TODAY’S STUDY: THE PROGRESS OF DISTRIBUTED WIND

2012 Market Report on U.S. Wind Technologies in Distributed Applications

AC Orrell, HE Rhoads-Weaver, LT Flowers, JO Jenkins, MN Gagne, KM Sahl, BH Pro, and RE Baranowski, August 2013 (U.S. Department of Energy)

Executive Summary

At the end of 2012, U.S. wind turbines in distributed applications reached a 10-year cumulative installed capacity of more than 812 MW from more than 69,000 units across all 50 states. In 2012 alone, nearly 3,800 wind turbines totaling 175 MW of distributed wind capacity were documented in 40 states and in the U.S. Virgin Islands, with 138 MW using utility-scale turbines (i.e., greater than 1 MW in size), 19 MW using mid-size turbines (i.e., 101 kW to 1 MW in size), and 18.4 MW using small turbines (i.e., up through 100 kW in size).

Distributed wind is defined in terms of technology application based on a wind project’s location relative to end-use and power-distribution infrastructure, rather than on technology size or project size. Distributed wind systems are connected either on the customer side of the meter (to meet the onsite load) or directly to the local grid (to support grid operations or offset large loads nearby).

Capacity-weighted average costs reported for a sample of 2012 U.S. distributed wind installations were $2,540/kW for utility-scale wind turbines, $2,810/kW for mid-sized wind turbines, and $6,960/kW for newly manufactured (domestic and imported) small wind turbines. An emerging trend observed in 2012 was an increased use of refurbished turbines. The reported capacity-weighted average cost of refurbished small wind turbines installed in 2012 was $4,080/kW.

As a result of multiple projects using utility-scale turbines, Iowa deployed the most new overall distributed wind capacity, 37 MW, in 2012. Nevada deployed the most small wind capacity in 2012, with nearly 8 MW of small wind turbines installed in distributed applications. In the case of mid-size turbines, Ohio led all states in 2012 with 4.9 MW installed in distributed applications.

click to enlarge

As in previous years, state and federal policies and incentives continued to play a substantial role in the development of distributed wind projects. In 2012, U.S. Treasury Section 1603 payments and grants and loans from the U.S. Department of Agriculture’s Rural Energy for America Program were the main sources of federal funding for distributed wind projects. State and local funding varied across the country, from rebates to loans, tax credits, and other incentives.

Reducing utility bills and hedging against potentially rising electricity rates remain drivers of distributed wind installations. In 2012, other drivers included taking advantage of the expiring U.S. Treasury Section 1603 program and a prosperous year for farmers. While 2012 saw a large addition of distributed wind capacity, considerable barriers and challenges remain, such as a weak domestic economy, inconsistent state incentives, and very competitive solar photovoltaic and natural gas prices.

The distributed wind industry remains committed to improving the marketplace by advancing third-party certification of wind turbines and introducing alternative financing models, such as third-party power purchase agreements and lease-to-own agreements more typical in the solar photovoltaic market. Continued growth is expected in 2013.

click to enlarge

Introduction

Distributed wind energy systems are commonly, but not always, installed on residential, agricultural, commercial, industrial, and community sites and can range in size from a few- hundred-watt, off-grid turbine at a remote cabin or a 5-kW turbine at a home to a multi-MW turbine at a manufacturing facility.

Distributed wind energy systems are connected either on the customer side of the meter (to meet the onsite load) or directly to the local distribution or micro grid (to support grid operations or offset large loads nearby). This distinction differentiates distributed wind power from wholesale power generated at large wind farms and sent via transmission lines to substations for subsequent distribution to loads.

