Wind Energy Corp., a startup developing a small, vertically spinning wind turbine, has raised about $6 million from private investors since launching a year and a half ago, CEO Jim Fugitte told Greentech Media this week.

The news comes after the company announced Wednesday that its first pilot project is up and running in Texas.

The turbine, which looks a bit like a spinning hourglass cut into twin spiral blades, sits atop a 100-foot tower next to a Weslaco, Texas, distribution center owned by San Antonio, Texas-based grocery chain H-E-B.

Unlike the far more common horizontal-axis, or propeller-style, wind turbines built by giants like Denmark's Vestas Wind Systems and General Electric (NYSE: GE), Wind Energy's vertical-axis, or "sail" turbines, spin slowly, make little noise, kill no birds and are more pleasing to the eye, according to CEO Jim Fugitte.

The company's first prototype, made of new carbon materials, is rated to generate 25 to 50 kilowatts in varying wind speeds, he said.

"It's a prototype - it gets us up and through the improvement stages," Fugitte said.

Small-wind power, defined by the American Wind Energy Association trade group as anything that generates less than 100 kilowatts, is aimed at individual homes or businesses rather than utilities.

But while the market for distributed wind power has been growing in the past several years, it remains a tiny part of the overall wind-power industry (see Small Wind Hits an Updraft).

In 2007, the small-wind market saw global sales of about $42 million for 9.7 megawatts of new capacity, a 14-percent growth rate, bringing total capacity to between 55 and 60 megawatts at the end of last year, according to AWEA. That's not much, considering that large-scale wind power provides 48 gigawatt-hours in the United States alone.

U.S. -based manufacturers now hold about 98 percent of the small-wind market, with just three companies -- Flagstaff, Ariz.-based Southwest Wind Power, Norman, Okla.-based Bergey Windpower Co. and Prior Lake, Minn.-based Wind Turbine Industries Corp. - making up three-quarters of the sales, according to Ron Stimmel, AWEA's small-wind advocate.

The wind turbines those market leaders sell are horizontal-axis, as are "99 percent of all turbines sold," Stimmel said. Vertical-axis wind turbines, which suffer from certain disadvantages compared to propeller-style turbines when it comes to generating electricity, have not yet found widespread commercial success.

Wind Energy, which recently received a $750,000 grant from the Kentucky New Energy Ventures program, is among a handful of companies that are hoping to buck that trend.

Vertical-axis turbine developers Mariah Power of Reno, Nev., and London-based Quiet Revolution say their vertical-axis wind turbines, besides being more aesthetically pleasing than their propeller-styled counterparts, can produce power more cheaply as well (see They Call the Small-Wind Firm Mariah and Riding the Wave of Renewable Regulation).

Others developing vertical-axis small-wind turbines include AeroTecture International Inc., Gual Industrie, PacWind, Cleanfield Energy and Windterra Systems Inc.

As for Wind Energy, Fugitte claims the company's vertical-axis turbines could compete withsolarpanels on cost, but wouldn't disclose the cost of the prototype.

He said the company plans to make as many as 150 wind turbines in 2009.

At some point, he'd like to see Wind Energy's turbines improved to the point that they can generate power at a cost of 11 cents to 12 cents per kilowatt-hour, which he estimates would bring customers a return on their investment in roughly five to six years, depending on the cost of electricity. But the company faces hurdles to reach that point.

One challenge will be to find materials light enough, strong enough and cheap enough to do the job, Fugitte said.