Wind Power When the Wind Ain’t Blowin’

7/25/07Follow @wroush

No one would spend hundreds of millions of dollars to build a coal, gas, or nuclear power plant and then leave it idle two-thirds of the time. Yet that’s the prospect faced by wind-farm operators, who consider themselves lucky if there’s enough wind to keep the turbines spinning eight hours a day. Wind is one of the cleanest and cheapest of clean-energy sources, but it’s also one of the least reliable. And that means wind-farm operators often can’t sell power at the times of day when demand—and prices—are highest.

When David Marcus learned about this limitation from separate articles in Forbes and Scientific American about five years ago, he got interested. Marcus had founded and led the successful Apex Property Exchange—an ingenious service leveraging federal tax regulations that allow investors to sell obsolete assets and acquire replacement ones without incurring capital gains taxes—and had sold it to JP Morgan Chase in 2002 for an undisclosed (but undoubtedly handsome) sum. He was looking for his next big investment, and wind farm operators desperately needed capital. But there was that pesky problem of waiting for the wind to blow.

Marcus wondered if there was a way to lick the reliability problem. But most of the money going into the wind industry was being used to build conventional wind farms, not to experiment with new technologies. “Most venture capitalists at that time, and it’s still the case today, consider wind to be a mature technology,” Marcus says. “They think there’s nothing fundamentally new to do—that the business is owned by big companies like GE, Mitsubishi, and Siemens, and that there are subtle refinements to do but no big technology breakthroughs waiting in the wings.”

Then Marcus met Eric Ingersoll, CEO of a company called Mechanology that had an innovative design for a high-pressure, high-flow air compressor. The two hatched the idea of using air compression instead of electricity to bridge the gap between the windmill and the grid. In their scheme, the conventional electric turbine in a windmill’s gearbox would be replaced with a compressor that sent compressed air down to the ground, where it would be stored and used in conjunction with a traditional power source, such as gas combustion, to generate electric power on demand. Thus was born General Compression.

The Attleboro startup was co-founded last year by Marcus, his brother Michael, Mechanology, and power-project consultants Summit Power Group. The company aims to test the air-compression idea in a pilot plant as soon as 2009. But electrical generation at the plant won’t be entirely driven by stored wind power. Yes, Ingersoll’s four-stage compressor will squeeze air down to a pressure of 100 atmospheres and store it in large underground tanks, caverns, or pipelines. But then the compressed air will then be released via a Mechanology-designed expander into a conventional gas-fired turbine, where it will enhance combustion and triple the generator’s power output (turning a 100 megawatt generator, for example, into a 300 megawatt machine).

general_compression_2.jpgPlanting a wind farm around a conventional gas-fired generator “reduces the cost of running a gas turbine by roughly 75 percent, which is enough to pay for the entire wind farm and all of the [compressed air] storage,” says Marcus. It also allows the wind energy to be dispatched when needed—meaning the plant owners can charge the higher prices per kilowatt-hour in effect at times of peak demand. According to General Compression’s models, a compressed-air plant will have twice the financial return of a conventional wind farm, and the same return as a gas plant (but using one-third as much fuel).

Since its May 2006 incorporation the company has raised $8 million from institutional and angel investors and hopes to raise another $30 million in a second funding round beginning this September. Marcus says the venture-capital partners he’s approaching for the second round are experienced energy investors, but usually don’t have much experience with the wind industry. “These firms have been telling their limited-partner investors that they want to invest in solar, geothermal, biofuels, efficiency, and wind, and they’re able to find companies in the other sectors, but they have more trouble finding something in wind that’s not just a [wind farm] project,” says Marcus. General Compression’s technology—which could firm up existing wind farms, or bring new transmission to power-poor areas–could win VCs the higher returns they’re looking for, Marcus says.

General Compression’s first pilot plant may or may not be in New England—that depends on where the company can find the best partners or hosts for the prototype. But Marcus says the Boston area is a good place for the company’s headquarters, for three reasons. “The first is, I live here and it’s a great place to live. The second is, with the universities and the technology companies that have grown up around here, there are really smart people here who care about the sectors they’re in. And third, the money is here. VCs are like the rest of us—they don’t want to travel too far to visit their deals. If you want them to attend your board meetings, you’d better be near them.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • KevPark

    The idea of storing up wind energy as compressed air is a novel one and was an engaging read. It made me think that there could be many ways to implement storing wind energy for future release into the electrical grid, not just using compressed air. It will be interesting to see if another company comes up with a different, perhaps more cost-effective approach to storing and releasing wind energy at peak energy usage periods.

    Regards,
    Kevin Park, M.D.

  • Frank M

    “No one would spend hundreds of millions of dollars to build a coal, gas, or nuclear power plant and then leave it idle two-thirds of the time.”

    Where exactly did you pull this statement from? Montgomery Energy is currently planning to build a 348 megawatt natural gas plant (one of the largest in the state of Massachusetts’s) that will only be permitted to run 1500 hours a year. 1500 hours a year means the plant would be idle over 80% of the time.

    newspaper link: http://www.townonline.com/billerica/homepage/x1807337003

  • Wade Roush

    Responding to Frank M’s comment –

    Of course, Frank, you’re right. The Billerica plant you mentioned is an example of a “peaking plant” that’s turned on only during the hours of greatest electrical demand, when the owners can collect the highest rate for the power they deliver. My somewhat smarty-pants lede for this posting did not take peaking plants into account.

  • Michael Schrage

    so, what’s a better business: data compression or air compression?

    there’s an important similarity between the two techniques and technologies that wade understates….that is, data compression’s value is a direct function of the algorithmic and computational costs of converting, storing and reconverting the data…the analogy (admittedly a crude one) does hold for compressed air/wind…

    but the more important analogy is that data compression and wind compression are both COMPLEMENTS rather than STANDALONE techniques and technologies….my bet is that the economics of co-storage/co-generation will prove to be the better value-added business than ‘stand-alone’ windfarms…
    complementary design & engineering & business models strikes me as the better investment than ‘purity’…this will no doubt drive the ‘greens’ nuts but then, what doesn’t…?

  • Rocky Choi

    The wind power can converted into hydrogen when the power is over produced. Hydrogen can be easily compress and store in liquid form, and can be transported to not far away gas turbine generator as fuel. Or more advance but expansive, use a fuel cell to turn it back into
    electricity when needed.

    Rocky Choi

  • veekram B

    Well, I agree with the compression idea as far as individual production of energy for each household is concerned. I just do not understand why people are after business with electricity.. Rather why don’t we think of it at the individual /family level.. Any amount you produce will be used to cut down on electricity supplied by companies.. Hence, the more you produced the more economy you make. Now, we must know the amount we are producing and use only that amount- constantly. So, no need to think about what to do with excess energy. The compression of the air will be achieved by the rotating blade connected to a compressor, which in tern will supply regulated air pressure to a turbine that will produce only energy that can be converted to ac through inverters. In this way, electricity will be available 24/24.
    veekram