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Keystone Tower Systems

by Eric Peterson on February 21, 2016, 01:54 pm MST

www.keystonetowersystems.com

Westminster, Colorado

Founded: 2010

Privately owned

Employees: 13

Founder and CEO Eric Smith is looking to take manufacturing for wind projects onsite to allow for much taller towers.

Smith moved from machine design consulting to the wind industry after a year-long search for opportunities. "We did this big bottom-up cost analysis of the wind industry," explains Smith. "What were the biggest opportunities for cost reduction in wind technology?"

The short answer: "Tower design and tower manufacturing really stood out."

Funding the startup with a mix of federal grants and private investments, Smith set out to spark a paradigm shift in the wind industry. "The technology is based on spiral welding, which is a technology that's been used for 50-plus years to manufacture large-diameter pipe," Smith notes. "The difference between our pipe and a tower is a tower has a variable diameter and a variable thickness."

Keystone's patented process solved the puzzle. "The underlying geometry is pretty complicated," says Smith. Instead of making straight cuts on the steel, "What we do is we cut it into a series of trapezoids. We form those trapezoids together to form an arc. That allows us to form it into a cone."

Smith touts it as more efficient in terms of both man-hours and materials. "It's 80 percent less labor to fabricate a tower and 15 percent less steel," he says.

Keystone will enter the market as an alternative to the status quo. "We'll make the same things everybody else makes, but we'll just make it cheaper and faster," Smith says.

In the longer term, however, the company aims to expand the footprint of the wind industry. Because towers are tapered, the base needs to be wider and thicker than the rest of the tower. "The taller it is, the wider the base needs to be," says Smith.

Shipping limitations mean that the base diameter maxes out at about 14 feet, which will support a tower that's at most 100 meters tall. Wider bases also require considerably more steel. "It starts really costing you," says Smith. Keystone aims to break the 100-meter barrier and scale to heights that allow for more efficient generation.

Keystone's concept of mobile towering manufacturing with one highly automated machine allows for wider bases. "Our manufacturing process is so fast and so labor-efficient, it makes it cost-effective to do it in the field," says Smith.

The company has a demonstration tower installed in Massachusetts and is now targeting Vestas, Siemens, GE, and other big players in the wind industry. "They're very excited about our towers," says Smith.

After four years in Boston, Smith relocated Keystone's headquarters to Colorado -- "the wind capital of the U.S." -- in late 2014. "There's no wind in Boston," he says of the move. "We knew we weren't going to build large-scale manufacturing in Boston. Denver offered a nice combination of a good market where we could attract engineering talent, plus access to the large spaces we would need to scale up."

The wind talent pool is notable deep on the Front Range, he adds. "We've made a number of shockingly specific hires we would have never been able to make in Boston.

The company is now looking to establish a manufacturing facility. "One of the sites we're looking at is in Colorado," says Smith. "Our R&D facility will be located in Colorado as well as the site where we build the manufacturing equipment."

Challenges: "The biggest challenge of all is just the scale of it," Smith notes. "There's no such thing as small-scale wind manufacturing. It's big and expensive and hard for a startup to get into it. You can't ease your way into the market. You either go massive-scale or you don't do it at all."

Metro Denver's booming marijuana industry has made it tough to find manufacturing space. "Finding industrial real estate with high enough ceilings to install cranes has been a challenge," he adds. "The industrial real estate market has been hard to navigate."

Opportunities: Taller towers. The current 80- to 100-meter norm limits the geography of wind farms. "140 meters is an interesting metric," says Smith. "There's about three times as much developable wind at 140 meters than there is at 80 meters."

The height increase would allow for wind farms in all 50 states, he adds, as east of the Mississippi has been limited by the lack of wind at 80 meters. "You might get 30 percent more energy out of the tower. It's a real game changer," he says. "The endgame is the Southeast. That's where electricity demand is growing and there's a bunch of coal plants that are retiring. You have to get up into the 140-meter range to make it viable."

But first, Smith envisions leveraging Keystone's advanced manufacturing techniques as a launchpad for the company. "It's really easy to switch over," he says.

Needs: To navigate the site-selection process for new facilities and make a few new hires. "It all comes down to execution at this point," says Smith. To go from R&D to production requires "a lot of different pieces to come together to make that transition successfully."

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