Rare earth bets becoming factor in wind turbine direct-drive generator startup investmentsPublished on September 23rd, 2011 | By: firstname.lastname@example.org
About a week ago, Boulder Wind Power, a maker of a direct-drive system with what’s been described as a low-speed permanent magnet generator for utility-scale wind turbines, announced that it had received $35 million in investment venture capital firm NEA and rare-earth producer Molycorp.
Molycorp’s involvement, presumably, is based on its insights to rare-earth markets and what they think will be the long-term role that rare earths will play in permanent magnets. The company had previously said it wants the company to be organized around a “mines-to-magnets” strategy. BWP’s news release says the investment “positions Molycorp to become the ‘preferred provider’ of rare earth magnets and/or alloys for wind generators using Boulder Wind Power’s innovative drivetrain technology.”
But BWP isn’t the only direct-drive startup, so I wondered, why is Molycorp interested in it?
For example Danotek, a high-speed permanent magnet innovator, also has been highly touted and nearly the same time BWP was getting its new investments, Danotek also was receiving a nice venture funding package from GE Energy Services, CMEA Capital, Khosla Ventures and Statoil Hydro.
A story over at the American Wind Energy Association’s blog perhaps provides some explanation about Molycorp’s involvement and how other investors are formulating their bets. The AWEA post contains comments from people involved with both start-ups, including Sandy Butterfield, BWP’s CEO and once the chief engineer for the Wind Technology section of the National Renewable Energy Lab. The payoff paragraphs in the AWEA story are
One of the most distinguishing characteristics of the BWP PMG design is that its magnets are part of an axial flux air core machine which operates at relatively low temperatures and are made with a rare-earth metal called neodymium. More commonly, PMG magnets are part of iron core radial flux machines like Danotek’s, operate at relatively high temperatures and require a rare earth metal called dysprosium.
In very round numbers, Butterfield said, dysprosium sells – in today’s very constrained market dominated by China’s hoarding of its unique rare earth metal supply – for around $1,000 to $2,000 per kilo; neodymium sells for about $100 per kilo and is relatively more common.
Rare earth metal processing techniques used in China, Butterfield said, “are pretty environmentally detrimental. But, he said, “Molycorp has developed a closed loop system that is both efficient and environmentally friendly. Nothing comes out of it and their yield is much better.”
This assures BWP a secure domestic supply of neodymium while other PMG system makers must continue to pursue supplies of dysprosium, which, Butterfield said, “drives the price of high temperature magnets.”
Indeed, Molycorp is pretty overt in how it sizes up its business plans. On its website, the company notes
“While the US currently has no capacity whatsoever for production of NdFeB magnets and intermediate magnet materials (metals and magnet alloys), it does control one of the world’ s largest and richest rare earth deposits at the Mountain Pass, Calif., facility. … [P]lans are in place to bring the facility back into full production over the next couple of years. In addition, with appropriate federal assistance for research and development and capital costs, [Molycorp Minerals] is prepared to move forward to reestablish domestic manufacturing capacity for both intermediate magnet materials and finished NdFeB magnets on an expedited basis.
Butterfield predicts its costs of generating electricity could drop to $0.04 per kilowatt-hour with a PM generator system.
BWP and Danotek aren’t the only players in this field. For example, Siemens offers a low-speed PM system and ABB has a high-speed PM system and claims on its website, “Our global, long-term supply agreements for magnet material secures capacity, availability and cost control.”
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