The U.S. Department of Energy (DOE) Energy Efficiency and Renewable Energy (EERE) Wind and Water Power Technologies Office defines distributed wind in terms of technology application based on a wind project’s location relative to end-use and power-distribution infrastructure, rather than on technology size or project size (Wind Program 2013); thus, the distributed wind market includes turbines and projects of many sizes. Wind systems are characterized as distributed based on the following criteria: • Proximity to end-use: wind turbines installed at or near the point of end-use for the purposes of meeting onsite load or supporting the operation of the local (distribution or micro) grid. • Point of interconnection: wind turbines connected on the customer side of the meter or directly to the local grid.

Therefore the scope of this report has been expanded from past years’ reports to include a finer breakdown of small wind statistics (i.e., up through 100 kW in size), more extensive statistics on mid-size turbines (i.e., 101 kW to 1 MW in size) used in distributed applications, and new statistics on utility-scale turbines (i.e., greater than 1 MW in size) used in distributed applications. Past years’ reports only focused on small wind turbines; thus, this report makes use of more historical data for the small wind market than it does for the mid-size and utility-scale distributed wind markets.

click to enlarge

U.S. Distributed Wind Market Overview and Highlights

At the end of 2012, U.S. wind turbines in distributed applications reached a 10-year cumulative installed capacity of more than 812 MW (Figure 1) from more than 69,000 units across all 50 states.

Overview of Distributed Wind Market Segments

Although sales of small wind turbines declined in 2012, distributed wind installations still comprise more than 68% of all wind turbines installed in the United States (on a unit basis) over the past 10 years (2003 – 2012), and small wind systems still make up the majority of turbine units used in distributed applications (Figure 2). In 2012, the majority of distributed wind projects installed consisted of single turbines, and the largest project installed consisted of six turbines.

Off-grid small wind turbine models continue to account for the bulk of wind turbine units installed in U.S. distributed wind applications. In 2012, almost 72% of turbines in distributed wind projects were installed to power remote homes, telecommunications facilities, rural electricity and water supply, and military sites.

Wind turbines connected to the distribution grid, or “grid-tied” applications, comprised more than 99% of the annual domestic distributed wind capacity (in terms of MW), with more than 66% either installed on the customer side of the meter at residences, farms, schools, and businesses; in net metering and net billing arrangements; or otherwise meeting onsite demand across 40 states, primarily in the Midwest, New England, and California. The remaining 2012 grid-tied distributed wind projects, accounting for 27% of the mid-size and 36% of the utility- scale distributed wind capacity, were connected to distribution lines serving local loads and constructed primarily in Iowa—with one project each in Vermont, California, Washington, and Illinois.

click to enlarge

Annual U.S. Distributed Wind Deployment

In 2012, the annual capacity of distributed wind installed in the United States increased by 62% over that of 2011 with 175 MW deployed. Additions in 2012 account for about 3,800 wind turbines and represent more than $410 million in domestic investment.2 Corresponding to a large decrease in off-grid and residential-scale units sold, the number of small wind turbine units installed in 2012 U.S. distributed wind applications dropped by nearly 50% from 2011. Over the same period, the number of mid-size wind turbines installed in the U.S. increased by more than 250% and the number of utility-scale wind turbines increased by nearly 100%, leading to a sharp decline in the contribution of small wind turbines to the overall U.S. wind market. Small wind turbines dropped from nearly 70% of all U.S. wind units installed in 2011 (Figure 3a) to less than 40% of units installed in 2012 (Figure 3b). For context, utility-scale turbines installed in wind farms – non-distributed applications – are also shown in Figures 2 and 3.

Utility-scale wind turbines (i.e., above 1 MW) installed in distributed applications showed the largest increase—an 80% increase from 77 MW in 2011 to 138 MW in 2012. The next largest increase was in mid-size wind turbines (i.e., 101-1,000 kW), which increased more than 50% from 12 MW in 2011 to 19 MW in 2012. Newly manufactured mid-size and utility-scale wind turbines installed in distributed wind applications (excluding refurbished equipment) increased 81%, from 85 MW in 2011 to 154 MW in 2012.

