The U.S. Small Wind Turbine Industry ROADMAP a 20-Year Industry Plan for Small Wind Turbine Technology AWEA SMALL WIND TURBINE COMMITTEE

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The U.S. Small Wind Turbine Industry ROADMAP A 20-year industry plan for small wind turbine technology AWEA SMALL WIND TURBINE COMMITTEE

ROADMAP

A 20-year industry plan for small wind turbine technology

American Wind Energy Association (AWEA) Small Wind Turbine Committee

Contributing Committee Members:

Chair, Mike Bergey, Bergey Windpower

Tod Bartholf, Consultant Kathy Belyeu, AWEA Dave Blittersdorf, NRG Systems Alan Caldwell, Prime Energy David Calley, Southwest Windpower Craig Hansen, Windward Engineering Bob Markee, Energy Unlimited Vaughn Nelson, Alternative Energy Institute Gary Norton, Northern Power Systems Robert Sherwin, Atlantic Orient Corporation

Facilitated by Merwin Brown, National Renewable Energy Laboratory (NREL) Coordinated by Trudy Forsyth, NREL

June 2002

Prepared by AWEA and published by the National Wind Technology Center, National Renewable Energy Laboratory, Golden, Colorado, for the U.S. Department of Energy, Office of Wind and Hydropower Technologies, Energy Efficiency and Renewable Energy.

NOTICE

Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. 1 CONTENTS

Foreword ...... 3

Executive Summary ...... 4

Introduction ...... 7

The Technology Opportunities...... 11

The Market Potential ...... 14 U.S. Market Export Market

The Barriers Identified ...... 21 Near-Term Technology Barriers Near-Term Market Barriers Near-Term Policy Barriers

Mid-Term Technology Barriers Mid-Term Market Barriers Mid-Term Policy Barriers Action Plan ...... 25 Near-Term Technology Goals and Actions Mid-Term Technology Goals and Actions Long-Term Technology Goals and Actions Near-Term Market Goals and Actions Mid-Term Market Goals and Actions Long-Term Market Goals and Actions Near-Term Policy Goals and Actions Mid-Term Policy Goals and Actions Long-Term Policy Goals and Actions The Strategy ...... 30 Public Policy Research, Development and Demonstration Small Wind Turbine Industry Cooperative Strategy Summary Schedule of Actions Research Priorities Identified Endnotes ...... 34

Appendix: Detailed List of State Incentives

2 FOREWORD

Millions of homeowners, farmers, and U.S. small wind turbine industry, its part- small business owners all across ners, and its supporters is to deliver the America dream of the day they can gen- products Americans want at a price they erate their own electricity from clean, can afford. This task requires progress sustainable renewable resources. They on several fronts—from public policy ini- want the freedom of choosing how their tiatives, to technology development, to electricity is produced, who produces it, market development. and what environmental impacts their consumption generates. A full 91% of In addition to meeting the dreams of Americans support "investments in new Americans for clean energy, the U.S. sources of energy, such as solar, wind, small wind turbine industry is also posi- and fuel cells," according to a Gallup tioned to help the 2 billion people poll conducted November 27, 2001. around the world who do not have access to electric power. For many of these Americans, small wind turbine technology offers the best near-term hope of supplying products to fulfill that dream. The task before the

3 EXECUTIVE SUMMARY

VISION STATEMENT: Small wind turbine technology can be a But a great deal of work must be done to meaningful contributor to our energy securi- realize the potential for small wind technol- Our vision is to make ty, strategic technology, and long-term eco- ogy. The current products are too few in small wind turbine technol- nomic growth. Small wind turbines are a number, too expensive, and not reliable ogy1 a significant contribu- "distributed" generation source with a very enough to ignite the market. Customers face tor to America’s clean attractive near-term potential for low-cost, too many obstacles in financing, permitting, energy supply portfolio by rapid growth. Small wind turbines can miti- and installing small wind energy systems, providing consumers with gate our dependence on foreign energy and most receive few, if any, financial supplies while providing distinct benefits to incentives to investment from state and an affordable renewable our domestic economy. Electricity generated federal governments. energy option for their by small wind turbines uses a clean, non- homes and businesses polluting energy source—the wind. The long-term industry vision is of a major and to make wind energy new category of home energy appliance. In a significant contributor to The AWEA Small Wind Turbine Committee order to achieve 50,000 MW the small improving the quality of recognizes the importance of collaborative wind turbine industry will have to grow to planning and R&D partnering to the future over $1 billion per year and employ over life and economic opportu- vitality of the technology—especially 10,000 people in manufacturing, sales, nities of people in devel- because no segment of the industry is cur- installation, and support. This is possible oping nations worldwide rently large enough to guide the entire infra- due to the sheer number of homes (15 through electrification. structure and competitive investments on its million) and small businesses (1 million) that own. By developing this "roadmap," the could effectively use small wind systems if U.S. small turbine industry is addressing the the economics were favorable. critical needs of small wind turbine technology and is ensuring U.S. industry leader- In this roadmap, the industry has identified ship over foreign competitors. Our docu- barriers and appropriate near-term, mid- ment is a framework that can serve to term, and long-term actions to address these 1 Small wind turbines (SWT) are develop strategic plans for and investments barriers. The industry has also tried to prior- defined as having a generating capacity up to 100 kilowatts (kW) in this technology and business—specifical- itize these actions and identify priorities for (~60 ft rotor diameter). ly as a U.S. strategic and national resource. R&D efforts. The roadmap is intended to help guide government and corporate It is time for a combined effort on the part policy towards the overall goal of making of government and industry to increase the small wind a significant contributor to contribution of small wind turbines to our America’s domestic energy supply. electric generation mix. In 2001, annual sales of the U.S. small wind turbine industry amounted to about 13,400 turbines. We estimate that turbine sales will increase, and by 2020, small wind turbines could contribute 3%, or 50,000 MW, to America’s electric supply. Increasing the energy contribution from this home-grown industry could increase our energy security and our gross national product as well as our energy supply. In the process, this technology will also give the public more energy choices and make electricity markets more competitive.

4 EXECUTIVE SUMMARY

Table 1: Summary of the Barriers Identified

Technology Barriers Market Barriers Policy Barriers Near-term Near-term Near-term -High cost of wind turbines -Lack of effective standards -Lack of federal incentives -Insufficient product reliability -Low visibility of the industry and technology -Restrictive zoning -Misconceptions about the wind resource -NIMBY and environmental concerns -Excessive interconnection requirements and unequal billing policies -Undervaluation of green energy -Disincentives in the tax code

Mid-term Mid-term Mid-term -Turbine productivity hampered -Insufficient capitalization -Lack of more state-based incentives by power electronics issues -Complicated financial impact -Lack of sustained national incentives -Domestic market requirement—quiet -Lack of multilateral bank funding for export -Lack of interconnection standards operation markets -Lack of national models for net metering and -Reliability zoning rules -Need for better technology tools

"This is an exciting time for the small wind turbine industry. We are very close to the ‘tipping point’ where production volumes would skyrocket, causing production costs to plummet. With the right federal leadership and support in a few more states, I think we will get there." - Mike Bergey, Chair, AWEA Small Wind Turbine Committee

5 EXECUTIVE SUMMARY

Table 2: Summary Schedule of Actions

Technology Actions Market Actions Policy Actions Near-Term - Reduce costs by new turbine - Develop nationally recognized - Develop a strategy to work with (0-3 years) development activity for low wind standards for participation in stimu- state policies for inclusion of small speed sites and new component lus programs wind development for SWT - Publish SWT articles in corner- - Develop a national policy for an - Research reliability concerns such stone magazines such as Scientific SWT tax credit as lightning, corrosion, bearing American, to create more "SWT - Work to eliminate zoning lubrication, alternator winding insu- buzz" restrictions lation, electronics - Revise new U.S. wind maps for - Develop model zoning ordinances - Continue focused long-term SWT, 30 m hub height and .25 and blueprint templates of zoning research unique to SWT - furling, shear, new legends regulations, interconnection agree- durability, blade aerodynamics, - Explain turbine micrositing ments, and other policies noise, and power electronics - Provide information to remove mis- - Work to reduce excessive - Develop packages with other dis- conceptions about the wind interconnection requirements tributed generation and storage resource technologies - Incorporate the value of environmental attributes of small wind into electricity prices

Mid-Term - Work to improve the reliability and - Update national market study - Influence/develop new state and (4-10 years) reduce the cost of power - Characterize the export potential for national incentives electronics U.S. manufacturers and work with - Disseminate and expand informa- multilateral development - Work to eliminate noise from small tion on zoning regulations, intercon- programs nection agreements, and net meter- turbine designs - Establish consumer-friendly cus- - Develop consumer-friendly tomer financing programs, including ing rules performance predictions lease options - Develop a more consumer-friendly - Improve analytical design tools - Increase the number of products national interconnection standard - Continue the development of pack- available (models and size range) ages with other distributed genera- for different market segments tion and storage - Increase outreach and education technologies

Long-Term - Develop hydrogen-based systems - Stimulate the emerging micro-power - Develop policies to help deliver (11+ Years) - Develop blackout protection revolution, of which SWTs are part higher service levels to rural strategies customers - Establish links with storage and other power technologies

Crosscutting - Continually work to reduce cost - Continue to develop standards for - Continue to develop standards for (Ongoing) and improve reliability reliability, durability, and longevity reliability, durability, and longevity - Continue to develop standards for reliability, durability, and longevity

