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Innovation for Our Energy Future

Technical Report
Distributed Wind Market NREL/TP-500-39851
Applications November 2007

T. Forsyth and I. Baring-Gould

NREL is operated by Midwest Research Institute ● Battelle Contract No. DE-AC36-99-GO10337

 Technical Report
Distributed Wind Market NREL/TP-500-39851
Applications November 2007

T. Forsyth and I. Baring-Gould

Prepared under Task No. WER6.7502

National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393
303-275-3000 • www.nrel.gov
Operated for the U.S. Department of Energy
Office of Energy Efficiency and Renewable Energy
by Midwest Research Institute • Battelle
Contract No. DE-AC36-99-GO10337
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Table of Contents
CHAPTER 1. EXECUTIVE SUMMARY.................................................................................................................1
I. SUMMARY OF MARKET POTENTIAL ........................................................................................................................3
II. SUMMARY OF DOMESTIC MARKETS FOR DISTRIBUTED WIND TECHNOLOGIES .....................................................4
III. SUMMARY OF INTERNATIONAL MARKET FOR DISTRIBUTED WIND TECHNOLOGIES ............................................8
IV. MARKET-BASED BARRIERS TO THE DISTRIBUTED WIND MARKET ....................................................................11
V. TECHNICAL BARRIERS TO THE DISTRIBUTED WIND MARKET .............................................................................12
VI. ACKNOWLEDGEMENTS ......................................................................................................................................13
VII. CONCLUSION ....................................................................................................................................................13
CHAPTER 2. SMALL-SCALE REMOTE OR OFF-GRID POWER..................................................................15
I. EXECUTIVE SUMMARY .........................................................................................................................................15
II. APPLICATION BACKGROUND ...............................................................................................................................15
III. CURRENT STATUS OF SMALL-SCALE WIND .......................................................................................................16
IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................17
Expected United States Market ..........................................................................................................................17
Expected International Market...........................................................................................................................17
Technology Adoption Timeframe .......................................................................................................................19
Non-Technical Barriers for Technology Adoption.............................................................................................20
Time-Critical Issues ...........................................................................................................................................22
Incentive Markets...............................................................................................................................................22
Utility Industry Perspectives ..............................................................................................................................22
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................23
Barriers for Small-Scale Turbines .....................................................................................................................23
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION .................................................................................26
Technical Challenges.........................................................................................................................................26
VII. CONCLUSIONS ..................................................................................................................................................30
VIII. REFERENCES ...................................................................................................................................................31
CHAPTER 3. RESIDENTIAL POWER .................................................................................................................32
I. EXECUTIVE SUMMARY .........................................................................................................................................32
II. APPLICATION BACKGROUND ...............................................................................................................................33
III. CURRENT STATUS OF GRID-CONNECTED RESIDENTIAL DISTRIBUTED GENERATION .........................................34
The Future..........................................................................................................................................................34
IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................35
Expected United States Market ..........................................................................................................................35
Expected International Market...........................................................................................................................39
Technology Adoption Time Frame.....................................................................................................................40
Non-Technical Barriers for Technology Adoption.............................................................................................41
Economics ..........................................................................................................................................................41
Lack of Incentives...............................................................................................................................................44
Subsidy Market for Residential Wind Distributed Generation...........................................................................46
Utility Industry Impact of Residential Distributed Generation ..........................................................................46
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................49
Technology Barriers for Distributed Wind Generation .....................................................................................49
Expected Turbine Size for Residential Distributed Generation .........................................................................52
Required Cost of Energy ....................................................................................................................................53
Seasonality and Geographic Nature of Wind Resource .....................................................................................54
Impact of Intermittency on Residential Wind Energy.........................................................................................55
Interface between Turbine and Wind-Distributed Generation...........................................................................55
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION .................................................................................55
The Future..........................................................................................................................................................55
VII. CONCLUSIONS ..................................................................................................................................................58
VIII. ACKNOWLEDGEMENTS....................................................................................................................................59
IX. REFERENCES ......................................................................................................................................................59

i
 X. BIBLIOGRAPHY ...................................................................................................................................................61
CHAPTER 4. FARM, INDUSTRY, AND SMALL BUSINESS ............................................................................61
I. EXECUTIVE SUMMARY .........................................................................................................................................61
II. APPLICATION BACKGROUND ...............................................................................................................................62
III. CURRENT STATUS OF ACTIVITIES FOR THIS APPLICATION .................................................................................62
IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................63
Expected Market in the United States ................................................................................................................63
Expected International Market...........................................................................................................................65
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................65
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION .................................................................................66
VII. CONCLUSIONS ..................................................................................................................................................67
VIII. REFERENCES ...................................................................................................................................................69
XI. BIBLIOGRAPHY ..................................................................................................................................................69
CHAPTER 5. “SMALL-SCALE” COMMUNITY WIND POWER ....................................................................70
I. EXECUTIVE SUMMARY .........................................................................................................................................70
II. APPLICATION BACKGROUND ...............................................................................................................................71
III. CURRENT STATUS OF COMMUNITY WIND ..........................................................................................................72
IV. MARKET BARRIERS ISSUES & ASSESSMENT ......................................................................................................74
Expected U.S. Market for “Small-Scale” Community Wind Applications.........................................................74
Expected International Market for “Small-Scale” Community Wind Applications...........................................75
“Small-Scale” Community Wind Technology Adoption Time Frame................................................................76
Non-Technical Barriers for “Small-Scale” Community Wind Technology Adoption........................................78
Time-Critical Nature of “Small-Scale” Community Wind Technology .............................................................80
Subsidy Market for “Small-Scale” Community Wind ........................................................................................82
Utility Industry Impact of “Small-Scale” Community Wind ..............................................................................82
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................83
Technology Barriers for “Small-Scale” Community Wind................................................................................83
Complexity of “Small-Scale” Community Wind Technology Barriers ..............................................................85
Expected Turbine Size to Meet “Small-Scale” Community Wind Market .........................................................85
Required Cost of Energy to Compete in “Small-Scale” Community Wind Market ...........................................86
Seasonality and Geographic Nature of Wind Resource .....................................................................................86
Impact of Intermittency ......................................................................................................................................86
Interface for “Small-Scale” Community Wind ..................................................................................................87
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION .................................................................................88
The Future..........................................................................................................................................................88
VII. CONCLUSIONS ..................................................................................................................................................91
VIII. ACKNOWLEDGEMENTS....................................................................................................................................91
IX. REFERENCES ......................................................................................................................................................92
X. BIBLIOGRAPHY ...................................................................................................................................................93
XI. APPENDIX A ......................................................................................................................................................95