Sales of newly manufactured small wind turbines (i.e., up through 100 kW) installed in the United States decreased by 53% from about 19 MW in 2011 to 8.9 MW in 2012. Seven U.S.- based suppliers of newly manufactured and refurbished small wind turbines (i.e., reconditioned equipment emerging primarily from California wind farm repowering) reported sales greater than 1 MW, up from four suppliers in 2011. The combined U.S. market for new and refurbished small wind turbines declined by 3% from 19 MW in 2011 to 18.4 MW in 2012, representing $101 million in investment and nearly 3,700 units sold.

click to enlarge

Types of Turbines and Towers

In 2012, reported U.S. distributed wind deployments encompassed 84 different wind turbine models ranging from 100 W to 3 MW3 from 55 suppliers with a U.S. sales presence (Figure 4), including suppliers from Asia (i.e., China, Japan, South Korea, and India), Europe (i.e., UK, Belgium, Denmark, France, Germany, Netherlands, and Spain), Canada, and South Africa. U.S. manufacturers based in 14 states (i.e., Arizona, California, Georgia, Kansas, Massachusetts, Michigan, Minnesota, Missouri, New York, Oklahoma, Oregon, Vermont, Washington, and Wisconsin) sold 38 different models. Nine of the top 10 models of all 2012 wind turbines installed in distributed applications (on a unit basis) were manufactured in the United States.

The widest variety of wind turbine and tower designs are for turbines rated under 20 kW. Only a few turbines larger than 10 kW are not configured as 3-bladed horizontal-axis units installed on self-supporting tubular towers. Self-supporting lattice and guyed monopole towers were reported as the most popular designs for U.S. residential-scale wind turbine models, with vertical-axis and rooftop models representing less than 3% of 2012 U.S. distributed wind capacity and less than 9% of units. A wide range of tower designs and heights were sold for small turbine projects, including guyed lattice and monopole (including tilt-up designs4) and self- supporting lattice and tubular towers.

Tower heights ranged from as low as 9 m up to 49 m for small turbines and from 30 m to 100 m for mid-size and multi-MW turbines, with most 2012 grid-tied distributed wind installations featuring hub heights of 30 to 80 m. The capacity-weighted average hub height for all 2011 and 2012 utility-scale distributed wind projects was 82 m. In 2012, the average mid-size distributed wind hub height increased from 53 m in 2011 to 60 m and the average hub height for refurbished distributed mid-size turbines increased from 39 m in 2011 to 52 m.

Reflecting the shift in the distributed wind market toward larger “grid-tied” units connected to the distribution grid, the capacity-weighted average size of wind turbines across all distributed wind sectors increased by more than 300% between 2011 and 2012, from about 15 to 47 kW (Figure 5). This large increase was primarily due to the 50% reduction in the number of small wind turbines and the 70% growth of mid-size and utility-scale turbines in distributed applications.

In addition, the total number of grid-tied wind turbines installed in U.S. distributed applications decreased considerably from more than 3,000 units in 2011 to just over 1,100 grid-tied units in 2012. Off-grid units also declined by about 37%. Grid-tied projects accounted for an increased portion of the overall annual capacity. The average size of grid-tied turbines installed in U.S. distributed applications increased from 35 kW in 2011 to 156 kW in 2012, while the average size of off-grid units sold in the United States in 2012 remained stable at about 380 W, continuing the slight decrease from the 2007 off-grid average of 520 W. The dramatic increase in reported installations of refurbished turbines sized 40 kW to 1 MW, from 9 units totaling 3.5 MW in 2011 to 111 units totaling 11.8 MW in 2012, also contributed to this trend.

click to enlarge

Top Ten States for Distributed Wind:

Annual and Cumulative Installations Distributed wind installations were documented in 40 states in 2012 (Figure 6), and in all 50 states plus Puerto Rico and the U.S. Virgin Islands over the past 10 years (Figure 7).