6 INTRODUCTION

The U.S. Small Wind Turbine Industry In 2001, annual sales of the U.S. Small Roadmap is the result of collaboration over Wind Turbine Industry are estimated to be an 18-month period among the members of 13,400 turbines valued at about $20 the Small Wind Turbine Committee of the million.[1] While this is about the same level American Wind Energy Association as sales in the early 1980s, it is only about (AWEA). Many industry leaders contributed 2% of the value of sales of large wind tur- to this roadmap that will guide activities to bines in the United States.[2] The success of achieve the vision of the small wind turbine the large wind turbine industry shows the industry of the United States. impact of sustained, substantial support from government programs and policies (both at State of the Small Wind Turbine home and abroad). Support such as federal Industry and state tax credits was discontinued in the The modern industry for small wind turbines mid-1980’s for small wind systems. This led was born in the energy crisis of the 1970s. to a significant shrinking of the industry and Responding to the crisis, consumers turned a loss of momentum in technology and to restored vintage designs from the 1930s, market development. to newly manufactured machines based on the old designs, and to new wind turbine There are several good reasons why it is technologies developed to meet modern time for a combined effort from government needs. Most of these turbines were connect- and industry to increase the contribution of ed to the utility grid. This surge in the U.S. small wind turbines to our generation mix. small wind turbine industry, fueled by First, there is the potential for real contribu- federal energy tax credits, state incentives, tion to our energy supply. We project that and high electricity prices, peaked in 1983. small wind turbines could contribute 3% of Then energy prices fell, federal energy tax U.S. electrical consumption by 2020. credits expired, and state incentives gradual- Second, small wind technology is a home- ly fell by the wayside. By 1986, the people grown industry. While the market for other who still wanted small wind turbines were renewable energy technologies is dominated interested in stand-alone or off-grid applica- by foreign companies, the U.S. small wind tions for remote homes. While serving this turbine industry is the leader in markets at smaller domestic market, U.S. manufacturers home and abroad. expanded their efforts in markets overseas. Third, the market for small wind turbines Since 1999, electricity prices have been also fuels companion industries, including rising again. People are once again con- those that market composite products, steel, cerned about the security of our energy sup- towers, power electronic equipment, and plies and the centralized generating facilities construction projects. Fourth, while produc- that rely on those sources of energy. And ing energy, small wind turbines produce no some people want independence from elec- environmental emissions. Fifth, small wind tric utilities. There is also a steadily increas- turbines help meet the national need for ing concern about global warming. State energy diversification and national security. governments, under utility restructuring, have And finally, the American public overwhelm- enacted significant incentive programs that ingly supports the expansion of renewable buy down the initial cost of small wind energy, and they stand to benefit from more turbine systems, thereby tunneling through choices about where their energy comes the cost barrier. These incentives are funded from. Small wind turbines through system benefit charge programs could contribute 3% of which are significant—totaling $3.5 billion Recently, the market for small wind turbines in 2001 for programs that include incentives has been growing 40% per year. As we U.S. electrical con- for small wind turbines. All these factors discuss later, the potential market for resi- sumption by 2020. have increased interest in small wind tur- dential and business applications of small bines connected to the utility grid. wind turbines is tremendous because it is Meanwhile, the U.S. industry continues to clear that the turbines work and that people dominate the overseas market for small wind want them. However to realize our vision, turbines. significant challenges lie ahead in the market, policy, and technology areas. We 7 INTRODUCTION

must overcome these challenges as barriers State of Small Wind Turbine to widespread use of small wind technology. Technology Then, we devise actions needed to over- The U.S. small wind turbine industry offers come these barriers. And finally, we devise a wide assortment of products for various a strategy of public/private cooperation to applications and environments. Machines complete these actions and reach our goals. range in size from those that generate 400 In the end, we expect to deliver small wind watts (W) of electricity for specific small turbine products that people desire and that loads such as battery charging for sailboats they can afford, allowing individuals to con- and small cabins, to 3–15 kilowatt (kW) tribute to our energy security. systems for a home, to those that generate

Figure 1: Small wind turbines are being sold for use in many different environments.

8 INTRODUCTION

up to 100 kW of electricity for large loads fore have relatively low maintenance such as a small commercial operation. requirements.

Small wind turbines can operate effectively Thanks to continuous development within in most of the rural areas of the United the industry and in collaboration with the States. In fact, about 60% of the United U.S. Department of Energy (DOE) small States has enough wind for small turbines to wind turbine projects, several new features generate electricity. Today’s small turbines are in development for incorporation into have been designed for high reliability with commercial turbines. Advanced airfoils, only two or three moving parts and there- super-magnet generators, smart power elec-

9 INTRODUCTION

tronics, very tall towers, and low-noise fea- ty, eliminate noise concerns, and lower tures will help reduce the cost of electricity manufacturing and installation costs. and increase the acceptability of this tech- There is much to be done both to incor- nology. porate the technologies currently under development and to enhance manufactur- VISION STATEMENT: Small wind technology has been improving. As an example of the cost reducing since the 1970s. However, it is still tions that are possible, the industry esti- Our vision is to make generally acknowledged that more work mates that high-volume manufacturing small wind turbine tech- is needed to improve operating reliabili- alone could reduce costs 15–30%. nology a significant contributor to America’s clean energy supply portfolio by providing consumers with an affordable renewable energy option for their homes and businesses and to make wind energy a significant contributor to improving the Key elements of our vision quality of life and economic opportunities of 1. Enhance America’s energy diversity people in developing and security nations worldwide 2. Increase competition in electric through electrification. markets by giving consumers the choice of a clean power source 3. Develop small wind turbines as a household energy appliance and business tool (by lowering competitive energy costs) 4. Build an industry to meet the explosive growth potential 5. Contribute to rural infrastructure development worldwide

10 THE TECHNOLOGY OPPORTUNITIES

Modern small wind turbines are not like to a solar electric system operating in the our grandparents’ wind generators from same environment. Both technologies the 1920s and 1930s. Today’s small tur- have the potential for significant cost bines borrow from aerospace technolo- reduction and for substantial roles in dis- gies with sophisticated, yet simple, tributed generation markets. In our expe- designs that allow them to operate reli- rience, the public is most concerned with ably for up to a decade or longer finding a clean technology they can without maintenance. Current products afford, whether that be wind or solar or are designed for operational lives of 20 a combination of both. to 30 years, and they have withstood everything, short of a direct hit from a Responding to more active markets in the tornado, that Mother Nature can throw last few years, the small wind turbine at them. As small wind turbine technolo- industry has increasingly adopted gy has matured, the products have advanced component technologies and become mechanically simpler and more state-of-the-art design tools such as three- robust. dimensional solid modeling and compu- tational fluid dynamics. Technologies As shown in Table 3, small wind turbines such as unique high-efficiency airfoils, are very competitive with other renew- neodymium-iron-boron "super-magnet" able energy technologies that are suit- generators, pultruded FRP blades, able for homes, farms, and small busi- graphite-filled injection molded plastic nesses. Small wind systems, for example, blades, special purpose power electron- cost less than half the price of compara- ics, and tilt-up tower designs have both ble photovoltaic systems. We do not lowered costs and increased efficiency. foresee a time when solar electric The long-term vision of the industry is to systems will be less expensive than small produce small wind turbines that are wind systems. Solar electric systems do accepted as common household appli- have the advantage of wider geographic ances in the same way that heating and applicability, and they can be used in air-conditioning systems are today. By denser suburban or even urban environ- virtue of their compelling economics, ments. However, the wind resource in a these new turbines will achieve high good area can lead to much higher market penetration in areas with lower capacity factors for small wind compared

Table 3: Comparison of Home-Based Renewables

Status of the Solar Thermal Small Wind Photovoltaics Technologies Electric

Status Commercial Demo Commercial

Installed cost $4/Watt $10/Watt $8/Watt

Payback Period 15 Years 30+ Years 25 Years

Cost Potential $1.50/W in 2010 ? $3/W in 2010

Typical Site Rural Southwest Suburban

Available Resources PoorÐGreat PoorÐGood PoorÐGood

11 THE TECHNOLOGY OPPORTUNITIES

housing densities and sufficient wind relationship between DOE/NREL and the resources. small turbine industry is important today, and it will become increasingly important People, however, do not tend to live as international competition heats up where the wind howls, so achieving high over the next five to ten years. All parties market penetration rates will require need to realize that large wind turbines small wind turbines that are specially are now in their seventh or eighth gener- designed to work effectively in low wind ation of technology development, while resource areas. These turbines of the small wind turbines are only in their future will need to have relatively larger second or third. rotors to capture more energy. But they cannot sacrifice robustness because even For its part, the industry is striving to areas with low average wind speeds reduce the cost of electricity generated experience severe weather. The new tur- by small wind turbines. In 2002, typical bines must be extremely quiet, so that 5- to 15-kW residential wind turbines they are seldom heard above the local cost about $3,500 per installed kilowatt. background noise. They must be able to These turbines produce about 1,200 operate for 10 to 15 years between kWh per year of electricity per kilowatt inspections and/or preventive mainte- of capacity in an area with a DOE class nance, and they must offer a reasonable 2 wind resource.2 By 2020, the industry expectation of a 30- to 60-year operat- hopes to have lowered the installed cost ing life. Most important of all, the small to between $1,200 and $1,800 per kilo- wind turbines of the future must be watt (smaller systems being relatively affordable without significant subsidies. more expensive) and to have raised the productivity level to 1,800 kWh per Achieving these goals will require further installed kilowatt. If these goals are met, advances in small wind turbine technolo- the 30-year life cycle cost of energy will gy, major improvements in small turbine be in the range of $0.04 to manufacturing, and more efficient instal- $0.05/kWh, lower than virtually all resi- lation techniques. The U.S. Department dential electric rates in the country of Energy (DOE) and the National today. Renewable Energy Laboratory (NREL) have critical roles to play in accelerating To further enhance the attractiveness of the development and adoption of new small wind turbines to consumers, there small wind turbine technology and manu- is also a need for meaningful, appropri- facturing techniques. A close working ate, and cost-effective standards and a certification program for them. Some new entrants to the industry have signifi-

Costs and electricity production for typical 5- to 15- kW residential wind turbines

