Investment Report: Flower Turbines

Oct 29, 2021 22 min read

Active on StartEngine, Flower Turbines has already raised $4.54M+ on its current round from 2,500+ investors after being selected by Pepperdine University as one of the 10 Most Fundable Companies in America in competition with 4,500 businesses.

The company has designed small and efficient wind turbines that overcome the problems of most current wind energy solutions, including size, weight, noise, aesthetic appearance, and efficiency.

Flower Turbines' cutting-edge design means they can be installed in urban and suburban settings, including parking lots and on building rooftops, where it is impractical or even prohibited by law to install current wind energy solutions.

Flower Turbines Product
Flower Turbines
IN THIS REPORT

The Problem(s): What is the problem with existing small wind turbines? Let's understand the state of the industry right now.
The Solution: How does Flower Turbines solve those problems? Let's review the company's technology by analyzing its patents and intellectual property.
A Deeper Look at the Data: After reviewing the technology and design, it is critical to analyze if that translates to higher efficiency compared to existing solutions. And what about wind speed data across Europe and the US? Is average wind speed in residential areas enough to make Flower Turbines worth having?
Flower Turbines vs. Solar: How does Flower Turbines compare to solar? At what average wind speed does Flower Turbines start being more efficient than solar?
Products and Unit Economics: Let's review the different products offered as well as their unit economics— really understand what the margins look like? Let's also take a look at the company's recent acquisition of a charging stations product line.
The Market: How large is the small wind turbines market and how does it compare to solar?
Debt: Does the company have a healthy balance sheet? Let's review Flower Turbines' debt.
Financials, Liquidity, and Valuation: Will the company have sufficient runway after fundraising? Let's review and discuss their financials. And importantly, is the valuation reasonable?
The Team: Can we trust the team?
Exit Strategy: Can we get our money back? How are we going to get a return on our investment? Does the company have the potential to be acquired or go through an IPO?
Conclusion: Did I invest in Flower Turbines? Does the company meet our 10 investment criteria?

The Problem(s)

As you can see in the earlier photo, Flower Turbines look very different from the more traditional wind turbines we're used to seeing (illustrated below). So the first thing that comes to mind is, besides a good-looking design, is there actually a problem with standard wind turbines?

Horizontal Axis Wind Turbines (Photo by Rabih Shasha / Unsplash)

There are a few major problems with existing wind energy solutions besides aesthetic appearance. In order to better understand them, let's make some distinctions:

Large-scale wind turbines

According to Hoen, the average total height (from base to tip) of an onshore US turbine in 2017 was 142 meters (466 feet). As you can imagine, this type of wind turbine cannot be installed in or near residential areas. Each state will legislate differently around both distance and the height of the turbines. So, generally speaking, standard wind turbines cannot be installed in urban and suburban settings - including parking lots and on building rooftops - because it is prohibited by law.

Small wind turbines

To install a turbine near residential areas, it has to satisfy a number of requirements imposed by state laws. Probably the most important one is about size. For example, in relation to building-mounted wind turbines, laws in England require that, including the blades, no part of the turbine should protrude more than 3 meters above the highest part of the chimney, and the overall height of the house and wind turbine should not exceed 15m.

This is where small wind turbines come into play. However, although small wind turbines could theoretically be a viable alternative to solar, they do not seem to have gained significant traction so far.

The global small wind turbines market size is expected to reach USD 316.7 million by 2025, from USD 166.6 million in 2019, growing at a CAGR of 17.4%. By comparison, the residential solar PV market, in the US alone, is expected to reach USD 14.1 billion by 2028, from USD 10.4 billion in 2021, growing at a CAGR of 5.6%.

So what's the problem with existing small wind turbines? Why are they failing to gain traction? The three main obstacles to mainstream adoption of small wind turbines are:

  1. Noise: Most small wind solutions have to compromise between low noise and high efficiency. As a result, this makes them unusable for most areas where people live and work.
  2. Aerodynamics: It is nearly impossible to install them without interfering with each other's wind flow. The aerodynamic interference of one turbine with another means they have to be widely spread, resulting in lower cost-effectiveness in settings where most people live and work.
  3. Birds: Conventional wind energy technology is treacherous for birds. A 2013 study published by ornithologist K. Shawn Smallwood in The Wildlife Society Bulletin found that wind turbines killed an estimated 573,000 birds annually in the United States.

In order to analyze each of the above problems, we need to examine the state of the industry right now and review existing solutions further. Let's start from an additional categorization of wind turbines:

Lift-type wind turbines

Lift-type wind turbines work like airplane wings or helicopter rotor blades. When wind flows across the blade, the difference in air pressure across the two sides of the blade causes the rotor to spin. They can be further categorized into vertical (VAWTs) and horizontal (HAWTs) wind turbines. As depicted below, in HAWTs the machine's axis is parallel to the wind direction/floor while in VAWTs the machine's axis is perpendicular to the wind direction/floor.

