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A Big Year for Small Wind: Mariah Power Closes Cash

mariahpowerimage1Startups haven’t been seeing a lot of venture-capital money lately, but Mariah Power, a company with a small vertical-axis turbine that can turn low-speed gusts of wind into electricity, recently managed to squeeze cash out of the slowed-down funding environment. The company — named for the song “They Call the Wind Mariah” from the Clint Eastwood musical film “Paint Your Wagon,” — raised its second round of funding, with investors including Noventi Ventures, Greenhouse Capital, BigSky Partners and the Sierra Angels.

Mariah didn’t say how much money it secured, but CEO Mike Hess said in April that the company was seeking $5 million to $10 million, which it hoped to close by June. Before this latest round, the company had already raised $1.25 million, made up of $750,000 in angel funding last year and $500,000 earlier this year.

The cash comes at the end of quite a year for the Reno, Nev.-based startup. Aside from raising money, Mariah earlier this year produced 50 turbines, demonstrated its Windspire turbine at the National Mall next to the U.S. Capitol in Washington, and officially launched Windspire in June. (By November, Mariah had received more than 4,000 orders.)

And in October, the company announced that it had partnered with MasTech Manufacturing to begin producing and distributing Mariah’s turbines in Manistee, Mich. The companies expect to ramp up to 1,000 turbines per month by the end of 2009.

But Mariah is by no means the only company working to grow the small-wind market. A whole crop of companies are targeting the sector, with startups such as Quiet Revolution, Renewable Devices, Marquiss Wind Power, Emergya Wind Technologies and France Eoliennes also raising money this year (see stories on Quiet Revolution here and here).

And more competitors keep coming in. Japan-based Nikko last week said it plans to make a small-wind turbine, and Michigan-based Cascade Engineering in October said it was bringing its wheel-shaped turbines to North America.

Overall, it’s been a big year for small wind. In October, the U.S. Congress passed federal tax credits of up to $4,000 for small-wind systems, a major win after a 23-year hiatus in small-wind incentives, and the technology also has received support from cities like San Francisco and New York.

According to the American Wind Energy Association, the U.S. small-wind market grew 14 percent – or 9.7 megawatts – in 2007, the latest year for which data is available. The association, which defines “small wind” systems as those rated for 100 kilowatts or less, reported sales of $42 million and 9,092 systems last year, and a total installed capacity of between 55 and 60 kilowatts. But those figures are still miniscule – far less than 1 percent – compared to the overall wind market, which grew more than 5,000 megawatts of wind power last year, reaching more than 16.8 gigawatts of total installed capacity.

Still, if small-wind companies can attract residential customers, the potential market is huge. And companies are predicting rosy futures. Southwest Windpower, for example, recently announced a joint venture in China and forecast that it could as much as double its growth next year after its November revenue nearly tripled from last year. (Check out this story I wrote about Southwest Windpower in April).

Challenges, such as difficulty of getting zoning and other permits to install turbines in residential areas, remain. Price has also been an issue, as most customers want to recoup their costs in five years or less, according to AWEA. Without any government incentives, most of Mariah’s customers will see a return on their investment in less than 10 years, which is about half the expected life of a turbine, the company said.

Founded in 2005, Mariah makes a slim, 30-foot-tall turbine with straight blades that spin vertically to produce up to 1.2 kilowatts of power. The company claims the vertical axis enables the turbine to spin more slowly – just two to three times the speed of the wind – making it quieter than the usual pinwheel-shaped turbines.

The company says the turbine, which costs $3,995, plus $1,000 for installation, will produce roughly 2,000 kilowatt-hours of electricity per year – about a quarter of the electricity used by an average home – in areas with average winds of 12 miles per hour. The cost of ownership comes to 12.4 cents per kilowatt-hour over 20 years, compared to 22.6 cents per kilowatt-hour for most propeller systems and 36 cents for solar-power systems, according to Mariah.

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