2002 2020

Cost/kW $3,500 $1200–1800

Annual Electricity Production (kWh) 1,200 1800

2 Numbers provided by Mike Bergey, chairman AWEA Small Wind Turbine Committee, Jan. 15, 2002. 12 THE TECHNOLOGY OPPORTUNITIES

cantly underestimated the engineering To assist industry in addressing tech- rigor and expense required to deliver a nology barriers, four models of govern- reliable small wind turbine product. And, ment/industry collaboration are in light of recurring instances of exagger- employed. ated claims, consumers have had trouble sorting out reasonable from unreason- 1. Research conducted at national able claims of performance. The stan- laboratories and universities with dards and certification programs that input from members of the industry. exist for large wind turbines are not 2. Applied research projects conduct- appropriate for small wind turbines. ed at the facilities of small wind Appropriate standards for small wind tur- turbine companies with support bines are under development by the from the government through com- international industry and by research petitive procurement. institutions. However, the U.S. industry 3. Applied research projects involving and DOE must also work to ensure that companies, universities, and related standards, such as electrical grid national laboratories. interconnection standards, are justified 4. Privately funded research and and do not unduly raise the costs of development. owning a small wind turbine. The opportunities offered by improved The industry believes that research coop- technology can be achieved through the eration between the private and public cooperative activities discussed in this sectors is strategically important if the roadmap for the small wind turbine U.S. industry is to maintain its leadership industry. Work by industry members, position. The engineering challenges pre- research institutes, state and local gov- sented by the interlocking disciplines of ernments, and DOE can help increase aerodynamics, structures, controls, elec- the contribution of small wind turbines to trical conversion, electronics, and corro- the electricity generation mix. sion prevention are formidable. There are also a number of generic technology opportunities that are not likely to be fully explored by the private sector alone. Government and industry must work together to build a better small wind turbine.

13 THE MARKET POTENTIAL THE MARKET POTENTIAL

In 2001, we estimate that 13,400 small U.S. Market The most recent public market study for The 1981 ADL study was quite conserva- wind turbines were manufactured in the We estimate that small wind turbines small wind generators was the A. D. Little tive. Although it considered wind United States. More than 50% of these have the potential to contribute up to 8% study sponsored by DOE in 1981. [2] resources, electricity costs, and available were exported. We believe that both the of U.S. electrical demand in 2020. Our That report (the ADL study) projected a incentives, it excluded more than 100 domestic and foreign market for small industry goal is to install turbines that market potential of 3.8 million small wind counties with high population densities. wind turbines will continue to grow. This will generate at least 3% of U.S. electri- systems installed in grid-connected appli- Today, we know that many of these coun- roadmap is designed to accelerate this cal demand in 2020 or 6-8% of residen- cations. If the average generating capaci- ties have small wind systems and that growth to its maximum potential. tial electricity demand. This will require ty of these systems were 10 kW, then the thousands of properties in these counties small wind turbines installed with a total potential contribution to the nation’s gen- generating capacity of 50,000 MW. eration mix would be 38,000 MW.

The goal for the small wind turbine industry is a generating capacity of 50,000 MW or the ability to satisfy 3% of U.S. electrical demand in 2020.

Figure 2: Energy production for small wind turbines in the United States.

14 15 THE MARKET POTENTIAL

Table 4: Residential Market Potential for Small Wind Turbines Millions of U.S. Homes Connected to the Utility Grid

2000 2010* 2020

Homes with 1/2 to 1 acre of land N.A.** 12.0 13.9

Homes with more than 1 acre of land 21.6 25.2 29.3

Gross potential number of homes for wind turbines 21.6 37.2 43.2

Net potential number of homes for wind turbines 7.6 13.0 15.1

*The number of homes has been growing 1.54% per year (U.S. Census Bureau, American Housing Survey, Census Bureau: Washington, D.C., 1998). **Appropriate small wind technology not yet available for lots under one acre.

are suitable for small turbines. We also In 2020, there will be approximately 43 know more about the wind resource and million homes with 1/2 acre or more of can better estimate the number of homes land. Of these homes, we estimate 65% in suitable wind regimes. will be prevented from using small wind technology because the wind resource is In this roadmap, we estimate the poten- not sufficient,4 because of restrictive tial contribution of small wind turbines by zoning and covenants, or because of dividing the market into sectors. proximity to airports or other sensitive areas. This will leave 15.1 million homes Rural Residential Market Sector— with the potential to install a small wind Distributed Generation turbine. If each of these homes installed a 7.5-kW machine, the total contribution The largest potential market for small wind tur- to generating capacity would be bines is for homeowners in rural areas where 113,000 MW. (see Table 4) wind-generated electricity can reduce utility bills. In 1998, American homes used 1.1 tril- Other Domestic Markets lion kWh or 35% of total electricity sales. Electricity consumption in the residential When combined, other markets for small sector exceeds the consumption in either com- wind turbines in the United States offer mercial or industrial sectors. Homeowners significant opportunities to expand elec- buy wind turbines to reduce their electricity tric generation capacity. For example, bills, and federal laws (such as PURPA 210) about two million medium-sized commer- guarantee their right to use them.3 While cial buildings5 are candidates for small some wind turbines may be installed when a wind turbines of 10 to 100 kW. In addi- new home is built, most market opportunities tion, public facilities such as schools and will be for installations at existing homes. A government buildings could also use small wind turbine produces energy that is small wind turbines at suitable sites. either consumed immediately in the home or transferred to the power grid and consumed Another distributed generation market by a neighbor. sector includes industrial and commercial customers who are connected to the

3 To meet the electrical needs of a typical home, a small wind turbine in a moderate wind regime must have a rotor diameter of 16 to 25 feet and sit on a tower from 60 to 150 feet tall. These dimensions are not suitable for homes on small lots. 4 The homes will be located in areas with DOE wind class 1. DOE wind class 2 or 3 is considered necessary with today’s technology for effective production of electricity with small wind turbine generators. 5 Fewer than 25,000 square feet under one roof. 16 THE MARKET POTENTIAL

utility grid and may have back-up gener- farms, and livestock. Today, there are ation requirements, which could easily also new wind-electric water pumping be integrated with a larger small turbine. systems for which the turbine can be Since the utility rate structure is typically located where there is good exposure to different from the residential market (e.g. the wind, and it does not have to be demand charges), further study is located near the well and pump. needed to specifically define this market. However, for low wind speed sites, the mechanical water pumper still offers Where the utility grid is not available, more economic water pumping. stand-alone or hybrid6 systems could provide electricity for homes, communi- Deregulation of the telecommunications ties, water pumping, and telecommunica- industry and the rapid growth in wireless tions services. The Energy Information systems has spawned growth in the Administration (EIA) estimates that there development of remote broadcast facili- are 200,000 off-grid homes in the U.S. ties. The preferential method of powering This is already a very active market for these facilities is hybrid systems that small wind systems. combine generation from solar, wind, and diesel systems. There are also a number of off-grid communities that are remote, isolated, and These other markets could contribute up produce their electricity with diesel or to 25,000 MW of generating capacity gasoline generators. Alaska, for by 2020. From this discussion, we con- example, has 91 villages powered by clude that the total installed capacity for diesel generators, serving a population small wind turbines in 2020 could be of about 42,000 people. In addition, 140,000 MW across all markets. several hundred miscellaneous remote However, the goal of the AWEA Small facilities are powered by diesel genera- Wind Turbine Committee is to install tors ranging in size from 2 to 250 kW. 50,000 MW of small wind turbines by 2020. (See Tables 4 and 5) In addition, water pumping for livestock and off-grid facilities is still a sizable According to figures taken from the most market. In the early part of the 20th recent EIA documents, the total generat- century, the United States had about ing capacity in the U.S. in 1999 was three million mechanical windmills in approximately 745,000 MW. According operation, supplying water for homes, to the EIA Annual Energy Outlook 2001,

Table 5: Other Potential Markets for Small Wind Turbines in the United States in 2020 [3]

Units Avg size in kW Total MW

Commercial buildings 675,000 25 16,875

Public facilities 160,000 50 8,000

Off-grid homes 150,000 3 450

Off-grid communities 200 250 50

Water pumping 350,000 1 350

Telecommunications 2,000 2 4

Total 25,729

6 Hybrid systems combine other generation such as solar cells or gas generators along with storage batteries to provide reliable power off-grid. 17 THE MARKET POTENTIAL THE MARKET POTENTIAL

Figure 3: Incentives for small wind turbines in residential applications. Notes: 1. Incentives change often. 2. Net metering has not been determined for all municipal utilities and rural electric cooperatives.

