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Small Wind: Market Update

Small wind energy systems are experiencing significant growth as the technology finally appears to be coming of age. What can big wind's little brother conjure up to advance the role of renewable energy in today's generation mix?

Typically generating just enough power to meet the demands of a home, farm or small business, small wind energy systems belong to a renewables genre that continues to grow in stature. Commercial customers, particularly small and medium enterprises (SME), have cottoned on to their many benefits - and not just to the bottom line of a balance sheet. Small wind extols a business's Green credentials, exudes corporate correctness, and engages investors in a way few other trappings of commercial endeavour can muster.

Ranging from 400 W to 100 kW (or up to 500 kW, depending on whose definition of 'small' you choose to believe) systems consist of a vertical or horizontal axis turbine installed either on- or off-grid.

Recent years have seen significant technological advances made at the utility-scale end of the wind power spectrum of development, leading to ever-larger, more powerful turbines. Paradoxically, perhaps, many of these advances have trickled down to small wind. Add to these rising energy costs and a string of economic incentives designed to wean industry off fossil fuels and the package becomes all the more compelling for businesses and home owners.

Micro turbines have been employed in residential settings (Source: Skystream)

Small wind systems are now more reliable, quieter and safer than those introduced in past decades. And although most electricity produced is used on-site, excess generation can be fed into distribution, strengthening the electric grid. It's a win-win equation.

Currently, some 250 companies in 26 countries manufacture, or plan to manufacture, small wind turbines, according to latest figures released by the American Wind Energy Association (AWEA). Of these companies, 95 (or 36%) are based in the US, though in the main they have fewer than 100 employees. According to AWEA's 2010 Review, the number of identified manufacturers in the US increased from 66 in 2009, which, given the country was then gripped in recession, was an impressive performance, although the vast majority are in start-up phases and roughly half the world market share is held by fewer than 10 US manufacturers.

Yet if there is one trend that has emerged from the global economic downturn, it must be that start-up manufacturers have narrowed their product lines while making their products more adaptable to a wider range of different markets - by enabling them to service both on- and off-grid applications, for example. In the US, at least, few leading manufacturers now offer more than three or four models and instead focus on catering to narrower market niches.

Moreover, manufacturers reported to the AWEA that while interest in small wind has increased throughout the economic recession, consumers are delaying purchasing decisions until financing becomes more available and affordable. Many manufacturers are therefore expecting a surge in sales to follow when confidence returns and the economy is more stable.

In common with their bigger counterparts, small wind's technology has advanced considerably in recent years. These have propelled small wind energy systems to a position of pre-eminence in renewables tables. They are one of the fastest growing forms of customer-sited or 'distributed' generation and one of the best energy investments for small businesses and homeowners.

The world's leading 15 manufacturers continue to predict exponential sales growth in the US market over the next five years, with projections of over 1000 MW of cumulative installed small wind capacity in America by 2015, despite current economic conditions and cautious sales in 2009. AWEA says that although manufacturers pared down their growth projections from 2009's review, they remain optimistic about achieving their target. Primary drivers include the eight-year 30% federal investment tax credit enacted in October 2008, private equity investments, and greater equipment supply and manufacturing capabilities across the board.

An Evance R9000 machine installed at a residential property (Source: Evance)

AWEA also publishes 'In the Public Interest — How and Why to Permit for Small Wind Systems — A Guide for State and Local Governments,' which sets out the issues local enabling bodies should consider when they are approached by prospective developers. The guide, produced in 2008, points out that the greatest challenges to small-scale renewable energy are not technical, but rather financial, political, and regulatory. It says that confusing, inconsistent or even absent permitting processes discourage the very people a forward-thinking community would want to enable: those with the motivation and resources to generate their own clean electricity.

The guide says the good news is that this is easy to fix. Making the permitting process affordable, streamlined, and accountable is in the best interest of the consumer, environment, and community. The guide explains why, and identifies best practices for local governments to balance the interests of property owners and the community. And it is a concept that is being copied outside the US.

