From wired, when wind hits the KiteGen, kites spring from funnels at the ends of poles. For each kite, winches release a pair of high-resistance cables to control direction and angle. The kites are light and ultra-resistant, capable of reaching an altitude of 2,000 meters. Research by Sequoia Automation, the small company near Turin heading the project, estimates that KiteGen could churn out one gigawatt of power at a cost of just 1.5 euros per megawatt hour. That's nearly 30 times less than the average cost in Europe of 43 euros per megawatt hour.
Proponents say other plusses of the merry-go-round generator are the contained cost of 360,000 euros and limited amount of space needed. Even with a modest diameter of about 320 feet (100 meters), they estimate KiteGen can produce half a gigawatt of energy. Emulators for the scalable project envision a 2,000 meter-version that would generate 5 gigawatts of power. The team expects it to be up and running in about two years. Outstanding questions about such a generator include location and possible bureaucratic headaches over permits for air space.
A pdf IEEE paper on the technology