the projection for 2020 is 1,060,000 small wind turbine markets, even with produce an estimated 132 billion kWh to 50,000 MW in 2020 would require a MW of generating capacity and 4,804 attractive incentives and favorable poli- of clean electricity per year, or approxi- doubling of the market each year for billion kWh in demand. cies, will not match the pace of market mately 3% of projected total U.S. several years and then require sustained penetration of other common household demand. At this level of capacity, small sales growth in the range of 50–55% per Although the domestic potential for small electrical devices with lower price tags wind systems would be providing 6-8% year. In this scenario, the domestic small wind generating capacity is estimated at and easier implementations. of residential sector electrical demand. wind turbine industry would reach 140,000 MW in 2020, we do not Our goal of 50,000 MW of small wind The EIA Annual Energy Outlook docu- annual sales of $1 billion and employ believe that this is a realistic goal. The capacity by 2020 is aggressive but ment forecasts that the residential electric approximately 10,000 people in 2020. limitation we see is market growth, not achievable given the right public policy sector demand will be 1,701 billion manufacturing capacity or sales and environment, particularly over the next kWh in 2020. Export Market support infrastructure. The growth of ten years. Fifty gigawatts (50,000 MW) U.S. manufacturers of small wind tur- of small wind turbines in 2020 would Growing the domestic market from its bines currently export more than 50% of current installed capacity of 15–18 MW their production and have a leading 18 19 THE MARKET POTENTIAL

share of the world market for this tech- carbon dioxide per kilowatt hour than nology. The foreign market for grid-con- diesel generators do. Small wind systems nected wind turbines is fueled by electric- can be used to electrify single homes ity prices more than double those faced (<500 W) or villages (<50 kW). There by U.S. consumers. In addition, it has are also a myriad of special uses of been estimated that about 2 billion wind electricity, such as making ice for people in the world do not have access coastal fishing villages, charging batter- to electricity for domestic, agricultural, or ies for distribution to single homes, and commercial uses.7 The traditional method purifying water for drinking. of providing electricity by extending the distribution grid has proved to be expen- Developing countries have a high poten- sive and poorly suited to the low con- tial demand for small wind systems sumption levels of communities in devel- because they normally do not have oping nations. And the number of homes major electrical power plants serving without electricity is increasing because rural areas. However, the people are the birthrate is outpacing the electrifica- usually too poor to buy small wind tion rate. systems and need financial assistance from their government in order to afford Small-scale renewable energy systems them. This assistance is, today, almost (wind, micro-hydro, and solar) are often exclusively directed to subsidizing exten- less expensive to install than line exten- sion of the grid and installing diesel gen- sions. Small turbines are less expensive erators. A breakdown of the estimated to operate and produce much less export market potential for 2000, 2010, and 2020 time frames is shown in Table 6.

Table 6: Potential Markets for Small Wind Turbines in Foreign Countries 2000 2010 2020

Number Avg size Number Avg size Number Avg size Total MW Total MW Total MW (millions) (kW) (millions) (kW) (millions) (kW)

Single home systems 150.0 0.2 30,000 195.0 0.3 58,500 260.0 0.4 104,000 Village systems 3.8 10.0 38,000 4.9 10.0 49,000 6.6 10.0 66,000

Facilities 7.0 1.0 7,000 9.1 1.5 13,650 12.2 2.0 24,400

Miscellaneous 5.0 1.0 5,000 6.5 1.5 9,800 8.7 2.0 17,400 Totals 80,000 130,950 211,800

Source: AWEA Small Wind Turbine Committee, 2001.

7 World Bank, 2000. 20 THE BARRIERS IDENTIFIED

Identifying and prioritizing barriers is an Near-Term Market Barriers important prerequisite to industry planning. Different companies and other stakeholders Lack of effective standards often have differing views on the most important barriers, and there is a natural As the domestic market continues to tendency to focus on short-term challenges. expand, consumers need protection from Reaching consensus on the barriers unscrupulous suppliers chasing the latest required a number of meetings and size- trend in search of wealth. Further, responsi- able investment in time, but this consensus ble small turbine manufacturers need a provides the foundation for plotting the path baseline for establishing turbine perform- to a billion-dollar industry. ance and credibility. There are existing international safety and draft national per- Outlined below are technology, market, formance standards for small turbines that and policy barriers for the near-term, mid- could be used by state or national incentive term, and long-term time frames. programs. The issue is the cost to meet the testing and documentation requirements of these standards. Near-Term (0–3 Years) Technology Barriers The existing design standards are primarily related to structural safety and do not direct- High costs of wind turbines ly address issues of reliability, durability, and longevity. There is no equivalent to Although people want small wind turbines, Consumer Reports in the small wind indus- most find the price is too high. System costs try. can be reduced by increasing production rates and advancing the technology. Low visibility of the industry and tech- Regarding production rates, small wind tur- nology bines are produced in limited quantities, so there are only limited economies of mass There are relatively few small wind turbine production. Advances in technology, such installations, so people just do not see small as new airfoils for blades, super-magnet wind turbines very often. In addition, the generators, and power electronics can companies of the small wind turbine indus- make small wind turbines cheaper to build, try have limited resources and capabilities more productive, and more reliable. The to promote the technology. Unlike the solar cost to consumers can be reduced with industry, there are no Fortune 500 compa- incentives. nies involved at this time in the small wind industry. Adding to the issue, DOE has Insufficient product reliability focused the majority of its resources and publicity on solar technologies. It is a substantial challenge to design, manufacture, and install small wind turbines that Misconceptions about the are low in cost and yet rugged enough to wind resource withstand 20 to 30 years of operation in weather that is often severe. Small wind The attention given to wind farm develop- turbine technology development is both art ments in high-wind areas has convinced and science. The true measure of a new some people that they must have an excep- design is often not known until several years tional wind resource in order to benefit from of operation at dozens of sites. At present, wind technology. However, small wind tur- there is no way to effectively duplicate the bines are designed to operate effectively in wear and tear of the real world during the the lower wind speed areas where most product development stage. As a result, reli- people live and work. DOE wind maps ability has historically been the Achilles heel have inadvert-ently exacerbated the for small wind turbine technology. problem by classifying wind regimes according to their potential for wind farm development.

21 THE BARRIERS IDENTIFIED

Near-Term Policy Barriers planning to install a small wind turbine system and the local zoning boards that Lack of federal incentives must approve permits typically do not have a fair basis for understanding the noise, For small wind turbines, there has been no visual, and other impact of the turbines. federal tax incentive or deployment They fear the worst and act accordingly. program since 1985. The resulting lower Consumers who need approval from level of business activity has affected zoning boards often run into objections industry expenditures on research and presented by concerned neighbors. development and has slowed the pace of Dealing with these objections can demand innovation. DOE has supported sporadic considerable time and expense. initiatives for research and development on small wind turbines since 1985. Excessive interconnection require- However, this level of investment by the ments and unequal billing policies federal government has not been sufficient to realize the potential for cost reductions Even though the federal Public Utility or leveraged deployment. Regulatory Policies Act (PURPA section 210), gives all Americans the right to inter- Restrictive zoning connect small wind turbines and to receive payment for excess electricity production, Most local jurisdictions limit the height of the policies of many utilities discourage structures in residential and sometimes the use of these systems. Many utilities other zones to 35 feet. This restriction was have limited experience with customer- developed nearly 100 years ago to ensure owned generation. They may use the same that the height of structures would not process for approving 500-MW gas exceed the capability of fire fighting turbine co-generation facilities and 10-kW equipment to pump water. Today, this residential wind installations. height limit is a significant obstacle to siting small wind turbines. It sometimes takes more hours of labor by the customer and the wind turbine vendor To make effective use of the wind, small to gain the approval for interconnection turbine towers must be at least 60 feet than it took to build and install the wind high and well above obstacles (such as turbine itself. Weak or uninterested public trees) in their vicinity. Wind speed increas- utility commissions can allow utilities to es with height above the ground. effectively thwart the federal rights provid- Turbulence, the disruption of the wind flow ed under PURPA. Interconnection standards around obstacles, increases near the that have emerged in the last five years ground and reduces energy output of small have required small wind turbines to wind turbines. deliver to the utility grid power that is of higher quality than the power delivered by Putting a small wind turbine on a short the utility to its customers. Meeting these tower is like putting a solar panel in the excessive standards increases the cost of shade. For many residential applications, the wind generating systems. systems of 5 to 15 kW, turbines need to be on towers from 80 to 120 feet tall. The In more than 35 states, there is a policy 35-foot height restriction causes unneces- called net metering, in which consumers sary expense and delay when getting a receive the retail rate for electricity they building permit and opens up opportuni- generate in excess of their consumption. ties for neighbors to oppose the permit But even under net metering, there is a because of either legitimate concerns or great variation from state to state and underlying historical animosities. utility to utility concerning the accounting periods, capacity limits, limits to participa- NIMBY and environmental concerns tion, and cost/benefit of net excess generation. This creates uncertainty in the mar- Because there are few installations of small ketplace. wind turbines, the neighbors of people 22 THE BARRIERS IDENTIFIED

Undervaluation of green energy because the wind is such a variable environment for a piece of machinery. How a No economic credit is given for having a turbine withstands the long-term effects of nonpolluting energy source. For every the wind is often known only after kWh produced by a small wind turbine, several years of operation at dozens of 102 pounds of carbon dioxide, 0.57 sites. There needs to be a way to effec- pounds of sulfur dioxide, and 0.34 pounds tively duplicate the wear and tear of the of nitrogen oxide emissions are avoided. real world during the product development stage. This will require the develop- Disincentives in tax code ment and verification of accelerated testing protocols for reliability, durability, Companies that buy fuel or electricity can and longevity. deduct these costs as business expenses, reducing their reported profits and their Need for better technology tools tax liability. Companies investing in energy-producing equipment, on the other Many small turbines use a passive over- hand, must capitalize the investment, speed control such as furling. In furling, the increasing reported profits and tax liabili- force of the wind turns the rotor sideways, ties. The accelerated depreciation sched- just as farm water-pumping windmills have ule for wind energy investments helps, but done for 100 years. So far, no computer does not level the playing field. codes have ben able to predict the performance or assist in the design of furling mecha- Mid-Term (4–10 Years) nisms. This means such designs need to be Technology Barriers performed empirically, raising development costs. Better computer codes are needed to Turbine productivity hampered by help reduce design costs. power electronics issues Mid-Term Market Barriers Because small turbines operating at variable speed produce variable frequency Insufficient capitalization and variable voltage output, power electronic converters are used to modify the U.S. small turbine manufacturers are entre- wild AC into standard 60-cycle AC. The preneurs who have a deep dedication to old inverter technology was too unreli- renewables, but who also have limited able. The new inverter technology is too resources. Their businesses lack the capital- expensive. The industry needs lower ization to effectively promote mass markets, cost, reliable power electronics. exploit design-to-cost technology options, or provide forward pricing to accelerate Domestic market requirement—quiet market adoption. They struggle in a capital operation intensive business that requires substantial investments in technology and overcoming High-growth domestic markets demand institutional barriers. While the solar industry quieter wind turbines, especially when has consumed billions in investment over the turbines are sited in residential neighbor- last two decades, the small wind turbine hoods. Turbine noise can be caused by industry has attracted far less capital. gearboxes, blade shape, tower shadow, etc. Small turbines operate at high RPM Complicated financial impact and tend to spin even if they are furled (pointed out of the wind); there needs to For consumers, purchases like small wind be a way to make them extremely quiet turbines that have longer lifetimes are more under all conditions. difficult to understand financially. Consumers generally look at monthly cash flow or direct Long-term reliability out-of-pocket expenses and rarely consider life-cycle costs. They also do not tend to con- As mentioned above, reliability is a long- sider tax consequences fully. This makes it term issue that is difficult to predict 23 THE BARRIERS IDENTIFIED

