Friday, October 24, 2014

No Tilting at this Urban Windmill

London-based City Windmills Holdings, Plc. (CYW:  GXG) wants to put windmills on houses and buildings all over New York’s Long Island….and beyond.  While solar technology has experience growing acceptance for both residential and commercial building owners, wind technology has lagged in the evolving distributed power generation system.   Do not expect the usual blade windmill that have made the Dutch famous and dot the prairie lands of the Midwest U.S. 

The City Windmill design is an unconventional, vertical axis windmill that is about four feet in height and two and a half feet in diameter  -  about the size of an oil barrel.  The windmill is designed to take advantage of the wind dynamics of both slant-roof and flat-roofed buildings where air currents at the roof perimeter can accelerate to speeds beyond the prevailing wind velocity.  City Windmills is still testing its design but management expects one of the windmill installations to provide as much as half the electricity requirement of a typical home.  An integrated storage solution makes the windmill ideal for remote locations or in areas where winter or summer storms often leave home or business owners without electric service for extended periods of time.

A project in North Carolina is testing a City Windmill in a utility project.  The project is also using City Windmills for provide power for security systems around the project border.  Another pilot project is using a City Windmill for power generation at a food processing plant in Pennsylvania.  The management team believes the economics of its novel windmill design will encourage widespread adoption of wind for distributed power production, much like solar has been adopted over the last ten years. 

Besides a compelling cost of ownerships and operation, City Windmills are expected to avoid one of the worst characteristics of conventional wind.  The City Windmill is enclosed by wire mesh and thus will not likely kill passing birds like the large, high velocity blades on a conventional windmill.

The company is working hard on arranging for manufacture of is novel design.  While the design is unique, the required materials are readily available all across the U.S.  That will make it possible to produce the windmills regionally and minimize shipping distances.  For commercial customers, the company will offer branding displays on the windmill exterior.

Shares of City Windmills are quoted on the GXG Global Exchange in London, but trades infrequently.  The stock is price near 4.75 Euros or about US$6.00 and has a relatively wide bid-ask spread.  The company has about 1.4 million shares outstanding, most of which are held by insiders.  Practically speaking, City Windmills functions like a private company.  Taking  a position in CYW could be easier said than done given trading scant volume.  Nonetheless, it is an alternative energy company worth watching.   

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


No comments: