Will Small Wind Get the Love that Solar Has?

Investment and growth in the cleantech sector has been driven in the last 2 to 3 years by the solar photovoltaic, large scale wind, and ethanol sectors. For years solar PV has, on a per kw basis relative to other technologies, received massive rebates and tax credits that underpinned its growth, and large scale wind power has had its production tax credit to anchor the industries’ rise, but solar thermal and small wind systems have been largely left out in the cold in this cleantech boom.

Perhaps that is changing for micro wind?

The CEO of Mariah Power, one of the micro wind turbine startups we follow, turned me on to a recent bill in Congress that might even the playing field for small wind. I’ve excerpted his notes in quotes below.

“Recently, Senator Ken Salazar (D-Colo.), along with Senator Gordon Smith (R-Ore.) introduced a bill that would provide $1500 per 1/2 kilowatt (kW) of capacity to customers seeking to purchase a small wind turbine, the same credit that solar is currently pursuing. In addition to this credit, the bill would provide accelerated 3-year depreciation and an Alternative Minimum Tax exemption.

A press release on this bill, S. 673, the Rural Wind Energy Development Act, can be found here.

This bill will provide an investment tax credit for the purchase of small wind systems (rated at 100 kilowatts and below) for homeowners, small businesses, and farmers. This credit is critical to sustaining the growth of this clean, renewable, and emissions-free energy technology while helping individuals and communities become more independent from unpredictable prices and supplies of traditional sources of energy.

Currently there is no federal support for small wind systems. Residential solar and fuel cell systems, however, which share the same competitive market as small wind, have been receiving a 30% federal tax credit. The federal Production Tax Credit (PTC) applies only to large utility-scale wind projects, not to individuals who want to install their own wind systems for on-site power. Federal support would help broaden the industry on a national scale.”

The growth of our cleantech and alternative energy industries have always been heavily influenced by the policy and subsidy environment, so how the debate plays out is critical to understanding where the product and investment opportunities may lie for any given clean technology.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog and a Contributing Editor to Alt Energy Stocks.

5 replies
  1. Anonymous
    Anonymous says:

    very interesting, and potentially a great boon for the micro wind industry. I would like to find a discussion/listing of micro wind companies that have the potential to break into the US market – both rural and urban. Any ideas?Thanks for the info – richard

  2. Tom Konrad
    Tom Konrad says:

    Neal, I agree small wind (and CSP and geothermal) are certainly lacking for love when it comes to government support… but when comparing subsidies we should also keep in mind the government largesse heaped on Clean Coal (which will never be clean so long as they're blowing up mountains to get the coal, nor will it be cheap when combined with any meaningful level of carbon sequestration… CSP will likely be cheaper than IGCC with 90% carbon sequestration on a per-kWh basis.) and nuclear… government has never been good at awarding money to the most deserving causes. Helping out small wind is worth doing… I just wish that renewable energy and energy efficiency did not have to fight for every crumb in the face of giant subsidies for unsustainable technologies.

  3. Nick Dalacu
    Nick Dalacu says:

    Wind and oil and hydro and bio-fuel; there is not enough of these form of energy for the 21st century civilization. The only thing out there is the sun with enough shining power to secure a comfortable life on earth. It will be photovoltaics, thermophotovoltaics, simulated photosynthesis, nanotechnology, or something new that does one thing: convert directly, efficient, without moving parts, light into electricity. We better agree quickly on that. The time is running out. I do not want to put down none of the sources of energy; they will become too precious in short time. However there is only one big picture and we all have to see it before looking at anything else.

  4. Jeremy Stieglitz
    Jeremy Stieglitz says:

    The "love" and lack thereof for small wind has lots of dimensions to it. From an end user standpoint, it's tough to use:1. Determining your payback isn't straightforward and requires measuring your wind speeds over time.2. Requires complex siting and permitting.3. May require towering4. {Network effect} No large ecosystem of installers/system integrators5. Confusion if and whether subsidies exist.From an investor standpoint, small wind is mostly unappealing:1. Hard to evaluate technology differentiation2. Perceived as "bunch of mechanical metal up in air" with high startup costs and little competitive protection3. Mental mapping: It's more sunny than windy where most investors live.4. No "10x" left; market perceived to be mature from technology/innovation standpoint, and gains from here are only incremental.5. Total market perceived to be poor. Graveyard of dead and failed small wind companies, two surviving firms make <$30m combined. Seen as existing in "rural" and "farm" scale only. Outside of the users and the investors, there are macro issues hurting the love for wind. Last but not least, if you parse the data available from CEC on solar purchasing, you'll see a lot of buying behavior NOT driven by economics. People are spending a lot of money on solar for systems that give them a poor return on their money – subsidies or otherwise.That means that the buying behavior is something other than economic. Call it "social" or "green".So can wind systems fit into social buying? Perhaps, but aesthetics clearly play a larger role when the buyer is motivated by the "social" aspects of their energy purchase.Will wind every be loved?When we get into real "power crunch" time (e.g. electricy isn't dirt cheap, and/or there is a real direct cost to carbon emissions) small wind power could be very compelling. #1. In power crunch, we won't use the near-worthless notion of "nameplates". (Comparing systems by their peak power output under best conditions.) Instead, yearly power output will be used. (think $/yearly kWh instead of $/watt). Wind power delivery is more consistent, and the power delivery over the year is substantially better (2-3x) than the nameplate comparisons of wind "vs" solar. By this math, in good wind sites, wind is already 10x better than solar (3x cheaper on 1kwh and 3x more productive)2. Wind turbines rely on many of the same burdened cost structures as solar. A million solar homes are going to create lots of shared economies of scale for wind. That means cost reductions to inverters make small wind more compelling as well. Of those million homes, if some enlightened system integrators start doing "hybrid" installs in good wind sites, that alone could drive demand for 50,000-100,000 turbines. #3. All power is geography. When power becomes more precious/scarce, we'll be forced to pay more attention to geography. That means, we'll take tidal power under bridges, solar power in strong sun, and wind power in high wind. More importantly, we'll pay attention to watts/meter (sorry, that should be: yearly kwh/meter). In urban settings, (such as tall rooftops) wind can achieve on the order of 10x the energy ouptut per square meter. Again, nobody is paying attention to energy footprints in linear feet, but it will come when the decision making is driven more by economics.4. Related to geography is of course, application. There are applications where wind and only wind can deliver power (think cell towers or mountain top army bases)Having congress drive small wind is important and useful. I think a bigger/better role may take place inside green design. (LEED and Green Buildings Council) That group can best overcome siting/aesthetics and also help penetrate vibrant and exploding mid-scale commercial market.) As proof, you already see tremendous "love" for wind in rest-of-world. Small wind purchasing in China and India, are growing like gangbusters. Those buyers presumably have considerably higher economic and reliable supply issues, and have probably never measured anything on a nameplate basis 🙂 In summary, wind love may happen, but it will need an honest energy "shock" to create it. I should also state that I have my own biases as I am involved in a startup developing advanced VAWT systems optimized for where we work and live. Check out link if you're so inclined.thanks,jeremyp.s. would also love to see the name change from "small wind" to "distributed wind". The irony of calling sub 100kw wind power 'small 'just goes to show how incredibly biased we are to solar. (How many solar installs as a percentage of solar are >100kw?)- Jeremy

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