ii
Table of Figures
Figure E.1. Overview of market segments and commercial wind turbines ........................................ 3
Figure E-2. Market projections using number of units installed in the United States ........................ 5
Figure E.3. Incremental domestic installed capacity by sector through 2020 .................................... 7
Figure E.4. Potential capacity variation for all domestic market segments........................................ 8
Figure E.5. Incremental international installed capacity by sector through 2020 without data for
off-grid or small-system segment (which is too large to show graphically)................................. 10
Figure E.6. Potential capacity variation for all international market segments .................................. 10
Figure 3-1. Renewable energy system end-use information from Home Power readers’ survey ...... 36
Figure 3-2. Renewable energy end-user information from Home Power readers survey .................. 38
Figure 3-3. Constructing a demand curve for DWT – experience from PV [27] ............................... 44
Figure 3-4. United States residential average retail price of electricity by state, 2004 (cents/kWh).. 54
Figure 5-1. United States large- and small-scale community wind energy market upper-bound
growth forecast.............................................................................................................................. 72

Table of Tables
Table E.1. Market Projections of Domestically Installed Units ......................................................... 5
Table E.2. Projected Domestic Installed Capacity (MW) by Sector through 2020............................ 6
Table E.3. Cumulative Installed International Capacity in MW by Sector through 2020.................. 9
Table 2-1. Electrical Access in Developing Countries by Region (Year 2000) ................................. 20
Table 2-2. Summary Information Table: Small-Scale Remote Power (Residential or Village) ........ 29
Table 3-1. 2006 Survey Responses on Grid-Connected Residential Wind Market Barriers.............. 43
Table 3-2. Small Wind Programs by State.......................................................................................... 48
Table 3-3. 2006 Grid-Connected Survey Responses .......................................................................... 51
Table 3-4. Average Customer Load in kWh/year, by State and Segment .......................................... 53
Table 3-5. Summary Information Table: Residential Power .............................................................. 57
Table 4-1. Summary Information Table: Farm, Industry, and Small Business .................................. 68
Table 5-1. 2006 Survey Responses on “Small-Scale” Community Wind Market Barriers................ 80
Table 5-2. 2006 Survey Responses on “Small-Scale” Community Wind Technical Barriers ........... 84
Table 5-3. Summary Information Table: “Small-Scale” Community Wind Power ........................... 90
Table 5-4. Community-Owned Wind Projects Utilizing Turbines from 100 kW to 1,000 kW ......... 95

iii
Chapter 1. Executive Summary

The Executive Summary will discuss the distributed wind market potential from a domestic and
international perspective with greater confidence in the number of units installed for the
domestic market. The market potential discussion will be followed by a summary of information
provided in each chapter, including regions of market interest for both the domestic and
international market, key market and technical barriers, time-critical issues for market
development, technology adoption timeframe, and recommended areas of concentration.

Distributed wind energy systems provide clean, renewable power for on-site use and help relieve
pressure on the power grid while providing jobs and contributing to energy security for homes,
farms, schools, factories, private and public facilities, distribution utilities, and remote locations.
America pioneered small wind technology in the 1920s, and it is the only renewable energy
industry segment that the United States still dominates in technology, manufacturing, and world
market share.

The series of analyses covered by this report were conducted to assess some of the most likely
ways that advanced wind turbines could be utilized as an option to large, central station power
systems. Each chapter represents a final report on specific market segments written by leading
experts in each sector. As such, this document does not speak with one voice but rather a
compendium of different perspectives from the U.S. distributed wind field.
For this analysis, the U.S. Department of Energy (DOE) Wind and Hydropower Technologies
Program and the National Renewable Energy Laboratory’s (NREL’s) National Wind Technology
Center (NWTC) defined distributed applications as wind turbines of any size that are installed
remotely or connected to the grid but at a distribution-level voltage.
Distributed wind systems generally provide electricity on the retail side of the electric meter
without need of transmission lines, offering a strong, low-cost alternative to photovoltaic (PV)
power systems that are increasingly used in urban communities. Small-scale distributed wind
turbines also produce electricity at lower wind speeds than large, utility-grade turbines, greatly
expanding the availability of land with a harvestable wind resource. These factors, combined
with increasingly high retail energy prices and demand for on-site power generation, have
resulted in strong market pull for the distributed wind industry, which is poised for rapid market
expansion.
Seven market segments were identified for initial investigation. These market segments,
documented in this report, include small-scale remote or off-grid power; residential or on-grid
power; farm, business, and small industrial wind applications; and “small-scale” community
wind. A summary of the market for remote wind-diesel applications is also included in this
summary, although a full report was never completed. The remaining two market segments,
water pumping for large-scale irrigation and water desalination, are currently being assessed as
part of other program activities and are not included at this time. While some of these market
applications have existed for some time, others are just beginning to emerge as part of distributed
wind power. A short introduction to each of these assessments is provided below.

