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Sunday, 12 May 2013 22:00

Tilting at Windmills? Beleaguered Muskegon wind turbine business closes doors

Written by  Elijah Brumback and Joe Boomgaard
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The promise of the WindTronics-made Honeywell Wind Turbine was that the power was generated at the tip of the blades rather than at the hub so it could produce electricity even at low wind speed. However, reviews of the turbine in Consumer Reports and other publications noted the product failed to live up to the manufacturer’s claims and suffered from quality issues. The promise of the WindTronics-made Honeywell Wind Turbine was that the power was generated at the tip of the blades rather than at the hub so it could produce electricity even at low wind speed. However, reviews of the turbine in Consumer Reports and other publications noted the product failed to live up to the manufacturer’s claims and suffered from quality issues. COURTESY IMAGE

Despite the promise of a revolutionary new technology for small-scale wind energy, one local company has found the industry’s headwinds too stiff to stay in business.

Even after receiving millions in government incentives and heady praise for its innovative wind turbine design, WindTronics LLC of Muskegon ended operations earlier this year after its sole-source supplier folded, according to a statement to customers and vendors.

“[D]espite four years of diligent work developing a novel and patented wind turbine technology, the business formed around this technology has failed as it was not able to achieve the high level of operating performance hoped for from the onset to allow it to continue,” Imad Mahawili, the turbine’s inventor, said in the letter.

As a result, WindTronics’ board of directors decided the company would close its doors and would no longer be honoring “warranty, service or business resolutions that may be pending or arise.”

WindTronics commercialized the new wind turbine design created by Mahawili, the former director of the Michigan Alternative and Renewable Energy Center (MAREC) at Grand Valley State University in Muskegon. The technology’s promise: By using a gearless design, electricity was generated at the tip of the blades, rather than at the hub of the turbine, which would allow it to produce energy at a much slower wind speed.

The company licensed the technology, which won a 2010 gold Edison Award, to Morristown, N.J.-based Honeywell International Inc. The partners inked a deal to sell the turbines at Ace Hardware stores across the country.

While the company struggled to find sales, it proved more than capable at securing government incentives during its short lifespan.

“I think the WindTronics’ experience underscores the complexity of some of these renewable technologies,” said Arn Boezaart, the current director of MAREC.

After the initial introduction, WindTronics ran into some controversy. After the State of Michigan offered a $3.7 million tax credit in 2009 to lure WindTronics to open a manufacturing plant, the company ultimately chose a site in Windsor, Ontario. The reason: The Ontario Ministry of Energy provided a $2.7 million incentive that included other benefits, namely the promise of a province-wide feed-in tariff for small-scale wind projects that could have helped create a market for the WindTronics turbine.

But the Ontario operations failed to live up to expectations, as MiBiz previously reported. Citing broken promises from the Canadian province, WindTronics President Reg Adams closed the shop after two years and after creating only 20 jobs of a promised 200 new positions. In a March 2012 report in The Windsor Star, Adams claimed that the company was packing up because the provincial government never implemented the promised feed-in tariff.

WindTronics then announced it had consolidated production to Altronics Energy LLC in Grand Rapids. In June 2012, the Michigan Economic Development Corp. awarded $450,000 in Michigan Business Development Program incentives to Altronics, a division of Altron Automation Inc., which said it would invest $2.5 million in an expansion to make the WindTronics turbine and create 90 jobs within three years.

An additional part of the incentive package included a $200,000 contract via the Michigan New Jobs Training Program for Grand Rapids Community College to put 51 workers through the college’s wind energy training program. The training was to occur over a six year period.

When the state initially evaluated the company’s legal and financial statements, Altronics looked to have potential for further success, said Josh Hunt, manager of development finance at the MEDC.

But it appears the latest move did not pan out. An automated message from Altronics states the company “has regrettably begun the process of winding down its operations due to circumstances outside Altronics’ control.”

In February of this year, GRCC received a letter from Altronics saying the company was in the process of conducting an orderly liquidation, said Julie Parks, GRCC’s training program director. No workers ever received the training, she said.

In the letter to customers and vendors, WindTronics’ Mahawili said the loss of the supplier “despite several months of negotiations and workable proposals” forced WindTronics to close its doors, too. He also stated Adams had resigned from the company.

Tim Mroz, vice president of marketing and communications at The Right Place Inc., which helped Altronics secure the MEDC funding, said the state incentives were also terminated.

“What we’ve found in the past year and half is a decline in wind industry components at all levels from large scale all the way down to small units,” Mroz said. “Even in our travels to Europe, a lot of major companies have scaled back their estimates in terms of wind turbine production this year and next.”

The WindTronics example also demonstrates the need for independent verification of renewable energy technologies, said MAREC’s Boezaart.

An August 2012 review by Consumer Reports found the Honeywell turbine fell well short of WindTronics’ claims. WindTronics calculated the turbine would produce 1,155 kWh per year given the 12-mph average wind speed it projected for the magazine’s Yonkers, N.Y. test site. But 15 months after installation, the turbine produced less than 4 kWh of electricity, the report stated.

At the installed cost of nearly $11,000, the WindTronics turbine’s payback period would be “several millennia,” the Consumer Reports story noted.

Boezaart said any alternative energy project must require a healthy amount of upfront due diligence.

“There are new ideas coming out all the time,” he said. “As we want to encourage entrepreneurs and inventors in the field, from a consumer standpoint, it’s important to verify the technology will perform as it’s promised.”

Read 22889 times Last modified on Friday, 10 May 2013 12:29

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