As mentioned last week, I have spent the entire week reviewing Flower Turbines with the help of an engineer. Below are all the insights we found and the open questions for the founder, as I have a call with him scheduled for today.
First of all, I wanted to make sure that I have understood all the ins and outs of the innovations that Flower Turbines brought to the industry.
Let's start by analyzing US Patent N° 9,255,567 - the one named “Two-bladed vertical axis wind turbines” - which discloses principles to improve performance and construction of vertical axis wind turbines (VAWT). The patent abstract is in the image below:
The first innovation over prior designs is about the shape of the blades, as you can see from the screenshot below which is taken from the patent.
So the description above refers to Figure 1 included in the patent. I've attached the figure 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.
The second innovation described in the patent consists of the horizontal lips at regular intervals along the double-curved structure. According to what is stated in the patent, this should decrease power production by at least 5%.
From what I have understood, the horizontal lips described in the patents are the ones I have highlighted in the photo below:
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:
I believe that the upper edge is what I have highlighted below:
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.
The design illustrated in Figure 17 looks different from the current design of Flower Turbines, so I would like to understand from the founder whether this innovation still applies to the current design.
The fifth innovation is the cluster effect, described in US Patent N° 10,330,086, according to which Flower Turbines enhance each other's performance when placed close to each other under the right conditions. This would be an innovation of significant importance because one of the barriers to greater adoption of small turbines is the aerodynamic interference with each other, and hence the need to separate them. The patent abstract is shown below:
OK, so how does that work? In the illustration below, red represents the highest velocity, blue the lowest; the wind comes from the left of the image, and this shows a horizontal slice through the middle of the turbine with the shaft in the middle.
Please pay particular attention to the red area of increased speed to the side of the turbine because that shows why the cluster effect works. Basically, to the side of the turbine, the wind has a higher velocity than it had before hitting the turbine. By setting up the placement of the turbines in a particular way, that effect can be leveraged and thus increase the efficiency of the overall system. I took the following figure from the patent and highlighted in red the wind with increased velocity.
The following graph depicts 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.
I have to admit, this finding is really interesting, but what I would like to know at this point is, does the cluster effect apply to any type of Savionus turbine, or is it down to the particular design of Flower Turbines?
A deeper look at data
Having understood how the product works, I would also like to have data that might help me compare Flower Turbines with existing solutions:
Power Coefficient: So from a marketing perspective, knowing that the turbine starts with a low speed of 1 m/s is great. However, from my understanding after talking with an engineer, the wind speed at which the turbine starts is less important than the efficiency of the turbine at different speed levels. If another turbine doesn’t start at 1 m/s but is much more efficient as speed grows then Flower Turbines' low starting speed is irrelevant. So I wanted to know if it was possible to see a graph showing the relation between efficiency (the power coefficient) of Flower Turbines and the wind speed? It would be great to have that graph for each Flower Turbines model.
Average Wind Speed: Another really important piece of data needed to estimate the potential addressable market is the average wind speed required to produce a decent yearly output for turbine owners. By taking a look at Flower Turbines' brochure, I see that they estimate the potential yearly output taking into consideration a wind speed of 6 m/s. (See image below) So I want to ask the founder if that is the minimum average wind speed needed for a Flower Turbines system to be worth having.
Why is that important? Many parts of the world have an average annual wind speed that is much lower than 6 m/s which, if that is the minimum wind speed required, would make Flower Turbines pointless. Below you can see two heat maps showing the annual average wind speed in Europe and in the US. As a rough estimate, I would say only 25% of the US and 50% of Europe have an annual average wind speed that is higher than 6 m/s.
Global Performance: Once satisfied that the turbine works well and is better than existing solutions, it would be great to know what the global performance of the system is and how it changes in relation to the wind speed.
Existing Small Wind Turbines: Coming on to the competitive landscape, I would like to understand what existing residential wind energy solutions exist and see some comparative data between those solutions and Flower Turbines.
Solar Energy: In addition to existing small wind turbines, an indirect competitor is certainly solar (of course, solar and turbines might also be complementary systems). In this regard, I can see in the company's pitch deck that Flower Turbines compare favorably to solar in windy areas.
However, an important piece of data needed to estimate how meaningful this is, is to know at what average wind speed Flower Turbines start being more efficient than solar?
After comparing research about the small wind turbines market and the residential solar market I noticed a pretty interesting detail.
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% (source).
As a 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% (source).
So I wonder, is the small wind turbines market so small because viable solutions for the residential market don't exist yet? If that were the case, and assuming Flower Turbines is a viable solution for residential wind energy, it would mean that they would be creating a new market.
An interesting exercise to estimate the size of that market would be to compare the heat map above (that showed that only 25% of the US and 50% of Europe have an annual average wind speed of 6 m/s or more) with another map analyzing the percentage of the same regions having enough sunny days for a solar system to be an efficient solution. I will ensure I do this in the dedicated investment report.
In addition to all the questions above, I would also love to know more from the founder about the unit economics of the business—what is the cost of production and the price to customers, what is the margin? What is the production capacity? And against this, how many units/month is the company actually producing?
As well as this, I would like to know more about existing customers—how many units have the company sold so far? What is the NPS from existing customers? What type of customers are they?