Ilustration: VAWTs vs HAWTs

As depicted below, HAWTs can be further categorized into different types based on the number of blades. The most used today are the three-bladed, for both their visual and aerodynamic characteristics.

Horizontal Axis Wind Turbines

The VAWT pictured in the photo above is a Darrieus—a lift-type vertical axis wind turbine. However, in addition to lift-type VAWTs, there are also drag-type VAWTs (Flower Turbines fall into this category). More in the illustration below:

Vertical Axis Turbines
Drag VAWTs (highlighted in sky blue) vs. Lift VAWTs (highlighted in red)

Drag-type wind turbines

While lift-type turbines rotate thanks to the difference in air pressure across the two sides of the blade, drag-type turbines rotate thanks to the wind pushing the two blades with different resistance. So let's get a little deeper.

How Savonius-Type Turbines Work: Savonius is a cylinder cut in half, with the two parts offset from each other. The concave and convex parts have different wind resistance so, when the machine is subjected to the wind, it creates torque that makes the rotor always rotate in the same direction.

Savonious Turbines

As depicted above, the two-blade configuration, viewed in horizontal section, appears as an S-shaped figure. The curved blade accommodates and exploits the wind that pushes it. The concave and convex parts have different wind resistance and the difference in resistance between the two blades induces the Savonius turbine to turn.

The Problems of Lift-Type Turbines

Ilustration: VAWTs vs HAWTs

Most existing small wind turbines fall into the lift-type category. While they are an efficient solution, they have a number of significant problems that are an obstacle to their mainstream adoption. As mentioned already, they are:

  1. Noise: Most small wind solutions have to compromise between low noise and high efficiency. As a result, this makes them unusable for most areas where people live and work.
  2. Aerodynamics: It is nearly impossible to install them without interfering with each other's wind flow. The aerodynamic interference of one turbine with another means they have to be widely spread, resulting in lower cost-effectiveness in settings where most people live and work.
  3. Birds: Conventional wind energy technology is treacherous for birds. A 2013 study published by ornithologist K. Shawn Smallwood in The Wildlife Society Bulletin found that wind turbines killed an estimated 573,000 birds annually in the United States.

Advantages and Disadvantages of Savonius-Type Wind Turbines

Savonius-type wind turbines don't have any of the above problems—they are not noisy, they can be placed near to each other, and they are safer for birds. Furthermore, they operate regardless of the wind direction (there is no issue related to the orientation of the machine). Another advantage is that the electromechanical part is at the base, making maintenance operations much easier.

So why has no one come up with a small Savonius-type wind turbine before Flower Turbines? What was the problem with the Savonius design and how are Flower Turbines solving this problem?

While the Savonius design offers several advantages compared to other solutions, it is also much less efficient the way it is usually made. It is traditionally assigned a maximum efficiency of 15%, but academic literature has shown the potential for efficiency with existing configurations in the high 20s. Most Savonius turbines have been built not according to accurate tip speed ratios; the efficiency range for the wrong ratio is 5-28%.

That's why Savonius-type turbines have failed to gain adoption so far.

However, Flower Turbines has applied several changes to the average Savonius design to make it much more efficient. As such, it offers all the advantages of drag-type turbines, while also being efficient enough to be worth using. Let's review the company's patent to analyze all the different pieces of innovation brought to the existing configuration.

The Solution: How do Flower Turbines solve these problems?

As already mentioned, existing lift-type small wind turbines have several problems, including noise, aerodynamics interference when placed near to each other and they are dangerous for birds. On the other hand, existing drag-type small wind turbines are not efficient enough to be worth using. So let's start with the most important problem:

#1 Problem: Efficiency

Since the most important innovation brought by Flower Turbines is their higher efficiency as compared to the average Savonius design, let's start by reviewing US Patent N° 9,255,567 - named “Two-bladed vertical axis wind turbines” - which discloses the company's principles to improve performance and construction of vertical axis wind turbines (VAWTs). The patent abstract can be seen in the image below:

Screenshot: US Patent N° 9,255,567 Abstract

The first innovation over prior designs is around the shape of the blades, as you can see from the screenshot below taken from the patent.

Screenshot: Description of the first innovation
Source: US Patent N° 9,255,567

The description above refers to Figure 1 included in the patent that I have also attached below. However, it is not really intuitive at first glance. Because of this, I have also attached images that compare the curved shape of Flower Turbines' blades against the straight shape of another Savonius-type turbine blades.

