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Small Wind Industry Set to Triple by 2015, U.S To Dominate Two-thirds of the Market

The small wind industry is, well, small — representing about 50 MW of capacity additions each year around the world. But new project additions are set to triple by 2015, bringing yearly capacity up to 152 MW, according to a new analysis from Pike Research.

That steady scaling will allow total installed costs to fall further, declining from about $5.40 per watt on average today to $4.10 per watt in 2015, according to the analysis

And guess what? The U.S. will continue to dominate in manufacturing and installing those units. According to the American Wind Energy Association, two thirds of all small wind systems deployed around the world are manufactured in the U.S. And in the American market, 95 percent of all turbines sold are made domestically.

Small wind may not be a mega-industry, but it does provide solid economic value.

During another sluggish year for economic growth in 2010, the small wind industry (turbines under 100 kW) grew 26 percent, representing $139 million in sales in the U.S. alone. The strong growth in the American market was spurred by the creation of an investment tax credit for small wind systems. According to AWEA, around 80% of the value of a small wind system is created within the U.S.

Similar promotion policies in other countries are driving growth around the world, allowing U.S. manufacturers to continue shipping products overseas. These companies are seeing increasing competition from Asian producers, but many of those companies have major reliability issues. For now, American and European manufacturers dominate the market.

Because siting small wind projects is often far more complex than siting solar projects, the industry has not kept pace with the rapid pace of PV deployment. While small wind won’t catch up with solar in total number of systems deployed, it can learn from the innovative financing models emerging in the industry, writes Pike analyst Peter Asmus:

[S]mall wind turbines have not enjoyed the same level of innovation when it comes to unique financing and business models, particularly when compared with distributed solar energy. Pike Research’s analysis indicates that business models gaining traction in the small wind sector include leasing programs and utility or third-party ownership.

With consistent policies that help spur better performance-based financing models, this industry will see solid growth. Pike expects the market to grow from $255 million to $634 million. Hopefully, with a continued focus on quality and innovation, the U.S. will continue to dominate the market.

This article was originally published by Climate Progress and was reprinted with permission.

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