SMALL WIND GETS BIGGER

AWEA Reports 78% Growth In 2008 For U.S. Small Wind Market; U.S. Department of Energy Analysis Finds That Wind Can Be Major Contributor to Energy Mix
Ron Stimmel and Shawna Seldon, May 28, 2009 (American Wind Energy Association)

SUMMARY
The AWEA Small Wind Turbine Global Market Study, Year Ending 2008 reports the U.S. small wind market grew 78% last year and predicts even more growth going forward on the strength of new federal incentives and rising electricity prices.

Small wind turbines are those with no more than 100-kilowatt capacities. They are typically erected at residential and commercial locations to deliver power primarily to the site and only secondarily to the grid.

There were 17.3 megawatts of new small wind installed capacity in the U.S. in 2008 and 38.7 megawatts of new installed capacity worldwide. The U.S. market share of the $156 million global small wind revenues in 2008 was $77 million.

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About a third of the world’s 219 small wind turbine manufacturers are in the U.S.

Summary of 2008 U.S. sales: 17.3 megawatts, 10,500 units, $77 million in revenues, 78% growth over 2007.

Summary of 2008 global sales: 38.7 megawatts, 19,000 units, $156 million in revenues, 53% growth over 2007

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A poll of U.S. small wind manufacturers found they expect a 30-fold increase in the small wind market in the next 5 years, despite the recession, to a cumulative U.S. installed capacity of 1,700 megawatts by the end of 2013. The growth anticipated is due primarily to the extension to small wind purchasers of the 30% investment tax credit (ITC) by the financial rescue and stimulus bills.

Grid-connected turbines are the larger part of the small wind market and are expected to continue to be so as they become more affordable, thanks to the ITC and larger manufacturing volumes.

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COMMENTARY
The primary driver of the small wind market was private investment in manufacturing, investment spurred by the anticipation of rising electricity prices, changes in public atttitudes and increasing federal incentives. $160 million was invested in just 18 manufacturers over the last 3 years. The result was increased product volumes, especially in small (21-to-100 kilowatt) turbines.

As supply caught up with demand, turbine prices dropped. Residential (1-to-10 kilowatt) turbines emerged as the biggest segment of that market.

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The changes in public attitudes that contributed to market growth included more public awareness of the possibilities of small wind, a growing interest in New Energy and more concern with climate change and environmental issues.

Much of the estimated growth going forward will be spurred by the new 8-year, 30% federal Investment Tax Credit (ITC) passed by Congress in the October 2008 financial rescue legislation and augmented in the February 2009 stimulus bill.

Both small wind and rooftop solar photovoltaic systems are now eligible for the same ITC and the 2 New Energies are in a race toward grid parity, the point where the price per kilowatt-hour at which they generate electricity is equal to the price for traditional electricity-generating sources. For both small wind and rooftop solar, as well as the other New Energies, growth has continued and prices have dropped due to federal federal support mechanisms, increasing economies of scale and concerns with larger climate, environmental and national security issues.

A small wind sales downturn of ~20% in late 2008 and early 2009 was attributable in part to the recession but early 2009 residential (1-to-10 kilowatt) sales were nevertheless 15-to-20% higher than early 2008 sales.

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The commercial (10-to-100 kilowatt) sector has had more difficulty with financing and, since being awarded the 30% uncapped ITC, has turned to Power Purchase Agreements (PPAs), a solution pioneered in the solar industry. PPAs guarantee a return on the power generated over an extended period of time to whoever puts up the money for installation.

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QUOTES
- Denise Bode, CEO, AWEA: “The U.S. wind industry is a growing bright spot in our domestic economy, and the small wind sector is no exception…Strong federal policies like the federal investment tax credit for small wind are critical to future growth, just as adoption of a federal renewable electricity standard (RES) is essential to growth in the utility-scale market.”
- Ron Stimmel, Small Wind Advocate, AWEA: “Consumers are looking for affordable ways to improve their energy security and reduce their personal carbon footprint…Small wind technology can be an answer to that search. As government policies have caught up with consumer interest, we’re seeing people all across the U.S. take advantage of this abundant, domestic natural resource and U.S. manufacturers have been able to meet this increasing demand.”
- Bode: “Wind energy is an all-around win…Every day, Americans are saving money on their electricity bills, boosting the national economic recovery, and helping to reduce our collective greenhouse gas emissions. This is great news for all Americans.”