Comparison: Flower Turbines Blades Shape Versus Average Savonius

How does the curved shape make Flower Turbines more efficient? Although it might seem difficult at first, it is actually quite intuitive. When the wind pushes the curved blades, they will face less resistance than a straight blade because the wind will go around (above and below) the blades, instead of just pushing the blade to rotate in the opposite direction. This results in less opposition to flow from the side moving into the wind and will help the side benefiting from the wind to absorb it better. I have attempted to help you visualize this in the following picture:

The second innovation described in the patent consists of the horizontal lips at regular intervals along the double-curved structure. They prevent the vertical movement of air from decreasing the power production by at least 20%.

Screenshot: Description of horizontal lips
Source: US Patent N° 9,255,567

The horizontal lips described in the patents are the ones I have highlighted in the photo below:

Photo: Flower Turbines Horizontal Lips

The third innovation described in the patent consists of the upper edge of the double curve, which should function as if it were a lip because of its shape:

Screenshot: Description of the upper edge of the blades
Source: US Patent N° 9,255,567
Figure 6: Blades Upper Edge
Source: US Patent N° 9,255,567 

The upper edge is what I have highlighted below:

Photo: Flower Turbines Blades' Upper Edge

The fourth innovation described in the patent consists of stackable S blades, which would be an important advantage in the mass production of a standard wind turbine that needs to be adapted to local circumstances. I've attached both the description and the figure from the patent below.

Screenshot: Stackable Blades Description
Source: US Patent N° 9,255,567

The design illustrated in Figure 17 looks different from the current design of Flower Turbines. However, the founder informed me that this configuration applies to the current design too.

Figure: Stackable Blades
Source: US Patent N° 9,255,567

#2 Problem: Aerodynamic interference

As already mentioned, lift-type turbines cannot be installed near to one another without interfering with each other's wind flow. The aerodynamic interference of one turbine with another means they have to be widely spread, resulting in lower cost-effectiveness in settings where most people live and work.

On the other hand, not only do Flower Turbines not interfere with each others' wind flow, they actually enhance each other's performance when placed nearby under the right conditions. This effect is called the cluster effect and is described in US Patent N° 10,330,086. The patent abstract is shown below:

Screenshot: US Patent N° 10,330,086 Abstract
Source: US Patent N° 10,330,086

OK, so how does that work? In the illustration below, red represents the highest velocity, blue the lowest; wind flows from the left of the image, and this shows a horizontal slice through the middle of the turbine with the shaft in the middle.

Source: Flower Turbines Pitch Deck

Please pay particular attention to the red area of increased speed to the side of the turbine as this shows why the cluster effect works. Simply put, the wind has a higher velocity at the sides of the turbine than it had before hitting it. By placing the turbines in a particular way, that effect can be leveraged and thus increase the efficiency of the overall system. I have highlighted the areas of increased velocity in the figure below, taken from the patent.

Figure 10: Flower Turbines cluster effect setup
Source: US Patent N° 10,330,086

The following graph shows the ratio of watts to wind speed in relation to the shaft to shaft distance between turbines. As you can see, the ratio increases significantly when placing the turbines at the right distance.

Graph: Cluster Effect Data
Source: Flower Turbines Pitch Deck

I have to admit, this finding is really interesting. As mentioned in the last weekly report, I wanted to know whether the cluster effect applies to all types of Savionus turbines, or if it is down to the particular design of Flower Turbines. The founder informed me that it might apply to other Savonius-type turbines too. Nevertheless, other Savonius-type turbines are still not efficient enough to be worth using in any case. Furthermore, it is worth mentioning that the patent is broad enough to include other drag-type turbines.

#3 Problem: Bird Safety

The tulip design makes it easy for birds to see and avoid the turbines. Below is a video shared on the company's youtube channel where some birds fly around the turbines without any particular problem:

#4 Problem: Noise

Recently, Flower Turbines underwent a third-party review analyzing the level of noise produced by the machine. The findings are pretty interesting—not only was the sound of the turbines indistinguishable from the background noise but it was also proven that the turbines have sound reduction characteristics. In fact, background noise at 45 decibels decreased, after passing through the turbine, to 39 decibels at 4.5 meters and to 32 decibels at 10 meters.

Screenshot: Flower Turbines Noise Reduction Report
Source

According to the founder, this is due to the fact that, if the turbine adds no or minimal turbulence, the energy consumed by the turbine reduces the energy carrying the sound. The company also announced that they are currently drafting a proposal for a large railway company to use Flower Turbines both for energy as well as for sound reduction.

Having understood how the product works and how the design increases efficiency, let's review some data to evaluate how that translates into real performance.

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