Small wind turbine business continues to expand

Photo by Elise Bauer, Flickr.

The large wind farms dotting Iowa’s landscape are no longer creating the most buzz in the green business world.  They’re losing that title to stand alone turbines atop homes and businesses.

Read more from the New York Times below:

Most of the buzz about wind power centers on the enormous turbine farms that dot plains and hilltops around the world.

But another segment of the wind business is also gaining traction — small wind turbines, the type that stand alone at homes or businesses.

In a report to be released later this month, the American Wind Energy Association says that the market for small wind turbines in the United States grew 26 percent last year — faster than in prior years. And in Britain, a report in Aprilfound growth in the year ending in December 2010 even higher, at 65 percent — making it the “greatest year on year increase” for the small-turbine industry, according to the report. (Both figures represent capacity additions.)

The robust growth, albeit from a very small base, has much to do with government incentives in both countries. In Britain, a “feed-in tariff” introduced last year promises operators of small wind turbines above-market rates for the power they produce.

In the United States, the small turbines have benefited from a 30 percent tax credit enacted a few years ago — the first U.S. incentive to aid small wind turbines since the 1980s — in addition to assistance for rural renewables provided by the Department of Agriculture and state-level incentives.

Americans have long been eager for a clean, homegrown source of energy, according to Larry Flowers, deputy director of distributed and community wind at the American Wind Energy Association, a trade association based in Washington. “Now you have the economics, with the incentives,” he said.

The small wind industry comprises turbines with a capacity of 100 kilowatts or less. The huge turbines in modern wind farms, by contrast, can supply 15 times as much energy or more.

In the United States at least, industry experts caution that 2011 will be a tougher year, even though the 30 percent U.S. tax credit will continue until the end of 2016.

“People are hoarding their cash,” said Mike Bergey, president of Bergey Windpower, which manufactures small turbines in factories in Oklahoma and China.

Mr. Bergey said his company had sold 50 percent more units in 2010 than the year before. This year, if it were not for the economy, “we’d be going gangbusters,” he said.

The challenges facing small wind turbines go beyond the economy, however. Obtaining a permit can be slow in places like Britain and the United States, Mr. Bergey said. And even after tax credits, installing a wind turbine is costly.

“Small wind turbines are more expensive relative to their size than commercial wind turbines,” said Paul Gipe, a longtime industry expert based in California.

The average installed cost of a small wind turbine in the United States is $5,430 per kilowatt, according to the American Wind Energy Association report. Mr. Flowers of the association said that is about 2.5 times the cost of installed large wind systems.

However, he argued, because owners of small wind turbines in the United States can generally get retail prices for their power, as opposed to the far lower wholesale prices that accrue to the larger wind machines, small turbines still provide value roughly equivalent to that of large ones.

Even so, the amount of power small turbines produce relative to size of the area their blades sweep is considerably less than that for large turbines, Mr. Gipe said.

The industry also faces quality problems. Proven Energy , a Scottish company that is one of the world’s major manufacturers of small wind turbines, recently announced that it was “aware of a potential manufacturing defect” in one of its turbines and advised owners of that model “to place their wind turbines on brake as soon as it is safe to do so.”

This year, both California and New Jersey — two states that have aggressively embraced renewable energy — put their small-turbine incentives programs on hold, at least temporarily, after problems surfaced.

In New Jersey, the issue was defects in a few turbines, according to Mr. Flowers. In California, “some scammers figured out some loopholes in the program,” said Mr. Bergey, who is also the president of the Distributed Wind Energy Association. Effectively, he said, they found a way to qualify for rebates that were higher than the cost of the equipment. “The market has literally stopped there,” said Mr. Bergey, referring to California. “We’re hoping it will get going again shortly.”

Mr. Gipe, the industry expert, said that the structure of any policy for establishing incentives for small turbines is crucial. Britain, with its feed-in tariff that rewards the production of electricity, got it right, he said.

“The important thing is that all the risk for installing and operating these small wind turbines is on the person who bought them and put them in the ground — not on the consumer and not on the ratepayers,” Mr. Gipe said.

Some of the reputation problems of the small-turbine industry may be eased by a new program in the United States to provide certification for such units. Leading turbine makers including Bergey Windpower and Southwest Windpower are putting their machines through the process. Mr. Flowers said that the first certifications for small turbines would probably be issued in six months to a year.

Meanwhile, new markets are opening up. In the United States, universities have shown more interest in small wind turbines because of government aid. The University of North Texas, for example, received a $2 million grant this year thanks to stimulus measures to plant three 100-kilowatt turbines near its new football stadium.

In Europe, Italy has been a strong market, as has Britain, Mr. Flowers said. Nova Scotia just introduced a generous feed-in tariff .

Also, the developing world is showing strong demand for turbines to power cellphone towers, industry experts say.

About one-third of the units sold by American manufacturers last year were to customers in foreign countries, according to the U.S. wind energy association report.

Southwest Windpower, which is based in Arizona, projects that 50 percent of its sales will be to foreign countries in 2012, up from 43 percent this year to date.

Another interesting trend — reflected in both the U.S. report and the British report in April — is that the number of small wind turbines sold is going down, even as the sales measured by capacity go up. One reason is that people are buying fewer tiny wind turbines for off-grid applications, like homes or sailboats, and more are buying turbines that can provide a bit more power.

“There’s obviously a shift over the last three years toward larger turbines,” Mr. Flowers said.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s