difficult for them to compare small wind tur- Need for sustained national incentives bines with other potential investments. As mentioned above, the lack of federal Lack of multilateral bank funding for incentives slows the pace of industry growth export markets to meet the market demand. Other traditional energy source technologies are being The World Bank and Global Environmental subsidized, and as noted above, federal tax Facility have been funding substantially policies actually encourage the use of fossil more solar projects than small wind projects, fuel and utility power. even though the cost of electricity from small wind turbines is lower than from solar elec- Need for national models for net tric products. [2] There is a need for the metering and zoning rules small wind industry and its partners to provide in-house technology expertise to the There are too many state, county, and city World Bank, which has proven to be suc- jurisdictions for the wind industry to address cessful for the solar industry. the policy needs of each. For example, in California there are 538 counties and incor- Mid-Term Policy Barriers porated cities. A 2001 industry study estimated that addressing the zoning barriers Need for more state-based incentives with new ordinances in each jurisdiction would cost more than $20 million and Currently, four states (California, Illinois, would require more than 200 person-years New Jersey, and Rhode Island) offer sub- of effort. This finding led to a state zoning stantial rebate or buy-down programs to bill, AB1207. National regulations, like promote the installation of renewable energy those passed for satellite TV, would be very equipment. Rebates typically range from 50 helpful to the industry. to 60% of the installed small wind system cost, resulting in significant savings. Other Lack of interconnection standards states, such as Wisconsin, offer production- based incentives. (See the appendix for a Few states have standardized interconnec- full listing of state incentives in 2002.) If tion requirements, and many public utility more states offered incentives, the sales and commissions give utilities broad discretion production volume for small wind turbines on policies towards customer-owned genera- would increase. tion. Some utilities have used this freedom to discourage competition through excessive requirements for equipment, special tests, and additional insurance.There is a need for a national interconnection standard developed by a technically recognized body.

24 ACTION PLAN

This roadmap of the U.S. small wind • Develop advanced airfoils suitable for turbine industry identifies the background, small wind turbines. status, and potential of the market for small • Develop advanced permanent magnet wind turbines. The roadmap points to tech- alternator and other generator technolo- nology, market, and policy goals and the gy suitable for small wind turbines. specific actions necessary to meet these goals. Many groups will need to partici- Reduced tower and installation costs pate in the activities described here in order to realize our vision of U.S. small Actions wind turbines as a significant contributor to • Develop advanced, lower-cost foundation America’s energy supply portfolio. or anchoring systems for towers. • Develop automated processes for tower These high-priority goals have been identi- fabrication. fied by the AWEA Small Wind Turbine • Develop alternate, lower-cost tower Committee to overcome the barriers identi- designs. fied in the previous section. Under each goal are listed specific actions that can be Improved turbine reliability taken by the industry working in concert with federal, state, and local governments Actions to meet these goals. Progress on these • Develop test methods for reliability issues items in the near-term, mid-term, and long- like "extreme events." term timeframes will help make the vision • Gather multi-year data on turbine per- of this roadmap a reality. formance, reliability, operation, and maintenance. Near-Term (0–3 Years) • Develop structural safety standards for the small turbine industry. Technology Goals and Actions Increased participation of small wind turbines as a technology option in Reduced cost of energy resulting from domestic government programs turbines that operate in low-wind regimes Actions • Work with the Federal Energy Actions Management Program to develop small • Develop U.S. technology for low-cost, wind projects at federal facilities. robust rotors optimized for low wind • Promote small wind turbines for home- speed regimes. land security and other military opera- • Develop low-cost, very tall towers. tions.

Turbine cost reduction through Reduced manufacturing costs by improvement of the performance and increasing the volume of production efficiency of small wind turbines Actions • Engage manufacturing consultants to Actions advise individual manufacturers on • Support cost-shared component develop- improved manufacturing techniques, ment projects.8 improved throughput time, and develop- • Conduct applied research projects aimed ment of a manufacturing plan. at improving the efficiency of small wind • Encourage small turbine manufacturers to turbines through better integration of sub- explore state incentives for building man- systems.9 ufacturing businesses.

8 In-house research projects are supported by the government through competitive, cost-shared procurement that may include cost sharing by the companies involved. 9 Universities, research institutes, and companies work together on applied research projects. 25 ACTION PLAN

Development of equipment and • Develop a Web-based performance pre- processes for mass production of small diction capability based on high-defini- wind turbine systems tion wind maps. • Develop improved guidelines for microsit- Actions ing considerations for small wind tur- • Support company-specific in-house activi- bines. ties to improve manufacturing processes. • Support development of components Improvement in the reliability and designed specifically for mass durability of small wind turbines production. Actions Mid-Term (4–10 Years) • Develop improved life-cycle testing protocols and analytical methods for small Technology Goals and wind turbines. Actions • Develop better understanding of design load characterization for enhanced relia- Development of improved bility, durability, and longevity. power electronics10 • Identify design elements necessary to achieve 50-year operating life. Actions • Perform durability and reliability testing • Support cost-shared company research for environmental extremes. on power electronics equipment. • Support company-specific, in-house relia- • Conduct applied research on generic bility enhancement projects. power electronics issues. Reduced maintenance requirements of small wind turbines Reduction of noise produced by small wind turbines Actions • Support company-specific, in-house proj- Actions ects to reduce maintenance requirements. • Develop a noise measurement and • Conduct applied research on generic reporting standard for small wind tur- maintenance issues through hardware bines (different from the IEC 61400-11 verification projects. addition to the noise test standard). • Conduct cost-shared, company-specific, Enhanced analytical tools for small in-house noise reduction projects. wind turbine design • Conduct applied research on generic noise issues of small wind turbines. Action • Enhance design techniques and capabili- Creation of higher-definition perform- ties, particularly rotor aerodynamics and ance predictions based on resource to dynamics that are unique to small wind help customers in site selection11 turbines.

Actions Improved understanding of passive • Initiate research to better understand the control of small wind turbines higher turbulence and shear environments in which small wind turbines Action operate. • Conduct applied research on generic • Develop an improved performance pre- passive control issues for small wind tur- diction methodology for small wind bines. turbines.

10 Such as for conversion, optimization of wind turbine generator operation, storage, etc. 11 Now that wind maps have better resolution (down to 400 m2) we should be able to weed out sites that will result in poor performance and give realistic assessments of performance for small wind turbines.

26 ACTION PLAN

Long-Term (11+ Years) Development of a consumer-friendly performance rating system Technology Goals and Actions Actions • Update and reconcile the AWEA per- Develop hydrogen-based systems formance standard with the IEC 61400- 12 for small wind turbines. Action • Promote adoption of the AWEA estimat- • Establish link with other hybrid power ed annual energy output technologies such as micro gas turbines, parameter. PV panels, diesel and other fuel generators, and any new power generating Increased visibility and credibility of technologies that may develop. small wind turbines

Establish links with storage and other Actions power technologies • Encourage DOE to give small wind greater visibility through policy incen- Action tives, studies, and speeches. • Establish links with storage and other • Publish in cornerstone magazines such as power technologies such as hydrogen Scientific American and Popular Science generation and storage, batteries, to highlight small wind as an important natural gas sequestration, and any new technology. storage technologies that might develop. • Publicize the new generation of products coming out of government-supported Near-Term (0–3 Years) development contracts. • Increase outreach to state energy offices Market Goals and Actions and other important local and regional stakeholders. Development of additional efficient • Create a significant federal deployment and effective standards initiative for small wind turbines to prime important markets. Actions • Create U.S. and international IEC stan- Completion of high-definition wind dards to address reliability, durability, mapping for all states and for interna- longevity, noise, and power perform- tional markets ance. • Complete the IEC 61400-2 draft safety Actions standard. • Complete high-definition wind maps for • Complete development of a cost-effective each of the 14 states targeted by the and efficient certification program for AWEA Small Wind Turbine Committee as small wind turbines. offering the best opportunities for small turbine installations. (Measurements Development of stronger, certified dis- taken at 24 meters [80 feet] above the tribution channels and support ground.) • Complete high-definition wind maps for Actions the next 16 states on the AWEA Small • Develop generic installation and mainte- Wind Turbine Committee’s pri-ority list. nance training programs for small wind • Modify existing international wind turbines. resource maps for small turbine charac- • Pursue technologies of communication teristics such as height, class descriptors, with distributed generation installations and approximate kilowatt-hours of pro- (remote monitoring). duction. • Develop certification program for • Develop an improved performance pre- installers. diction methodology for small wind turbines.