In Europe, the European Commission funds the Small Wind Industry Strategy (SWIS) with the intention of stimulating growth in the small wind turbine industry. The SWIS provides technical, market and contact information, as well as a FAQs section designed to inform newcomers about the current status and future direction of the industry. It also sets out to establish why the small wind industry is slow to reach its full and considerable true potential, to understand barriers in the fields of know-how and marketing, and to propose actions to boost the industry.

Its aims include detailed analysis of the small wind turbine (SWT) industry, through an exhaustive review of existing European SWT actors. The project team, including SEED (Société d'Études Et de Développement), trade group EWEA, and industry representatives such as Vergnet, is compiling details of successful SWT installations to date, and surveying national markets. The project will include market analysis covering markets in Europe and further afield. It will formulate recommendations for their development and prepare user guides for identified market segments.

Key project objectives of the organisation are to: provide a comprehensive manual covering all aspects of the small wind industry field, inform policy makers, industry specialists and the wider public, promote wind energy as a market showing vigorous growth, inform the general public of the reality of wind energy as a mature and beneficial technology and, crucially, initiate a regularly updated internet-based information source.

Europe is wind-rich. The UK has more than 40% of Europe's wind resources and is ideally placed to capture this energy with the latest generation of small wind turbines. BritishEco is just one of a number of specialists claiming that, when installed in the right location, small wind can give the highest return on investment of all the renewable energy technologies — with a payback period of just three to five years being achieved under the government's new feed-in tariffs scheme.

With a range of small-scale wind turbines, from 2 to 50 kW, the company says its installations are ideal for farmers, country estates, golf courses and domestic properties with large gardens or adjoining fields — locations with the significant amount of space needed for the technology to work at its best.

Small wind suppliers have been quick to capitalise on the UK government's feed-in tarrif, introduced in April 2010. The levels of generation tariffs vary based on the size of technology installed, so a 1.2 kW micro wind turbine will be paid just over 34p/kWh($0.5/kWh) while a 6 kW turbine will receive slightly less.

An Ampair 6 kW turbine has a 5.5 metre rotor diameter (Source: Ampair)

As another example, the owner of a 10 kW turbine would earn 26.7 p/kWh, regardless of whether the energy is used by the owner or exported onto the grid. Energy exported to the grid attracts a further payment of at least 3p/kWh. Also, energy used on-site offsets the energy bill and is typically worth another 12p/kWh.

Overall, a 10 kW turbine owner with a strong wind resource could reap up to an extra £14,000 ($21,000) per turbine per year. In England, Scotland and Wales, all the owner has to do is select an approved technology, such as a wind turbine that has qualified for the Microgeneration Certification Scheme (MCS), and install it using an MCS-accredited installer.

As the small wind industry has matured, so also has the range of services offered by suppliers. First, it is necessary to obtain a reliable estimate of the wind speed at the proposed site, and most companies now have facilities to provide this service. The generator must get acceptance for connection to the electricity distribution network, if applicable, and installers are offering this capability, also, just as they are able to consult local planning authorities on behalf of customers. Owners may also find it preferable to choose a supplier which is accredited for support schemes such as ROCs, LECs, and REGOs, and determine what type of on-site or export metering they must have (if applicable). By changing to a green electricity supplier, owners can generate a substantial return on a microgeneration tariff.

Although the costs associated with small wind installations have come down, in the main, wind turbine prices vary widely due to the numerous factors. AWEA has conducted a survey in the US which indicates costs, generally, tend to gravitate between $3 - 6/W, and $0.15 - 0.20/kWh for a well-sited turbine. Costs and cost recoupment periods can vary due to a range of factors. They include the availability and quality of state incentives and state/utility net metering policies, average wind speeds, and prevailing costs.

Installations tend to be most cost-effective in regions where the cost of utility provided electricity exceeds $0.10/kWh. Cost of equipment, installation, and maintenance, estimated operations and maintenance (O&M costs are roughly 1% of the retail cost of an installation, accrued annually) sales and property tax rates and incentives, raw manufacturing materials, insurance, method of financing, permitting costs, and the type of application also play a role in determining expense. Installations for businesses may benefit from special tax incentives.

