’s a unique differentiator we’ve got going for our product. I hope people will take a look at our website. Take a look, see what we've got, and find it interesting.
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