Which States Are the Best for Small Wind?

The solar PV market is booming in the U.S. and worldwide, thanks to increasing support from local and federal governments. Small wind turbines -- a technology pioneered in the U.S. almost a century ago -- are also growing in popularity, even though they face continued obstacles to widespread deployment. GE’s investments in Southwest Windpower  of Flagstaff, Arizona, represents a major milestone for the small wind industry in terms of attracting corporate support, but the small wind market has a ways to go to reach its full potential. The fact that Home Depot is now offering Southwest Windpower turbines in selected stores is yet another sign that this distributed renewable technology may be coming of age.

Today, a turbine is defined as “small” if it falls at 100 kilowatts or below; mid-sized wind turbines are typically classified as 100 kW up to 1 MW in capacity. The vast majority of small wind turbines sold, however, are 10 kW or less, with the lower end capacity serving residences, and machines rated at 10 kW and above in size typically deployed at farms, ranches, and businesses in rural regions.

A new policy comparison software tool funded by the U.S. Department of Energy (DOE), which will be available on-line within the next month, has calculated a ranking of states based on paybacks on for small wind turbine. Interestingly enough, the state that comes out on top for financial returns in an analysis performed by eFormative Options, the National Renewable Energy Laboratory and Pacific Northwest National Laboratory, is Hawaii, due to its extremely high retail rates.

The ranking below highlights both the Top 10 states when judged on the basis of shortest payback periods for small wind turbines up to 100 kW, incorporating the policy landscape on such critical incentives as availability of net metering and state rebates, renewable energy credits (RECs), and other forms of financial support.  

1)     Hawaii

2)     Vermont

3)     Maryland

4)     California

5)     Maine

6)     New Hampshire

7)     District of Columbia

8)     Delaware

9)     Massachusetts

10)  Oregon

While the U.S. has historically dominated the small wind turbine market, both in terms of manufacturing and deployments, the U.S. is now slowly losing its long standing global leadership position on small wind to the U.K. According to a market forecast prepared by Pike Research, the U.S. market is expected to grow at a compounded annual growth rate (CAGR) of 16% until 2015, accumulating over 51 MW of small wind capacity. By that same date, the U.K. will amass 56 MW, enjoying a CAGR of 23%, with other European countries such as Italy also picking up momentum.

Not reflected in this forecast (which will be updated later this year) is a very recent upswing in small wind turbines made in China. Quality control issues about some of these machines persist and it is unclear whether the small wind market in China will replicate the success of utility-scale turbines, with China grabbing the global leadership position in terms of installed capacity in 2010.

Part of the problem in the U.S. is the patchwork of state net metering and renewable energy credit programs. The lack of any consistent policy support makes it difficult for manufacturers and retailers to pitch their products. If Congress enacted a national FIT, how would such a policy impact residential customers in different states?

A recent case study relying upon the new DOE-funded policy comparison tool looked at what level of a federal FIT would be required to make small wind cost effective in a range of current policy environments. For example, in states with modest wind resources and few existing state incentives – such as Virginia – FIT rates similar to those deployed in the U.K. would be necessary to achieve favorable returns for residential customers: 50 cents per kilowatt hour. Given today’s political climate, such levels of subsidies are not likely. The same analysis found, however, that at half of that subsidy rate, a 10 kW wind turbine in a Class 2 wind resource in Minnesota would have a 9 year payback period. (The turbine would be generating power for 20 years or more.)