27 ACTION PLAN

• Develop a Web-based performance pre- • Increase programmatic involvement for diction capability based on high-defini- small wind turbines in the National Wind tion wind resource maps. Coordinating Council, the National Association of State Energy Officials, the Mid-Term (4–10 Years) Utility Wind Interest Group, the National Council of State Legislators, and others. Market Goals and Actions Increased participation of small wind Improved definition of the market to as a technology option in international be used for business planning development projects

Actions Actions • Update the 1981 A.D. Little market study • Support the establishment of in-house for small wind turbines in the United technology expertise in small wind at States. U.S. AID, the World Bank, U.N. • Characterize the export potential of U.S. Development Program, and other multilat- technology. eral development programs. • Develop effective response to foreign Increased customer options for tied-aid competition. purchase and financing of small • Promote easier and more effective export wind turbines finance programs. • Educate Congress and the public on the Actions importance of spending on foreign aid • Expand availability of plug-and-play assistance. systems suitable for mass marketing. • Encourage World Bank to make renew- • Establish consumer-friendly customer able purchase decisions based on least financing programs, like those available cost instead of defaulting to PV. for car buyers.

Increased number of products avail- Long-Term (11+ Years) able (models and size range) for Market Goals and Actions different market segments Stimulate the micro-power revolution Actions • Support company in-house product devel- Action opment projects. • Develop a strategy with outreach materi- • Encourage state support for small wind als to address the micro-power market. turbine product development. • Encourage greater investment in the Near-Term (0–3 Years) small wind turbine industry. Policy Goals and Actions Incorporation of environmental benefits into the value of wind turbines Supportive national policies to promote market development Action • Support development of effective green Action tags market for distributed generations. • Create supportive national policies (tax credits, regulations). Increased outreach and education on small wind turbines Supportive state policies to promote market development Actions • Develop state-specific consumer guides Actions for small wind turbines. • Promote creation of state incentive pro- • Develop a guide on wind power for grams that reduce first costs (e.g.- school programs. rebates). 28 ACTION PLAN

• Promote creation of state incentives that • Promote protection against unwarranted stimulate electricity production (e.g., set insurance requirements. up incentives that increase with tower • Provide expert testimony at rate height.)12 hearings. Credit for green attributes Removal of systemic height restrictions normally found in residential locations Action • Discuss the environmental benefits of Actions small wind, including the green • Provide information encouraging elimina- attributes. tion of height restrictions to local governments and bodies making such regula- Reduction or elimination of tions. disincentives to investment in • Circulate model regulation regarding per- small wind turbines missive zoning for small wind turbines. • Promote state and national legislation Action that can override local restrictions. • Address disincentives to investment in small wind turbines (tax code, sales More information to taxes, property taxes, etc). address aesthetic, noise, and environmental concerns Mid-Term (4–10 Years)

Actions Policy Goals and Actions • Create a credible white paper on avian issues for small wind turbines. Support state policies for small wind • Develop technology to reduce noise. incentives • Develop building permit reference materials relating to aesthetics, noise, environ- Action mental impacts, property values, etc. • Continue to work with states to develop • Develop videos to highlight the visual new policies non-intrusiveness of small wind turbines. • Develop a voluntary contribution Disseminate information on market program to remove obsolete and barriers orphaned wind turbines. Action Removal of interconnection barriers • Streamline information on zoning regulations, interconnection agreements, and Actions net metering to guide development of • Provide information to utilities and public state incentives. utility commissions that will help remove • Develop streamlined interconnection unnecessary and expensive requirements requirements in the areas of power quality, safety, and performance Long-Term (11+ Years) standards. Policy Goals and Actions • Participate in development of a national interconnection standard. Develop strategies to deliver high-level electric service to rural customers Equitable utility billing and interconnection cost policies Action • Work with rural electric cooperatives Actions to devise incentives for rural customers • Promote net metering. and to streamline the interconnection • Promote simplified interconnection process. contracts.

12 Action suggested by M. Sagrillo. 29 THE STRATEGY

All emerging industries and products have benefit charges assessed to retail electricity “Many more people faced this basic "chicken and egg" sales. Funds generated by these system dilemma. Some never made it over the benefit charges can be designated by legis- would buy small wind hump and eventually faded from the market- latures to subsidize renewable energy proj- systems if they were place. Some got over the hump by virtue of ects and promote industry development. cheaper. But, we can’t massive corporate investment (in R&D and forward pricing), and others made it into In 2002, four states offered these rebate make them cheaper the mainstream by steadily improving cost incentives for small wind turbines: unless many more and functionality. The small wind industry is California, Illinois, Rhode Island, and New people buy them.” composed of innovative, small, struggling Jersey. The requirements for specific turbines firms that lack the resources to develop are determined on a state-by-state basis, mass-production designs and build large and typically these incentives are only for David Blittersdorf, factories in anticipation of quantum increas- small turbines that are connected to the President, AWEA. es in sales. Steady improvement is the most grid. Other states offer tax credits, sales or likely route for firms offering small wind tur- property tax incentives, and net metering bines. In Washington, this is sometimes for small turbine owners. referred to as sustained orderly development. The various stimulus packages are shown in the map of state incentives presented in Sustained orderly development is the recog- Figure 3. As the number of states offering nition that there are not likely to be "silver stimulus packages for small turbines in- bullets" that will radically transform the creases, there will be further sustained glide slope of market penetration for small orderly development of the market. wind turbines. Steady improvements in the products and sustained public sector In order to meet the market goals of the support offer the best hope of delivering the AWEA Small Wind Turbine Committee, industry’s vision of a "new home appli- more incentives are needed. An additional ance" and making small wind turbines a two or three states per year need to imple- notable contributor to our national energy ment stimulus programs for small wind tur- supply. Although economics are a barrier, bines over the next six to ten years. It is the exciting thing about residential and also critically important that the federal gov- small business markets is that once the ernment does its share with a significant numbers work for one home, they work for (25 to 40%) tax credit or rebate program. 10,000 homes. This gives the small wind turbine industry explosive growth potential. Research, Development, and Demonstration Public Policy Federal, and to a lesser extent, state R&D A primary element of sustained orderly programs need to provide greater resources development for small wind turbine technol- for small wind turbine technology develop- ogy is related to public policy. Smart subsi- ment, and the industry must continue to dies, which enable customers to tunnel devote significant resources to product through the cost barriers, are critically development. The DOE research program important in aggregating demand. Federal on wind energy cannot be effective if it con- and state subsidies and incentives need to centrates solely on long-range, high-risk dovetail for a total package that provides R&D. Instead, the federal R&D program enough stimulus to move the market. must support development of advanced Removing institutional market barriers, such products and components and attack other as tower height restrictions and undue inter- cost drivers such as technology for manufac- connection costs, is also an important part turing and installation, outreach for con- of the recipe. sumer education, support for policy and market transformation, and work on generic In addition to efforts by the U.S. govern- basic technology. ment, some states have good policy environments for small wind turbines. Many of DOE now has a wind energy R&D budget these states offer rebate or buy-down pro- of about $40 million, of which about $3 grams that are typically funded with system million, or 8%, is spent on programs to 30 THE STRATEGY

develop small wind turbines. As technology market demand. DOE, national laborato- for large wind turbines "graduates" and ries, test centers, and universities will work requires less public sector support for the with industry partners to conduct basic and next few years, spending on small wind applied research, development, and testing technology should significantly increase. to improve small wind technology. Organizations representing utilities, stan- Small Wind Turbine Industry dards-making bodies, regulatory agencies, The small turbine industry must be open to and every level of government will partici- new entrants and should not foreclose any pate in market and policy actions to investment options. Private capital will remove barriers. Consumers will express remain the cornerstone of the substantial their will by seeking out this environmental- investments that will be necessary if this is ly friendly technology in spite of the barri- to become a billion-dollar industry. ers that still exist. Likewise, the industry should pursue all viable market diffusion models, from full- To address policy barriers, industry and service dealerships to "big box" chain government entities work together to stores to "Dell-like" direct sales programs. propose, review, advocate, and help imple- ment policies that support development of Cooperative Strategy small wind technology while safeguarding The members of the industry will continue to develop products and processes to meet

The market for small wind turbines in the United States is also affected by the activities of the Wind Powering America (WPA) Program. This DOE activity works to educate the general public on wind energy and its uses. The general public has specifically requested information on small wind turbines at various state workshops being organized under WPA. This grassroots level of interest stems from many sources, such as the desire for independence from the utility grid, the urge to reap the environmental benefits of renewable energy, the desire to make a public statement about the environment in a visual way by using small wind turbines, and the desire to use a renewable technology that is cost competitive over the life of the small wind turbine. Further, the agricultural community has historically used wind energy and may be more comfortable with small wind turbines.

Under the WPA activities, members of the AWEA Small Wind Turbine Committee were asked to rank the states from high to low priority for focused WPA small turbine activities. Not only were the states ranked, but the specific state activities were rated as well. These activities include the development of state-specific guides for consumers on small wind electric systems; distribution of Clean Power Estimator—an economic tool to help residential consumers and small business owners understand the economics of a small turbine system; and the development of better wind resource assessment maps.

The top 14 states designated by the AWEA Small Wind Turbine Committee have been targeted for the state-specific activities listed above. The targeted states are California, New Jersey, New York, Illinois, Pennsylvania, Minnesota, Washington, Oregon, Vermont, Colorado, Massachusetts, Idaho, Arizona, and Rhode Island. These states also receive high priority for workshops on small turbine technology under the WPA outreach and market development activities, in hope of stimu- lating the domestic market.

Further, Wind Powering America small turbine activities will be determined in con- junction with the AWEA Small Wind Turbine Committee.

31 THE STRATEGY

the public interest. The industry also The following tables summarize wide- lobbies at the national, state, and local ranging discussions of the AWEA Small level for policies that remove barriers and Wind Turbine Committee about the timing compensate for subsidies to other energy of actions to overcome barriers and reach technologies. the goals described in this roadmap.