• Small-scale remote or off-grid power (residential or village): Supplying energy to

rural, off-grid applications in the developed and developing world. This market

1
 encompasses either individual homes or small community applications and is usually
integrated with other components, such as storage and power converters and PV systems.
• Residential or on-grid power: Small wind turbines used in residential settings that are
installed on the house side of the home electrical meter using net metering to supply
energy directly to the home. Excess energy is sold back to the supplying utility.
• Farm, business, and small industrial wind applications: Supplying farms, businesses,
and small industrial applications with low-cost electric power. The loads represented by
this sector are larger than most residential applications, and payback must be equivalent
to similar expenditures (4 to 7 years). In many cases, businesses are not eligible for net
metering applications; thus the commercial loads must use most of the power from the
turbine.
• “Small-scale” community wind: Using wind turbines to power large, grid-connected
loads such as schools, public lighting, government buildings, and municipal services.
Turbines can range in size from very small, several-kW turbines to small clusters of
utility-scale multi-megawatt turbines. The key, defining factor is that these systems are
owned by or for the community.
• Wind/diesel power systems: Providing power to rural communities currently supplied
through diesel technology in an effort to reduce the amount of diesel fuel consumed. The
rising cost of diesel fuel and increased environmental concerns regarding diesel fuel,
transportation, and storage have made project economics more sensible.
• Irrigation water pumping: Using wind turbines to supply energy for agricultural
applications. Current applications are powered by grid electricity, diesel, gasoline,
propane, and particularly natural gas. Wind or hybrid systems allow farmers to offset use
of high-priced fossil fuels.
• Water desalination: Using wind energy to directly or indirectly desalinate sea or
brackish water using reverse osmosis, electrodialysis, or other desalination technologies.
The economic and technical performance of wind-powered desalination depends on the
configuration and placement of wind resource with regard to the impaired water and
existing energy resources. Water desalination works well with the wind resource found in
coastal or desert environments.

In these analyses, the DOE Wind and Hydropower Technology Program is assessing two new
segments that have not historically been classified under the distributed wind banner: farm/
commercial and the “small-scale” community wind market. Both of these markets struggle to
find commercial turbines to meet their needs, demonstrating opportunity for the development of
U.S. turbines.

These two emergent market segments combined with the existing small wind market result in
three conglomerated turbine capacities. The first is the residential and smaller business sector at
roughly 0 kilowatt (kW) to 100 kW capacity. The second sector is the farm/commercial market
sector that includes farm, industrial, and wind/diesel from 100 kW to 500 kW. The last market
sector for distributed wind is the “small-scale” community wind sector, which has been
estimated to be 500 kW to 1 megawatt (MW). Although not covered specifically within this
analysis, there is also likely a need to develop methodologies to lower the cost of power from
large, multi-megawatt turbines that are installed in distributed community applications. Further
hardware development in all of these sectors would help meet the desires of Americans to

2
 provide their own electricity, whether for a residence, farm, or business in rural America where
zoning challenges are minimized.

This study identifies and describes how the distributed wind industry can overcome long-
standing barriers and play an important role (in the United States and the international arena) in
supplying power near the point of end use or behind the meter.

I. Summary of Market Potential

Authors were asked to conservatively assess the potential market size for the five market
segments in terms of the number of units expected to be installed in 5-year increments through
2020. Additionally, authors were asked to recommend the expected turbine size that would be
most applicable to meet the proposed markets. Figure E.1 shows an overview of the different
market segments, the kilowatt capacity of the turbines for each market segment, and the existing
turbines available within each distributed market segment.

Market Segments

Small-Scale Remote Power US

International

Residential Power

Farm/Business/Ind Power Irrigation, Industrial

Net Billing, on-site

Wind/Diesel Power

“Small-Scale”” Community Power

10 20 50 65
300W 1 kW 5 kW 100kW 200kW 300kW 400kW 500kW 600kW 700kW +
kW kW kW kW

DOE Size Categories Distributed Wind Turbine Commercial/Farm Small-Scale Community

US Commercial Products

Non-US Commercial Products*

Refurbished
Commercial
* - Currently sold in the US 4/27/06
Prototype

Figure E.1. Overview of market segments and commercial wind turbines

From a manufacturing perspective, the strongest market segment is turbines smaller than 10 kW
in size, with 20 domestic or internationally manufactured turbines to choose from. The number

3
of turbine choices between 20 kW and 100 kW is quite limited, and turbines between 100 kW to
1 MW are practically nonexistent.

It should be noted that the re-powering of wind farms in Europe and the United States has made
available re-manufactured turbines that are being used to supply many current distributed
applications. Although generally inexpensive compared to existing new turbine models, most of
these are based on significantly outdated technology. Turbine design, reliability, and energy
capture have been improved over the intervening time, resulting in current projects with reduced
energy capture than would be expected from projects with turbines incorporating current
technology and design practices.

II. Summary of Domestic Markets for Distributed Wind Technologies

Teams of technical experts with knowledge of their market segments provided the market
projections summarized below. Each of these experts was asked to provide a conservative
estimate to ensure the report validity in retrospect. It should be noted that NREL did not attempt
to validate the expected market data from these market summary reports.