Iowa, Massachusetts, California, and Wisconsin led the nation for new distributed wind power capacity installations in 2012 across all turbine types (Table 1). Comparing 2012 to 2011 year- end figures, Vermont, Rhode Island, Wisconsin, Nevada, and Massachusetts were the fastest growing states in 10-year cumulative distributed wind capacity (Table 1).

Iowa deployed the most distributed wind capacity, 37 MW, in 2012. Further, Iowa retained its position as the state with the most small wind capacity installed over the past 10 years as well as its third place standing for cumulative distributed wind capacity installed over the past 10 years. Iowa installed considerably more distributed wind capacity in 2012 than historical leaders Minnesota and Texas, but not as much small wind capacity as Nevada which added the most small wind capacity in 2012.

click to enlarge

Texas, Minnesota, Iowa, California, and Massachusetts led the states for all cumulative distributed wind installations over the past 10 years; each of these five states now has more than 60 MW of small, mid-size, and utility-scale wind turbines combined in distributed applications (Figure 8). Ohio, Wisconsin, Illinois, Colorado, and Washington now each have more than 10 MW of distributed wind capacity.

Installed Costs Due to substantial differences in costs of various tower types and heights, as well as manufacturer methodology for setting nominal power ratings and estimating installation expenses, reported costs for wind technologies used in 2012 distributed applications ranged widely.

As shown in Figure 9, the reported capacity-weighted average cost to install new small wind turbines (domestic and imported) in the United States in 2012 was $6,960/kW, based on data for about 3,500 turbines totaling 8.9 MW, with a range of $1,500 to $27,500 per kW. The reported capacity-weighted average installed cost for U.S.-based small wind manufacturers’ 2012 sales was $6,510/kW, based on data for about 3,200 turbines totaling 6.3 MW, 19% lower than for non-U.S. suppliers. The reported capacity-weighted average installed cost of refurbished small wind turbines in 2012 was $4,080/kW, based on data for 105 turbines totaling 9.6 MW, with a range of $3,560 to $7,480 per kW.

The reported capacity-weighted average installed cost for mid-size wind turbines in 2012 U.S. distributed applications, based on a sample size of 8 projects totaling 9.5 MW, was $2,810/kW, with a range of $2,400 to $3,350 per kW. The reported capacity-weighted average installed cost for utility-scale wind turbines installed in 2012 U.S. distributed applications, based on a sample size of 26 projects totaling 78 MW, was $2,540/kW, with a range of $1,760 to $4,000 per kW.

click to enlarge

Top Suppliers and U.S. Manufacturers

The top U.S. small wind turbine manufacturers in terms of total 2012 sales (domestic and exports) were Southwest Windpower, based in Arizona; Bergey Windpower, based in Oklahoma; and Northern Power Systems, based in Vermont. Leading importers were Endurance Wind Power of Canada and Sonkyo Energy of Spain.

The top suppliers of 2012 mid-size wind turbines installed in U.S. distributed applications were Gamesa of Spain, PowerWind of Germany, and Massachusetts-based Aeronautica.

The top suppliers of 2012 utility-scale wind turbines installed in U.S. distributed applications were General Electric (GE), with corporate headquarters in the United States; Goldwind of China; and Vestas of Denmark.

Imports and Top Supplier Countries

In 2012, U.S.-based manufacturers claimed nearly 86% of domestic small wind capacity sales. However, imports comprised more than 60% of the total (small, mid-size, and utility-scale) annual domestic distributed wind capacity. China alone supplied more than 30% of distributed utility-scale wind capacity, with five turbine models from five manufacturers, and Denmark supplied more nearly 11% of total distributed wind capacity. Canada and Spain were the sales leaders in 2012 small wind imports to the United States, with nine models from four manufacturers. Spain also led the mid-size market segment and ranked third in 2012 utility-scale distributed capacity with three additional models.

In 2012, the top 10 supplier countries (based on manufacturer corporate ownership) for U.S. distributed wind applications were based in North America, Europe, and Asia (see Table 2)…

Tweet