Table 2: Summary Schedule of Actions (First appeared in Executive Summary)

Long-Term - Develop hydrogen-based systems - Stimulate the emerging micro-power - Develop policies to help deliver (11 + Years) - Develop blackout protection revolution, of which SWTs are part higher service levels to rural cus- strategies tomers - Establish links with storage and other power technologies

32 THE STRATEGY

Table 7: Research Priorities Identified

Research Area Continuing Research Future Research

Reduce cost - Low-cost robust rotors with advanced airfoils - Larger small turbine development (50Ð100 kW) - Low-cost, very tall towers - Improve performance and efficiency - Turbine optimized for low wind speed

Reduce manufacturing costs - Develop tailored, efficient manufacturing plans - Recyclability - Equipment and processes for mass production - Coating equipment

Improve reliability - Develop improved turbine standards - Design test methodology for “extreme events” - Gather multi-year turbine data - Research topics w/reliability impact

Power electronics - Reduce cost and improve reliability of power - Develop power electronics design for integrating power electronics and storage technologies and improving overall system - Develop optimized converter technology energy efficiencies

Reduction of noise - Understand aeroacoustic phenomena - Design strategies to reduce noise - Noise measurement standard

Better analytical tools - Wind/economic prediction - Integrated design tool - Aeroelastic models with furling

Improve overspeed control knowledge - Expand analytical tools to handle furling, stall/furling - Develop design tool based on improved aerodynamic data

Distributed generation applications - Control strategies to combine power and storage - Real-time optimization for electricity, heat, and second- sources ary uses - Control strategies to combine power and heat applications

33 ENDNOTES

1. Bergey, Mike, "The Sleeping Giant: 3. Energy Information Agency, Annual The Role of Small Wind in America’s Energy Review 1998. Government Energy Future,"in Proceedings of Printing Office: Washington, D.C., Windpower 2001. American Wind DOE/EIA-0384(98), 1998. Energy Association: Washington, 4. U.S. Census Bureau, American D.C., June 7, 2001. Housing Survey, Owner-occupied, 2. Arthur D. Little, Inc., Near-Term High- 1991-1997. Government Printing Potential Counties for SWECS. Solar Office: Washington, D.C., 1998. Energy Research Institute: Golden, CO, BE-9-8282, 1981.

34 NOTES

35 NOTES

36 APPENDIX-DETAILED LIST OF STATE INCENTIVES 1

% - rural Incentives Specifically Type and Amount of Length of land/tota Incentives Net Metering for Small Wind Funding Program l land STATE area

Power Project Revolving Loan term N/A 96 Loan Fund State Loan related to Program: interest rate tied the life of to municipal bonds.

ALASKA project. Personal tax credit 25% of the cost of a renew- 97 able system, up to $1,000, may be carried forward up to five years Sales tax exemption for equipment Up to a $5,000 deduction. Tucson Electric Power: wind < or equal to 100 kw ARIZONA NEG based on fixed sea- sonal rates Arizona Public Service: wind < or equal to 10 kw NEG based on avoided cost

Small wind: agricultural or 96 commercial: < or equal to 100 kW, residential: < or equal to 25 kW Arkansas Public Service Commission to establish

ARKANSAS rates, terms and conditions

Max capacity of 1 MW; 93 annualized calculation; credit for NEG is based on either baseline/over- baselines rates, or on time of use rates, and is carried over month to month; any NEG at the end of annual period is credited to the utility without compensation to the customer-generator.

Energy Innovations Small $2 to $2.5 million per year; Expires Grant (EISG) Program. $75,000 per project. September "Intended to determine the 2002. feasibility of energy technology and science innovations for new energy con- cepts whose feasibility are

CALIFORNIA not yet established."

Public Interest Energy $62.5 million/year Expires in Research Grants (PIER). 2012 Funds R&D efforts not ade- quately funded by competitive and regulated markets.

Public Benefits Fund: $70.2 million for existing wind Expires in Renewable Energy Trust projects ($/kWh credit); $162 2012 Fund million for new renewable projects, which must be installed by the end of 2001 ($/kWh); $54 million for emerging technologies 10 kW or less for wind (buydown). 2 STATE INCENTIVES

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

STATE land area

Max capacity: 10 kW; NEG carried from month to month, and granted to the utility at the end of the annual period. PSCo customers only. COLORADO

Public benefits fund. $118 million over five Enacted in 11.6% (3.1 Must be a direct econom- years-- renewable energy April 1998 total) 3,282k ic benefit to the state of investment fund Connecticut. Available in the form of grants, direct or equity investments, contracts or other actions which support research, development, manufacture, commercialization, deployment and installation of renewable energy

CONNECTICUT technologies. Net metering rules, regulations, and conditions to be decided by the Department of Public Utility Control. 40% income tax reduc- tionin the year of installation, and 20% each year for the next 3 years. Maximum deduction of $5,000 in any one year. "Low Interest Loans for Renewable Energy Resource Program: residential loans from $1,000 to $10,000, and commercial loans from $1,000 to $100,000, both at a 4% interest rate, to be repaid in 5 years or less. Several restrictions can IDAHO be viewed at: http://www.idwr.state.id.us /energy/Financial/ loanr.htm

Only customers of Idaho Power Company (although all utility companies have the opportunity to pass a net metering tariff because of a PUC order); all technologies under 100 kW eligible. STATE INCENTIVES 3

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

STATE land area

Small wind < or equal to 40 91 kW NEG avoided cost Commonwealth Edison only Property tax exemption Maybe $ in ComEd settlement fund Special property tax assessment.

Alternative Energy Bond Fund Program: not applicable to residential projects.

Renewable Energy Rebates available for Resources Program small systems; grants Grants available for large.

ILLINOIS Public benefits program: Expected to produce 10 year PropertyRenewable tax exemption.Energy $100Amount million/year varies. for program, to MunicipalitiesResources Trust are givenFund. the ten year length, end in 2007 theGrants, opportunity loans, toand adopt other 50% of which goes to theincentives exemption available. by the the Renewable Energy state. portion of the fund.

Public benefits program: $200 to $225 million Clean Energy for efficiency and Community Trust renewables. (CECT). Grants, loans, venture capital support, and other financial incentives available. Must demonstrate benefit to Illinois environment or economy.

Opportunity for local 97 government to assess wind turbines at a special valuation for property tax purposes. Sales tax exemption Wind energy equipment and all materials used to manufacture, install, or construct wind energy systems 100% exempt.

IOWA Alternative Energy Loan Small wind (< 10 kW), is Depends. In 1996, Program. 0% interest eligible for 10% of the $1.8 million per year loans for up to half of available funds, while big was allocated for the the project cost up to a wind (> 10 kW) is eligible years 1997-1999. maximum of $250,000. for 20% of the funds.

Net metering law in dispute; however, currently NEG purchased at avoided cost. Other details unknown. 4 STATE INCENTIVES

% - rural Incentives Specifically for Type and Amount of Length of Incentives Net Metering land/total Small Wind Funding Program

STATE land area

Renewable Energy Grant About $400,000-- 98 Program $500,000 per year. Typical award from $10,000--$50,000; max limit of award: $50,000. Property tax exemption

KANSAS Net metering law under con- sideration: Senate Bill 299, introduced in February 2001; not yet signed into law. None None None 87 LA

Renewable Energy Trust Will focus on large wind $150 million over a five 58 Fund. farms. Plans to put $ on year period; approximate- resource assessment ly $20 million per year for DG - "Still, limited aware- an undefined period ness among potential con- beyond 2002. sumers, lack of technical and financial information, and problems providing financing to consumers hamper wide scale commercialization...." Alternative Energy Patent Allows income tax deduc- Development: Corporate and tions for any income personal. received from the sale of or royalty income from a patent that is deemed beneficial for energy con- servation or alternative energy development. May be used for 5 years after it is granted.

QFs < or equal to 60 kW Monthly NEG avoided cost All utilities State sales tax exemption. 100% exemption from Enacted Applicable to residential the sales tax on a wind in 1977 systems only. system and all related equipment. MASSACHUSETTS State income tax credit. 15% credit against the state income tax for the cost of a renewable energy system (including installation) installed on an individual’s primary residence. Max limit of $1,000; can be carried over from first year. Property tax exemption. 100% exemption. Allowable for a period of 20 years after installation. Solar and Wind System Exemption from the cor- Deduction. Includes costs porate excise tax for the incurred from installing the length of their deprecia- unit. Aplies only to commer- tion period. cial and industrial projects. STATE INCENTIVES 5

% - rural Incentives Specifically Type and Amount of Length of land/tota Incentives Net Metering for Small Wind Funding Program l land STATE area

Minnesota Agricultural Up to 45% of loan, up Enacted 92 Improvement Loan to $100,000 of loan in 1995 Program - specifically for principal for up to 10 small wind. years. Value-Added Stock Loan Up to 45% of loan, up Enacted Participation Program. to $24,000 of loan prin- in 1994 Interest rate subsidized by cipal for up to and up for RFA, generally to about 8 years. renewal in 4%. 1997. Unclear whether it was renewed. Wind and Photovoltaic Systems < 2 MW are Enacted Systems Exemption. 100% exempt, while in 1992 Excludes value added to systems > 2 MW are property value by a renew- 91% exempt. able energy system from property taxes. Wind and Solar Equipment Expired? Sales Tax Exemption. Wind Energy Generation 1.5 cents/kWh paid for Enacted Grants. Available on a first systems < 2 MW for in July MINNESOTA come, first serve basis until ten years (payments 1997, new wind capacity can go past the 2005 expires statewide totals 100 MW. expiration). January 1, 2005. Establish- Max capacity of 40 kW ed in 1983 Applies to IOUs, municipals, and rural cooperatives NEG purchased at average retail rate (total annual class revenue from sales of electricity minus the annual revenue resulting from fixed charges, divided by the annual class kWh sales) Ability to create wind ease- For the purpose of Enacted ments (voluntary con- taxes,easements may in 1978 tracts), which protect decrease property value, access to wind for a wind but not increase it. energy system. Low-Cost Efficiency Loan Loans are determined Enacted 95 Funds. Available only to on an individual project in 1991 public schools (K-12) and basis, with fixed inter- local governments. est rates below market level. MISSOURI 6 STATE INCENTIVES

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

S TATE land area

Commercial or Net 35% tax credit for manu- Enacted in 99 Metering System facturing plants producing May 2001. Investment Credit -- alternative energy gener- Alternative Energy ating equipment, a busi- Systems. $5,000 ness facility with a renew- minimum investment. able energy system, or Excess after the first year alternative energy gener- can be carried over for 7 ating years. equipment.