The benefits from distributed wind projects are minimized when quantified using total
megawatts of installed capacity, especially for the smaller distributed turbines. However, the use
of a simple number of units produced reduces the visibility of the mid-size turbines used in the
farm/commercial, wind/diesel, and “small-scale” community wind segments. For this reason, the
summary results are presented in terms of both the number of units and total installed capacity. It
should be noted that the estimates of the number of units and thus the total installed megawatts
are very rough and should only be considered in relative terms. The DOE Wind and Hydropower
Program is in the process of conducting more detailed market assessments for the segments that
show the most promise.

Table E.1 summarizes the cumulative number of expected domestic turbine sales over the five
market segments. Note that the table also presents the turbine size for each market segment.
Currently the largest sector in terms of the number of installed units is the small-scale remote or
off-grid power market segment. The majority of these off-grid units have a lower capacity, with
a typical turbine size in the range of a few kilowatts or less. All market segments combine to a
potential total of 680,000 installed units by the end of 2020.

There are several market niches within the domestic off-grid segment, specifically in Alaska and
Native American communities. An example is the Navajo Nation—approximately one-third of
the 250,000 people on the reservation lack electricity.

The estimated market growth across 15 years to 2020 is 11% per year for the small-scale remote
or off-grid market segment; 22% per year for the residential or on-grid segment; 48% across the
farm, business, and small industrial segment; 26% per year for the wind/diesel segment; and 23%
per year for the “small-scale” community segment.

4
 Table E.1. Market Projections of Domestically Installed Units
Farm, Industrial & " Small Scale"
Off-grid Residential Business Community Wind/Diesel
Turbine Large: 250-400 kW
size 300 W - 60 kW 1 - 25 kW Net Bill: 10-60kW 100 - 1000 kW 100 - 300 kW
2005 125,700 1,800 20 150 65
2010 219,450 6,250 1,270 360 565
2015 455,450 14,000 4,270 1,010 1,565
2020 631,450 36,500 7,395 3,235 2,190

These data are shown graphically in Figure E.2. The off-grid market segment is excluded due to
its dominance of the graph, which reduces the reader’s ability to see the effects of other market
segments. With the off-grid data removed, the residential market segments show that on a unit-
production basis, residential leads the distributed market segment. From a manufacturing
standpoint, in which high volume can reduce cost, the high number of units should be attractive.

60,000
50,000
Number of Units

40,000
30,000
20,000
10,000
0
2005 2010 2015 2020
Year

Residential Farm, Industrial & Business

" Small Scale" Community Wind/Diesel

Figure E-2. Market projections using number of units installed in the United States

Table E.2 and Figure E.3 show these same data based on the expected cumulative installed
domestic capacity of the turbines in these market segments. This figure provides a different view
of the markets in that although fewer turbines will be installed in either the farm or community
wind markets, their capacity (in terms of rated kilowatts) is much larger than the cumulative sum
of the smaller residential and off-grid market segments.

It should also be understood that the “small-scale” community wind market was arbitrarily
capped at a maximum turbine size of 1 MW. It is quite clear that a vibrant community wind
market exists that uses turbines greater than 1 MW in size, with multiple installations reaching
up to 20-MW sites. Further DOE market assessment activities will likely extend this size range

5
of turbines to be considered to include turbines up to 1.5 MW in size.

Table E.2. Projected Domestic Installed Capacity (MW) by Sector through 2020
Farm, Industrial & " Small Scale"
Year Off-grid Residential Business Community Wind/Diesel
Turbine Large: 325 kW
size 1 kW 12.5 kW Net Bill: 30 kW 750 kW 200 kW
Cumulative installed capacity (MW)
2005 126 23 4 113 13
2010 219 78 260 270 113
2015 455 175 875 758 313
2020 631 456 1,516 2,426 438

Table E.2 shows the market segment with the largest installed capacity as “small-scale”
community wind, followed by the farm, business, and small industrial market segment. Note that
the farm, business, and small industrial market segment shares the same size turbine capacity as
the wind/diesel market segment. Technological solutions would likely address both market
segments. And combining the total projected market capacity of the farm, business, and small
industrial segments results in approximately the same total as the “small-scale” community
segment.

To date, approximately 270 MW of community wind projects are installed in the United States,
representing $250 million in investment in rural communities. Of those, 110 MW would meet the
“small-scale” community wind definition of 1 MW or less. At least 440 MW of new community-
owned wind projects are in the advanced planning states in the United States; however, project
developers expect to utilize turbines larger than 1 MW for nearly all of this future capacity (due
to their better economics and availability).

Figure E.3 shows the total of all five market segments, resulting in 5.4 gigawatts (GW) of
projected capacity by the end of 2020.

6
 6,000
5,000
Installed Capacity, MW

4,000
3,000
2,000
1,000
0
2005 2010 2015 2020
Year
Off-grid Residential
Farm, Industrial & Business " Small Scale" Community
Wind/Diesel

Figure E.3. Incremental domestic installed capacity by sector through 2020

A number of capacities were presented for each market segment, as shown in Tables E.1 and E.2.
Each market segment chapter provides a range of market potential for 2010, 2015, and 2020
(found in each chapter’s Summary Information Table). Based on those data, we evaluated the
total market potential assuming minimum values of capacity and market potential, likely values
of capacity and market potential (as shown in the above tables and figures), and the maximum
value of capacity and market potential. Figure E.4 shows the bars, which represent the likely
value of installed capacity in megawatts. The lines for each bar show the minimum and
maximum for future years.