Overall, the industry in the US at least, appears to be heading for sustained growth; the question is at what rate. If trends in investment and policy support continue, America may very well reach the industry's projection of installing more than 1 GW of cumulative capacity by 2015. AWEA says that, despite the economic downturn, the US market for small wind turbines (those with rated capacities of 100 kW and less) grew by 15% in 2009 with 20.3 MW of new capacity and $82.4 million in sales. This growth equates to nearly 10,000 new units and pushes the total installed capacity in the US to 100 MW. Half of this 100 MW milestone capacity came within the last three years of the industry's 80-year history.

Manufacturers attribute this growth to a mixture of new and improved federal and state incentives, optimistic private equity investors, and sustained consumer demand. An example is the 2009 American Recovery and Reinvestment Act, which expanded the federal investment tax credit (ITC) for small wind turbines, allowing consumers to take fully 30% of the total cost of a small wind system as a tax credit. Furthermore, in the same year another $80 million of private equity was invested in manufacturing during the peak of the economic recession, boosting to at least $252.7 million the total equity invested across 20 manufacturers over the past five years. This provided companies with capital to increase production, lower costs, meet sustained demand, and even acquire competitors.

Even the smallest of wind turbines can produce several hundred kWh a year, equivalent to 5%-20% of an average home's annual needs in the developed world. In the right location, a larger 20 metre tall free-standing turbine can generate tens of thousands of kWh a year, producing the vast majority of the power a building uses. A small-to-medium turbine of 50 metres in total height could supply enough energy for 60 homes, or equal to the needs of a factory, small business or farmstead.

 


Around the Companies

Ampair Energy went back to the drawing board when creating the design for the Ampair 6000, with the brief to create a low cost and virtually maintenance free turbine that could maximise revenue from feed-in tariff's now offered by many countries.

Another key requirement, each machine includes a web communications package directly linked over standard GPRS mobile phone networks to the myAmpair internet server for remote monitoring.

Ampair says the introduction of the FIT in April this year had an 'exceptional' effect on the market, with interest in its FIT-eligible products 'going through the roof'. Similar FIT schemes are in effect or are coming into effect overseas and this is driving the same upsurge in interest for our international sales. The company has recently expanded to premises that are 10 times as large as its previous plant.

Evance Wind has announced that two turbines were installed on Orkney Mainland and South Ronaldsay towards the end of 2010. Each turbine is expected to produce some 17 MWh/year at an average wind speed of 7 m/s. As the R9000 is fully Microgeneration Certification Scheme (MCS) certified, owners will receive a FIT income.

Helix Wind was recently awarded a Notice of Allowance relating to a US patent application filed in 2007 which covers segmented, helical rotors and will prevent competitors from selling similar turbines.

Meanwhile, Proven Energy's flagship 35-2 machine is now fully MCS certified. MCS is an internationally recognised quality assurance scheme which provides consumers with confidence in microgeneration products.

Southwest Windpower has unveiled its newest and most efficient small wind turbine — Skystream 600 — which could put wind energy in thousands of homes and businesses worldwide. Skystream 600 produces 74% more energy than its predecessor-making it the most efficient power grid-connected turbine in its class, its developers say. Providing an average of 7.4 MWh/year per household in 12 mph (19 kph) average annual wind speeds. A Skystream 600 could provide up to 60% of an average home's energy requirements.

Southwest Windpower (SWWP), the biggest among the world's 250 small wind makers and the 95 manufacturers in the US, has sold 170,000 turbines since its 1987 founding. Andrew Kruse, SWWP's Founder and Senior Vice President of Business Development, said his company foresees a coming US market worth US$2-7 billion — and that may not be the real small wind growth opportunity.

'In the big picture, this industry is only about 10 years old,' Kruse said, 'It is evolving. Last year, half our revenue was towards grid-tied and half of it was battery charging. We still do a lot of work with telecoms, sail boats, offshore platforms and things like that. But that is changing very rapidly, and we expect this year the grid-tied market will be a much larger part of our business.'

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