Leadership in Wind Energy Production Boosts Entrepreneurship July 16, 2008Posted by jgarciaalvarez in Clean Environmental Solutions, Entrepreneurship, Private Equity, USA.
What does the State of Texas and the Department of La Guajira, Colombia, have in common? How did the wind industry catapult the business operations of Knight & Carver? Let us explore three cases on how the wind industry is stimulating entrepreneurship in “tecnologías limpias” and clean environmental solutions.
According to the July 2008 issue of Fast Company, the state of Texas is pulling away from California as the No. 1 U.S. producer of wind energy. Texas is not only building onshore and offshore wind farms, but is interested in being at the manufacturing forefront of wind energy components, branded “Made in Texas”.
I delved into statistics compiled by the American Wind Energy Association (AWEA) and found out that as of March 31, 2008, Texas had an existing wind power capacity of 5,317 megawatts (MW) as compared to 2,483 MW of California. The AWEA’s 2007 Market Report also suggests that while Texas has 13 wind power projects under construction that will increase capacity by 1997 MW, California has one wind power project under construction that will bring an additional 290 MW.
La Guajira, Colombia
Las Empresas Públicas de Medellin (EPM), in collaboration with the Wayuu community, an ethnic group inhabitant of La Guajira Peninsula, Colombia, and various private and public institutions, launched the first fully operational wind farm in Colombia, Parque Eólico Jepírachi, in April of 2004. Composed of 15 turbines, the wind farm has an existing power capacity of 19.5 MW.
Since its foundation, the Parque Eólico Jepírachi has been recognized as a market-based initiative directed towards respecting the ethnic, cultural, and wealth-creation integrity of the Wayuu community. For instance, the United Nations Framework Convention on Climate Change has recognized the wind farm as a Clean Development Mechanism (CDM), earning certified emission reduction credits that can be traded with industrialized nations, per reduction targets of the Kyoto Protocol.
Stimulating Entrepreneurship in the Wind Industry
I believe the wind industry is poised to spur entrepreneurship in “tecnologías limpias”, clean environmental solutions, and alternative energy sources. According to a Renewable Energy 2007 Overview by Goldman Sachs Global Investment Research, wind costs are nearly competitive with conventional sources. Spain is the second largest wind market in the world, preceded by Germany and followed by the U.S.
Knight & Carver, a California-based inner city company and ICCC Chicago 2007 participant, seems to have benefited from the competitive advantages of being a first-mover in the industry. Building upon its expertise and success in the boating and yacht industry, Knight & Carver has expanded its operations to become a recognized leader in the wind blade inspection, repair, and maintenance services of wind farm operators in the U.S. and in Spain.
Most recently, I learned that Knight & Carver had secured a $12 MM USD investment from the Global Environment Fund, a leading environmental private equity investment firm. Seems to be an educated financing option as the company faces expansion opportunities in a capital-intensive industry and fast-growth wind markets. Kudos to the management team!
Overall, leadership in wind energy production has the potential to boost entrepreneurship. I am sure entrepreneurs in the U.S. wind industry are anxious to see what will happen with the Wind Energy Production Tax Credit (PTC), expected to expire on December 31, 2008. A five-year extension of the tax credit will provide stability and encourage financial providers to increase investments. In Colombia, according to estimates of EPM, the Parque Eólico Jepírachi has generated approximately $1 MM USD of business in the surrounding community. This business is focused on maintenance, metallurgy, transportation, and courier services. Many other entrepreneurial initiatives associated with the Parque Eólico Jepírachi and “tecnologías limpias” remain to be explored.