7
 50,000

45,000
40,000

Installed Capacity, MW
35,000
30,000
25,000

20,000
15,000
10,000
5,000

0
2005 2010 2015 2020
Year

Figure E.4. Potential capacity variation for all domestic market segments

A large variation exists between the minimum and maximum value for the year 2020. This is due
to several factors, including uncertainty about the optimum turbine size for each market segment,
uncertainty in the removal of market barriers that are needed to propel the market forward, and
uncertainty in the technology cost and the competitiveness of new products in the marketplace.

III. Summary of International Market for Distributed Wind Technologies

Although not the focus of this work, each of the market segment authors was asked to estimate
the international market for distributed applications. It should be noted that international market
information is notoriously difficult to measure, and the scope of these documents only allowed a
cursory investigation.

The international market is of special interest because unlike the market for large wind turbines,
U.S. small wind turbine manufactures currently hold a dominant market share. U.S.
manufacturers of small and distributed wind turbines represent the most diverse and
internationally recognized industry in this technology area.

Table E.3 provides a summary of the international market potential as identified in the market
segment reports. Note that the table also presents the turbine size for each market segment. The
largest sector in terms of installed megawatts is the community wind market segment.
Historically, the European Union has been the leader in community wind, with about 80% of all
the installed wind turbines considered community applications. This market is currently
estimated to be 8.2 GW of installed units under 1 MW.

8
In comparison to the domestic market, three international market items stand out. First, “small-
scale” community wind becomes a more dominant player in the world wind market, replacing
the substantially increased off-grid market. Second, wind/diesel applications become a stronger
market element. Finally, residential wind diminishes in importance. The off-grid market,
although not as large as “small-scale” community wind, still offers a huge potential. Although
most of this market potential is outside the developed world, China has a current installed
capacity of 170,000 mini wind turbines (60 to 200 W).

Table E.3. Cumulative Installed International Capacity in MW by Sector through 2020

Year Off-grid Residential Farm/Industrial/Bus Community Wind/Diesel
Turbine Large: 325 kW
size 5 kW 12.5 kW Net Bill: 30 kW 750 kW 200 kW
2005 2,361 14 0 8,250 10
2010 3,118 36 154 17,250 310
2015 6,275 99 410 40,125 1,810
2020 10,693 286 666 95,625 3,810

Table E.3 summarizes the cumulative capacity of expected international turbine sales over the
five market segments. Note that the table also presents the turbine size for each market segment
while Figure E.5 shows the expected number of installed units of each market segment,
excluding the off-grid or small-system segment, which is expected to grow at more than 150,000
units per year in 2020, and distorts the impact of the other market segments. The largest sector in
terms of the number of installed units is the off-grid or small-scale remote power market
segment; however, the majority of these off-grid units will have a lower capacity, with a typical
turbine size in the range of a few kilowatts or less. All market segments combine to a potential
total of almost 1,500,000 installed units by the end of 2020. The total year-over-year
international market grown is estimated at about 20%. It should be noted that due to the limited
data available to support these estimates, the range between minimum, likely, and maximum
values of capacity is quite large (Figure E.6).

9
 200,000
Number of Units

150,000

100,000

50,000

0
2005 2010 2015 2020
Year
Residential Farm, Industrial & Business
" Small Scale" Community Wind/Diesel
Figure E.5. Incremental international installed capacity by sector through 2020 without data for
off-grid or small-system segment (which is too large to show graphically)

200,000

180,000

160,000
Installed Capacity, MW

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0
2005 2010 2015 2020
Year

Figure E.6. Potential capacity variation for all international market segments

A robust market potential is estimated for the farm, business, and small industrial segment due to
strong economic policy (for example, the German “feed in” tariffs, in which high economic
value is given to the production of kilowatt-hours based in part on higher electricity rates). China
also has aggressive renewable energy goals, and there is already proven use of mini turbines.

10
IV. Market-Based Barriers to the Distributed Wind Market
Through this market analysis, several market-based barriers were identified that hinder the
development of the distributed wind applications market. Unless otherwise noted, many of the
barriers, which are described in basic rank order of importance, were found to be casual factors
in multiple market segments.
• Technology not quite cost competitive: Although markets exist in which incentive
programs can be combined to give consumers 50% cost-sharing of their turbines, further
cost decreases through volume manufacturing will be needed to allow appropriate
payback periods for most American consumers. (Markets in which distributed wind
technologies are cost effective exist in Class 3 to 4 wind resource areas and locations
with high electricity costs, such as remote diesel stations.)
• Turbine availability: In the current market, turbines sized between 100 kW and 1 MW
to serve farm, business, small industrial, wind/diesel, and small-scale community loads
are not produced. There is also a shortage of turbines sized greater than 1 MW because of
pre-purchases by wind developers using the Production Tax Credit. There are also
opportunities for turbine development in the 5-kW to 15-kW range to meet needs in the
residential market segment.
• Zoning/permitting restrictions or complications: Zoning remains a large issue for
distributed applications, specifically for individual home or business owners seeking to
install a small wind turbine on their properties in suburban America. The permitting costs
and zoning requirements can greatly increase the overall cost, lead time, and complexity
of installing even the smallest wind turbine. In most locations across rural America,
zoning and permitting are not an issue for smaller turbines, but those locations don’t
typically have the incentives in place to compel the purchase of a distributed wind
turbine. Model zoning ordinances for mid-size turbines currently do not exist, and there is
a need for them. These ordinances should consider proper setback for sound levels and
safety, as well as avian and other wildlife issues.
• Interconnection to the grid, including standards and defined requirements: Turbine
grid interconnection is a complex issue that varies from state to state and generally from
utility service provider to service provider. This creates a number of complexities, both
from a technology perspective and an information outreach perspective. With such a wide
range of requirements, it’s almost impossible for the industry and other supporting
organizations to provide informative assistance to interested homeowners.
• Lack of consistent incentive policies across markets: The lack of clear, consistent, and
economically motivating incentives complicates and distorts markets for small wind
systems. More systematic market incentives, such as “feed in” tariffs, a national
investment tax credit for distributed wind applications, and state-based rebates for all
distributed applications would expand the technology adoption.
• Poor image due to past small wind experiences: The historical performance of some
distributed wind turbines has resulted in a somewhat persistent belief that small wind
turbines are noisy, unsafe, and unreliable. Outreach activities addressing previous market
issues and some of the largest preconceived notions of modern small wind turbines are
needed.

