A co-founder of Bergey Windpower and president since 1987, Mike Bergey is a mechanical engineer and an internationally recognized expert in the field of small wind turbines, distributed generation, and rural electrification. He has authored more than 70 technical papers and articles in the field, provided testimony to Congress, and serves as a consultant to numerous government and international agencies. He holds one patent in the wind energy field.
Thank you so much for talking with us, Mike. Let’s start with you telling our readers how you first got involved in wind energy.
My father, Karl Bergey, introduced me to wind power in 1974. I was a student in mechanical engineering at the University of Oklahoma and my father was a professor of aeronautical engineering. I joined a team of his students building a small wind turbine for a national student engineering competition. That got me hooked on the challenge of wind power.
Bergey Windpower has been around a long time. Why has your company survived, while so many others have come and gone?
It has several ingredients, I think. First, the reliability of our turbines that comes from my father’s passion for simplicity has meant that our warranty costs have been lower than our competitors. Another factor has been our low overhead, spending discipline, and generally lean budgets. We’ve never taken large outside investments and remain a family-owned business. Finally, I’d say our focus on customer satisfaction, from conservative performance projections to offering the longest warranties. That has given us the all-important customer referrals that drive our sales clusters. Over the last 35 years, we’ve seen hundreds of companies underestimate the challenges of small wind. It’s a lot tougher than it looks.
Was there ever a time when you feared your company wouldn’t make it?
In 1986 we saw a more than 80 percent drop in revenues as the first round of tax credits expired and oil prices dropped to eight dollars a barrel. The U.S. market literally disappeared overnight. We decided then that there was a long-term future for small wind and made the painful adjustments to continue operations. We were the only U.S. small wind company to survive that abyss. We went overseas and found markets, like village power, where we could compete. We struggled for the next 10 years, but eventually sales recovered to more comfortable levels.
What do you think are the biggest challenges and opportunities at this point in the small wind industry’s development?
There was no federal subsidy for small wind for 24 years, but that changed with the introduction of the 30 percent ITC in 2009. That was the biggest challenge for over 20 years. After 2009, permitting was the biggest challenge and it remains a significant problem today. More recently, the low cost of solar energy has emerged as the major challenge. Solar has always enjoyed more favorable incentives than small wind, but the costs for solar were higher. But the $40 billion in soft loans for solar “super-factories” by the Chinese government over the last five years has led to a huge reduction in the cost of PV modules manufactured in China, and the recent oversupply situation has driven worldwide module costs to below actual costs of manufacturing. So customers see attractive solar prices and retailers see higher margins with these imported modules. Retailers also see easier permitting and a shorter sales cycle for solar.
We see a major opportunity for leasing in the farm and residential markets. Leasing and PPAs [Power Purchase Agreements] have been the major market driver for the distributed solar market over the last several years, but leasing was not available for small wind system customers. We work with United Wind, which is focused on leasing, and just weeks ago the first small wind lease in America was signed, with a Bergey turbine. We foresee significant growth in “no money down” leases for small wind. We think it could be a game-changer.
What policy changes do you think are needed in the U.S. for small wind to flourish here?
We need policy makers to understand the economic development and job creation advantages of U.S. manufactured small wind turbines over imported solar modules and, on that basis, be willing to reverse the more favorable current policy treatment of solar over small wind. Last year approximately 90 percent of the small wind turbines installed in America were built here, while less than 15 percent of the solar modules were. From the US-DOE RD&D program to utility rebate programs we hope to see a reassessment of funding, incentives and promotion priorities that will give the small wind market the boost it needs. DWEA federal and state policy work is critical to delivering this message.
What role do overseas markets play in the future of small wind?
Last year our exports exceeded U.S. sales, so export markets are extremely important. The UK, due to its robust feed-in-tariff and excellent wind resources, was our most active market. We see good growth opportunities emerging in other parts of Europe and Asia, particularly in Japan. We are also seeing more micro-grid projects in developing countries that use a combination of solar, wind, and diesel power for rural electrification and remote telecom sites. We have an advanced battery charging system in beta tests that will give our systems a 25 percent performance boost in these applications. On the other hand, we closed our Chinese subsidiary last year after 15 years pursing the Chinese domestic market.
Do you think that small turbines will continue to be produced in the U.S.?
Absolutely. In fact I think small wind is part of the renaissance of American manufacturing. With reasonable investments in tooling and fixturing we have found that in recent years we can produce equipment in our U.S. factory at costs competitive with our Chinese subsidiary, at a higher and more consistent level of quality. I’m very bullish on American manufacturing.
What do you tell people who are interested in getting involved in small wind today?
That it’s not the place to get rich quick, but there are substantial opportunities in the retail sector in regional markets and in the supply chain. I recommend joining DWEA, networking with industry veterans, and getting involved with policy work on the state and federal levels. To companies that want to introduce new turbines, I would advise thorough real world testing and certification before launching the product.
Thanks so much for chatting with us today, Mike.