Property tax exemption. Applies to systems with Exemption Exempts value added by up to a $20,000 value for may be renewable energy system a single-family dwelling; claimed to property value from up to $100,000 value for for up to property taxes. a multi-family residential 10 years dwelling or a nonresiden- after tial structure. installation.

Alternative Energy Revolving Loan Account. Applicable for residential

MONTANA and commercial customers for the purpose of building alternative energy systems to generate energy for their own use and for net metering.

Ability to create wind Enacted in easements, which protect 1983 access to wind for a wind energy system.

Small wind < or equal to 50 kW Annual NEG credited to following months, and at the end of annual period is granted to utility Applies to all utilities Low Interest Loan 99 Program for Energy Efficiency. To secure a loan, approach your own financial institution, which will then approve the project on financial terms. The Energy Office is then contacted by the financial institution, which then buys half of the loan at 0% interest so that the total interest on the loan NEBRASKA "from the borrower’s per- spective" will be half the market rate obtained through their private lending institution. Creation of wind easements allowed. STATE INCENTIVES 7

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

STATE land area

Full sales tax exemption for Full exemption from Expired in 65 solar and wind energy 6% sales tax. 2000. systems. New legislation? New Jersey Clean Energy Small Systems (<10kW), $358 million over the Program: State rebate receive a $5/watt rebate, to next three years (2001- program. Medium systems decrease over time as 2003), 25% of which (>10-100kW) receive a more energy systems are will support class I $4/watt rebate; larger added. Rebates available renewables (the other systems (>100 kW) receive up to 60% of system costs. 75% goes to energy a $3/watt rebate. Systems efficiency). producing more energy than needed by the renew-

NEW JERSEY able energy system owner are not eligible.

Max capacity: 100 kW NEG credited to the following month and purchased by the utility at the end of the billing period at avoided cost.

System benefits charge Up to $4 million avail- Enacted 58.9% (77.7 Public benefits fund: sup- able. in 2000 total) 1,740k ports the use of renewable energy for school districts, cities, towns, villages, and counties. Enacted Renewables < or equal to in 1998 10 kW NEG carried forward month to month,

NEW MEXICO or paid at avoided cost by the utility Utility chooses which method for credit. All utilities

Property tax exemption Any value added by Applies the renewable energy for all system is subtracted years fol- from total property lowing value for tax reasons. installation. 10 kW or less. Limit of 100 customer-generators

NEVADA for each IOU. Customer can choose to have NEG credited toward the next month's bill. Utilities are not required to pay avoided cost for NEG. 8 STATE INCENTIVES

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

S TATE land area

Renewables R&D Grant Annual funds average 85 Program. Provides funds around $2 million. for projects focusing on Funds up to 50% of product and technology project (generally pro- development, rather than installation of renewable viding between energy systems. $10,000 and $200,000 per project). New York Energy Interest rates reduced 5 year $mart(SM) Loan. Any by 4.5%. term. commercial, industrial, retail, agricultural, non- profit, or multifamily facility is eligible for this program. Must be customer of one of NEW YORK 6 IOU's in NY. Public Benefits Fund. $150 million annually. Expires June 30, 2006. High Value PV and Wind solicitation $1.3M - spring 2000 (net metering law not applicable to wind)

Income tax credit 3%/ year for five years 97 for the cost of equipment and installation (5% if installed before January 1, 2001). Large Wind Property Tax 70% reduction in prop- Constructi Incentive (100 kW or erty taxes on must larger). begin before January 1, 2011. Geothermal, Solar, and Five year Wind Property Exemption period following installation. NORTH DAKOTA Large wind sales tax Construction must exemption (100 kW or begin before January larger). 1, 2011. Up to 100 kW; no statewide limit of net metering capacity; NEG must be purchased at avoided cost.

95 IOU's and rural cooperatives under the Commission's jurisdiction are required to file net metering tariffs for customer-generators. 100 kW or less. No state-wide limit. Customers may OKLAHOMA request that utilities purchase NEG, but utilities are not required to do so. STATE INCENTIVES 9

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

STATE land area

Property tax exemption. 100% exemption. Expires in 98 Added value of renew- 2012 able energy system shall not be included when evaluating the property for tax purposes. Business Energy Tax 35% tax credit over 5 Enacted in Credit ("Betsy"). Must years 1980 replace at least 10 percent of the electricity, gas or oil used; max. limit of $10,000,000 per project. Only applies to businesses! Residential Energy Tax 60 cents credit/ estimat- Enacted in Credit. Equipment, ed kWh to be produced, 1978

OREGON installation, and intercon- up to $1,500 in the first nection costs are year . applicable.

Small Scale Energy Loan Amount varies. Enacted in Program (SELP). Energy 1981 savings must be able to pay majority/all of loan; applies to commercial/industrial and municipal/schools projects.

Public Benefits Fund. $8.7 million/year

Small wind < or equal to 25 kW Annual NEG carried month to month or credited at avoided cost At end of annual period, NEG granted to utility for use in low income program Applies to all utilities

Municipal and local authorities may establish wind access laws. Public Benefits Fund. Varies according to 90 Created for the purpose utility. of promoting the development and use of renewable energy

Low-income renewable Provide renewable energy pilot programs energy system to decrease electricity costs. PENNSYLVANIA 10 kW or less. NEG credited at the end of each month to utility. 10 STATE INCENTIVES

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

STATE land area

Public benefits fund. Approximately $3 million Program over 5 years? reviewed in August 43 2001. Personal Tax Credit. Beginning with 25% in 2000- Based on maximum 2000, but declining by 2004 system cost of $15,000. 5% every year until 2004. Property tax exemption. Expires Renewable energy 12/2004 systems cannot be assessed at more than the value of a conventional heating, hot water, or other energy production system.

RHODE ISLAND Sales tax credit. Refund of any tax paid. Expires 12/2004 PUC order of 1988; requires IOU's to provide net metering contracts; max of 25 kW or less; NEG at end of month credited to following month; NEG at end of annual period credited to IOU.

Property tax exemption. Exempts entire 98 May be taken for 3 years assessed value of resi- after installation; is not dential systems from applicable to energy property tax, and 50% systems that produce installed cost of com- energy for resale. mercial systems. SOUTH DAKOTA Property tax exemption. Exempts 100% of the 96 value added by a renewable energy system to the assessed property value.

TEXAS Enacted in PUC Ruling. 50 kW max; 1985 NEG purchased by utility at avoided cost at the end of the billing cycle. Corporate tax credit. 10% of the cost of Expires 96 installation, up to December $50,000. 31, 2006. Personal Tax Credit. 25% of the cost of Applicable installation, up to January 1,

UTAH $2,000. 2001, through December 31, 2006. STATE INCENTIVES 11

Incentives % - rural Type and Amount of Length of Incentives Specifically for Net Metering land/total Funding Program

STATE Small Wind land area

High Technology Product 100% exemption from Expires in 94 Manufacturers Excise Tax excise tax. 2004. Exemption Sales and use tax exemption. 100% exemption from Expires Must have at least 200 watt sales tax. June 30, generating capacity. 2009.

"Washington State University Energy Program: assistance in finding solutions to energy problems that utilize renewable energy, including: technical assistance, education, workshops, field assistance and

ASHINGTON user-centered solutions. W http://www.energy.wsu.ed Max capacity: 25 kW; NEG at the end of each month is credited to the following month's bill; NEG at the end of the annual billing period is granted to the utility with no compensation to customer-generator.

Property tax exemption. "Does Exempts 100% of the 94 not include equipment or com- value added by a renew- ponents that would be present able energy system to as part of a conventional energy the assessed property system or a system that oper- value. ates without mechanical means." "Renewable Energy Assistance 10% to 20% of a project, Program (REAP): applies to up to $75,000. renewable energy systems incorporated into construction projects; half of grant available at purchase of equipment, the other half given upon completion of project; available to businesses, municipalities, and non- profit organizations. Public benefits fund. State Approximately $3.8 To be re- awards grants for low income, million to fund renew- evaluated energy efficiency and renewable able projects. after 2005.

WISCONSIN energy services.

Demand Side Applications of $1.25 million. Renewable Energy (DSARE); only for WI northeastern 23 counties. All technologies < or equal to 20 kW Monthly NEG purchased at retail for renewable energy systems only (non- renewable generated energy purchased at avoided cost).

Opportunity to apply for permits that guarantee wind access. 12 STATE INCENTIVES

% - rural Incentives Specifically Type and Amount of Length of Incentives Net Metering land/total for Small Wind Funding Program

STATE land area

Max capacity: 25 kW; 99 NEG at the end of each month can be credited or compensated to the bill for the following month; NEG at the end of each

WYOMING year shall be sold to utility at avoided cost.

"This table was created based upon a report ""Looking Outside - Lessons Learned from Renewable Energy Funds in Other States or Regions"" written by Ryan Wiser and Kevin Porter. The net metering column information was found on the Green Power Network - Net Metering, http://www.eren.doe.gov/greenpower/netmetering, latest revision July 2001. Other information on state tax, property tax and loans was found on http://www.dcs.ncsu.edu/solar/dsire/financial.html, latest revision September 2001. Rural land information from: http://www1.stateline.org/fact.do?factId=721 (Data is from Highway Statistics '98, Federal Highway Administration, U.S. Dept. of Transportation); Land information from: http://ga.water.usgs.gov/edu/wetstates.html (Data is from the Statistical Abstract of the United States, 1987