11
V. Technical Barriers to the Distributed Wind Market
In addition to market barriers, technical barriers were also identified. A summary of these
barriers, all of which are discussed in greater length in each of the chapters, is provided.
• Product reliability and performance: Turbine and system reliability, especially in
distributed applications where service personal are less readily available, hinder the
adoption of wind systems. Performance is typically over-predicted (usually due to a poor
understanding of the wind resource, the micrositing of the turbine system, and
insufficient tower heights).
• Limited size choices using older designs: The limited number of commercial turbines
50 kW and greater, combined with non-optimized turbine efficiency and design, result in
missed market share. Many technological advances have been made on residential turbine
designs and multi-megawatt turbine designs, and these technological advances could be
applied to distributed turbines.
• Availability of maintenance support: By definition, distributed applications will not be
installed in organized wind farms where field support is readily available. The lack of or
additional cost of field support undermines technology acceptance.
• Lack of performance standards, testing, and ratings: The lack of industry-accepted
standards undermines the credibility of performance estimates for wind turbines. In many
cases, incentive organizations are unsure of which products to endorse and incent,
limiting the available product with good economic value.
• Technologies for low-wind regimes: Most mid-size wind turbines used in the
distributed market were designed before recent advances in low-wind-speed technology.
However, a large number of sites where distributed applications will be applied are not in
high-wind-speed regimes and would receive the most advantage of low-wind-speed
designs.
• Turbine noise: Although distributed turbines are becoming quieter with each successive
generation, some are still considered too noisy to be used in residential settings. Further
technical advances to reduce noise will allow turbines to operate in a wider variety of
settings.
• Lightning susceptibility and grounding: The susceptibility of distributed wind turbines
to lightning and the cost of lightning protection increase the cost and technical
complexity of wind systems.
• Grid interconnection and integration: The technical complexity and cost of
interconnection of small wind systems to the electric distribution grid require further
advancement, standardization, and testing. Distributing turbines through the use of more
sophisticated remote-monitored controllers can allow the turbine to support the weak
rural distribution systems, providing grid stability.
• Tower options for larger wind systems: Most towers are currently designed around
wind turbines for central station wind farms. To allow for more cost-effective installation
and maintenance, distributed wind turbines must be developed with towers and systems
specifically designed for the distributed wind market, such as self-erecting towers or
lightweight, tall towers for small turbines in rural low-wind-speed applications.
• Energy storage for remote power systems: Remote, non-grid-connected power and
water irrigation applications require some form of energy storage to supply consistent,
grid-quality electrical service. Energy storage is currently the highest life-cycle cost

12
 component of a remote power system. Improving the cost and technical performance of
energy storage will increase the applicability of wind-driven remote power systems.

VI. Acknowledgements
The following people and organizations completed the work summarized in this document:

The residential and “small-scale” community wind reports were written by a team led by Heather
Rhoads-Weaver of eFormative Options LLC. The residential market team includes Amy LeGere,
Brian Antonich, Johnny Holz, Steve Grover, Craig Hansen, Mick Sagrillo, Ed Kennell, Thomas
Wind, Ron Lehr, Meg Gluckman, and Thom Wallace. The “small-scale” community wind team
includes Brian Antonich, Lisa Daniels, Jonny Holz, Steve Grover, Craig Hansen, Mick Sagrillo,
Ed Kennell, Thomas Wind, Ron Lehr, Amy LeGere, Meg Gluckman, and Thom Wallace.

The small-scale remote power report was written by Robert Foster and L. Martin Gomez Rocha
from New Mexico State University – Southwest Technology Development Institute and Ken
Starcher and Vaughn Nelson from West Texas A&M University – Alternative Energy Institute.

The farm, business, and small industry report was written by Ken Starcher and Vaughn Nelson
from West Texas A&M University – Alternative Energy Institute and Robert Foster and Luis
Estrada from New Mexico State University – Southwest Technology Development Institute.

Additional reports were completed by Dustin Gaskins, Steve Amosson, Thomas Marek, DeDe
Jones, Bridget Guerrero, Lal Almas, and Fran Bretz of the Agricultural Research and Extension
Center, Texas A&M University; and James Janecek, Tom Acker, Abe Springer, Jan Theron,
Mark Manone, Grant Brummels, and Sean Martin of the Sustainable Water Resource Alliance
and Sustainable Energy Solutions Group at Northern Arizona University. Jesse Stowell of
Northern Power Systems also contributed to this report.

All of these teams have significant experience dealing with the market sector that they reported
on and have provided potential market growth estimates based on their experiences. Their reports
include a description of the market today, current market and technical barriers, their associated
time frames, and projected market growth for the domestic and international markets.

The authors would also like to thank the U.S. DOE Wind and Hydropower Technologies
Program for its support of this work.

