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United States

Targeting medium scale niche market -- Upstart manufacturer

Recent orders from three project developers in the US Midwest are at the leading edge of what an upstart North American turbine manufacturer sees as a mushrooming -- and largely not catered for -- market for small and medium-sized wind power projects. Americas Wind Energy Corporation (AWEC), a company listed in the US but with a base in Toronto, Canada, has sold two of its 900 kW turbines to Wind Vision, an Iowa-based developer, two more to Waverly Light and Power, a municipal electric utility serving 4300 customers in northeast Iowa, and a single unit to the Rural Electric Convenience Cooperative in Auburn, Illinois. The orders are in addition to the sale of a single turbine to the Wray School District in Colorado, announced in February and due for installation this year.

AWEC has the exclusive North American licence for Lagerwey direct-drive technology, a turbine developed in the Netherlands by Henk Lagerwey, the man behind the ubiquitous Lagerwey 75 kW turbine with two blades which dotted the Dutch and North German landscapes in the 1980s and early 1990s. AWEC also has a non-exclusive licence for the 900 kW unit in the rest of the Americas. Since acquiring the rights to the machine in 2004, it has installed four turbines, all in Canada.

Unlike many major manufacturers that are gravitating to large, multi-year framework agreements with deep pocketed developers, AWEC is focussing on smaller developers looking to buy only a few machines. "We target the medium-sized wind market with our medium-sized wind turbine. That is the way we describe it," says CEO Hal Dickout. "We find most of our quoting is for 20 turbines and under. That is the space in which we work. And that is the area where most of the big players, who are all sold out well into the future anyway, don't even want to talk to those little guys. And that is exactly where we do want to talk."

Interest in the small project niche is enormous right now, says Dickout, driven by initiatives like Ontario's program for standard offer wind power purchase contracts and by energy co-operatives "springing up in all sorts of places" across both Canada and the US. "The business is mushrooming. It is just incredible what the growth is. The limitation on our ability to grow is going to be in the production capacity," he says.

Outsourced

Since the beginning, AWEC has outsourced all of its manufacturing. The strategy, says Dickout, has turned out to be an advantage in a tight market: the company can get components from a variety of places. "As production ramps ups, we have got more resources to draw on than if we had to take our own money and spend it on a facility and buy the equipment to build up the capacity to meet that need." When it comes to towers, the company has a list of about half a dozen manufacturers it can turn to. "While some of those are pretty busy nowadays with the work they are doing for the major guys, almost everybody has room for us," says Dickout. "This is true with effectively every other component."

Still, with the growth AWEC is expecting, the company has taken steps to bolster its supply chain. In March, it signed an agreement with the Coopératives regroupées d'énergie renouvelable du Québec (CRERQ), a group of wind power co-ops, municipalities and First Nations that has said it plans to submit bids for at least ten projects totalling 300 MW in Hydro-Quebec's current call for 2000 MW of wind. The deal will see CRERQ become the company's sales arm in Quebec. The organisation has also set up a second co-operative, made up of ten companies, mainly based in eastern Quebec, that will manufacture blades, rotors, generators, nacelles, towers and converters for AWEC turbines.

Technology transfer

Dickout expects technology transfer to take place over the coming months and production to start before the end of the year. While AWEC will continue to have some towers and possibly other components built elsewhere, "the focal point is going to be in Quebec," he says.

The company has also gone through other changes Dickout believes will help it gain a slice of the hot American market. It started out in Toronto as Americas Wind Energy Inc (AWEI), but in August completed a reverse takeover of a company listed on the Over the Counter Bulletin Board in the United States, creating US-based AWEC as the publicly traded parent company. AWEI is now AWEC's Canadian subsidiary. "It is working out well because we are using the one company in Canada and the other in the US," says Dickout. It also recently paid off an outstanding loan and is now debt free, "providing an improved financial position for future growth," says AWEC.

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