VII. Conclusion
Distributed wind technologies provide an avenue for Americans and people from across the
globe to economically take part in the determination of the world’s energy future. Until recently,
most of the world’s population was dependent on outside forces to provide energy services,
primarily through large central-station power generation. Although individuals with adequate
financial resources have been able to rely on personal energy sources, such as photovoltaic
panels or small fossil-fueled generators, these personal energy sources have been out of reach for
many. The dramatic reduction in the cost and availability of distributed wind technologies,
combined with new policy incentives in many parts of the world, has started to change this
dynamic. This report documents a substantial market for distributed wind applications and,

13
although some technical and market-based barriers exist, none of them are insurmountable. The
report also indicates that there is much to be understood about this market and that further
analysis will be required in areas of specific interest. As the nation moves toward a posture of
energy independence using more environmentally friendly energy technologies and away from
large, central-station power generation and the large transmission lines that these will require,
distributed wind applications—from residential wind turbines connected to our homes to large
distributed wind and wind/diesel applications—can play a greater and significant role in our
energy portfolio.

14
Chapter 2. Small-Scale Remote or Off-Grid Power

Prepared by:
Robert E. Foster and L. Martín Goméz Rocha, New Mexico State University – Southwest
Technology Development Institute
Ken L. Starcher and Vaughn C. Nelson, West Texas A&M University – Alternative Energy
Institute
I. Executive Summary
This section evaluates the key market and technical barriers faced by wind energy technology for
the small-scale remote or off-grid power (residential and village) market sector. Market and
technical questions posed by the National Renewable Energy Laboratory (NREL) are discussed
to identify promising priority areas for U.S. Department of Energy (DOE) wind program
research and development activities.
Small-scale wind energy systems employing renewable energy offer an attractive and practical
approach to meet electrical power needs for individual households and rural communities around
the globe. Small wind turbines are a distributed energy source with good potential for rapid
growth in the next 20 years. The key to long-term success for any small-scale wind energy
system is to install a well-designed energy system while keeping in mind the institutional
framework and structure needed to provide long-term operation and maintenance for the system.
The small wind turbine industry is already a sustainable market around the globe. With about 1.7
billion people without electric grid power, the village electrification market is estimated to be at
least 26 GW [1]. Remote village power can be designed as a complete system with options of
wind, photovoltaics (PV), batteries, and diesel generators. The major challenges are system costs,
sizing system components, and establishing high-volume production of systems with a
corresponding price reduction.

II. Application Background

Small wind energy systems come in many sizes to fit the need for energy and the resources
available to the end users. This market encompasses single-home or small-community
applications by supplying electricity to rural, off-grid applications in the developed and
developing world. Sizes range from simple home-sized systems (60 W and up) to larger, village-
scale systems with hundreds of kilowatts of wind added to the generation mix. In the United
States, most consumers want to use wind energy to meet their energy needs at remote sites away
from the grid or to make themselves energy self-sufficient. Developing countries desire small
wind energy systems to supply energy for remote homes and villages without increased
infrastructure demands on the limited resources of the central governments.
Wind power can provide significant amounts of energy to rural households and communities
currently supplied through diesel technology and reduce consumption of diesel fuel. Small wind
offers capabilities for individual loads or a collection of loads to be met.
In some villages, positive exposure to the first small wind energy systems predictably has led to
an overall increase of energy use. Load management needs to be considered for each wind
system installation because system designers cannot plan for unlimited growth in their initial
system designs. Enforcing payments from the energy users seems one way to curb the

15
exponential growth in system load, but it is feasible only if the costs are kept low so that energy
value remains affordable.
High penetration for wind/diesel is defined as the wind providing at least 75% of the current
load. For high-penetration, wind/diesel power systems without energy storage, there are three
operating stages: (1) diesel only, (2) wind/diesel, and (3) wind only. The transition between these
three separate operation stages is the most difficult part of system control. Both the wind and the
load will fluctuate over short time periods.

III. Current Status of Small-Scale Wind

Small wind energy systems have been around for many decades and are a mature technology,
initially gaining popularity in the early 20th century for small farms and ranches in the Midwest.
Most of these farms and ranches were already accustomed to using wind-powered mechanical
water pumping systems. Before the large U.S. rural electrification programs, many rural farms
installed small wind electric systems to supply energy (e.g., Jacobs units). However, small wind
popularity waned as the large rural grid-electrification programs were initiated during the
Depression and after World War II. But the small wind industry has once again gained popularity
in recent years as more people move to rural, off-grid areas and most states offer net metering.
Net metering allows utility customers to use their wind generation to offset their power
consumption over an entire billing period.

The small wind turbine industry is consistently growing, but not as rapidly as the large wind
turbine industry. To date, more than 430,000 small wind units are installed worldwide,
representing about 110 MW of installed capacity. The most successful turbines for the small-
scale industry are the smaller units, usually only a few hundreds Watts in size. The largest
market for these small turbines is overseas, in places such as China and Mongolia. The turbines
are most often used to power individual households. There are also about 150 wind-hybrid power
systems installed around the globe, using larger wind turbines (typically ranging from 1 kW to
50 kW). For these larger hybrid systems, institutional management issues are key to their long-
term success. Likewise, a similar number of telecommunication systems around the world use
small wind technologies to help power microwave repeater stations, etc.

The leading U.S. and world manufacturer of small wind turbines is Southwest Windpower
(SWWP) in Flagstaff, Arizona, which has sold nearly 100,000 units to date. SWWP has roughly
half of the world market share for small wind turbines, with 40% sold domestically and 60%
overseas. The market that includes turbines for sailboats is shrinking and represents 15% of
SWWP’s sales. In 2006 (SWWP’s best sales year to date), sales sometimes surpassed 1,000 units
per month and, at the time of this writing, were expected to be about 12,000 for the year. High-
volume production has allowed SWWP to sell a competitive-priced unit [2]. Other key
manufacturers are Marlec from the UK (more than 50,000 90-W units produced) and Bergey
Windpower in Oklahoma (more than 4,800 units produced, both 1-kW and 10-kW units).

16
IV. Market Barriers Issues and Assessment
Expected United States Market
In the United States today, there are an estimated 35,000+ kW of installed small wind turbines,
representing more than 90,000 total units in the 90-Watt to 25,000-Watt size range. The U.S.
small wind market is growing at about 15% to 20% per year, and it roughly doubles every 5
years.

There is a growing interest in small wind systems in the United States, especially for rural
households. The implementation of net metering in most states is allowing the small wind
industry to grow. Also, since the U.S. rural electric grids were never set up with the intent of
meeting all of the electrical services for today’s modern households with their many electrical
appliances (big-screen TVs, satellite dishes, microwave ovens, computers, etc.), small wind
systems could play a role in strengthening the rural electric grids.

There are several U.S. wind niche markets. For instance, some rural U.S. villages are not
electrified (most notably in Alaska). Approximately 75,000 people live in 175 rural communities
throughout Alaska [3]. Of these, 42,000-plus people in 91 communities have a high potential for
wind/diesel systems. Most of these are Native American communities.

The largest Indian reservation in the United States is the Navajo Nation, and approximately one-
third of the 250,000 people on the reservation lack electricity. The households are typically
scattered and will never be electrified by the grid or a village system. The Navajo Tribal Utility
Authority has already installed hundreds of individual PV systems for some of these rural
households (typically about 300 Wp each). Small wind generators can help augment battery
charging for these existing and new systems.

Another significant, often overlooked U.S. niche market is the sailboat market. Small wind
turbines (e.g., Air Marine) are very popular with boaters. This market was one of the first to help
launch Southwest Windpower to success.

Expected International Market

Predicting the future overseas market for the small-scale, remote power distributed wind
applications market is not a simple process. Many political, technical, and fuel price variables
will have a direct impact on future market growth. Energy demand for overseas markets will
continue to rapidly grow in the near term (decade), but most will be supplied by conventional
generation. Likewise, as oil prices continue to increase over the next decade, the economics of
small wind systems improve. There will also be greater interest in using wind energy
technologies as a clean energy technology to help offset CO2 and other global warming
emissions. The use of wind energy will become more desirable to operate remote diesel mini-
grid systems as diesel fuel costs continue to increase. Small wind turbines (1 kW to 50 kW) can
be shipped in containers and assembled and installed in areas with little or moderate
infrastructure. The operation will be modular in that two to ten units can be added as needed. The
prognosis is excellent for increased growth for small wind in the international markets for years
to come.

17
China. China has been a leader in adopting small wind technologies. More than 70 million
people in rural areas are still not connected to the national electricity grid. China has nearly
125,000 villages with 8.89 million households without electrical power. About one-third could be
powered by renewable energy [4], as grid expansion is too slow and expensive. The province of
Inner Mongolia has implemented a U.S.$30 million fund per year for 5 years for rural
electrification. The United Nations recently completed a survey of Chinese village power and
found that there are about 45 wind/solar or hybrid village power systems, with an installed
capacity of 1,363 kW.

More than 170,000 mini wind turbines (60 to 200 Watts) operate in China, of which more than
110,000 are located in Inner Mongolia. An additional 12,000 units are installed in Mongolia. The
annual production of mini wind turbines exceeds 21,000 units in the region. The Chinese
government estimates that the total installed capacity of mini wind turbines was about 30 MW in
2000 and will be about 140 MW in 2020, with total energy generation of 90 and 450 GW-hours,
respectively.
India. As per projections by the Indian Ministry of Non-Conventional Energy Sources, 10% of
the 24,000 megawatts of the anticipated installed capacity requirement by the year 2012 will
come from renewables. Half of this capacity (12,000 MW) may come from wind power. India
has gained a wealth of technical and operational experience for mid-size to large wind turbines.
It is anticipated that as the larger wind turbines become more popular, this will also have a
positive effect on smaller wind turbine usage in rural areas and with hybrid systems. There are
more than 24,000 remote village sites across all 23 states of India, many of which are located in
good wind regimes.

Latin America. Mexico, Brazil, and the Caribbean represent the largest potential small wind
markets in the Americas. More than 5 million people in Mexico in more than 70,000 small
communities are without power. In 2006, the United Nations Development Program studied the
use of distributed small wind systems for productive use applications in rural Mexico. The UN
intends to help finance 15 MW of rural wind projects before the end of the decade. Likewise,
Brazil has more than 25 million people without power in hundreds of thousands of dispersed
small communities. Other areas, such as Central America and the Southern Cone, also have
significant potential for hybrid systems development, with more than 10 million people without
electric service.

Europe. Europe has an extensive electric grid, so there is little need for off-grid wind energy
systems. However, there is some potential for small on-grid wind energy systems, which many
Europeans would find attractive. Likewise, the European Union members are examining ways to
successfully develop and market hybrid wind systems for developing countries, as well as supply
high-penetration systems for existing diesel-powered micro grids. A survey from monitoring
programs in France states that there were 276 renewable projects in the European Union, with
only 24 projects that could be classed as hybrid or autonomous wind systems [5].

Spain has an increased interest in hybrid systems because of the recent success of the utility-
scale wind farms in Tenerife [Spain]. In the Canary Islands, two research groups (ITC and ITER)
are active in testing these types of systems. Federal funds are funneled to the CIEMAT test

18
facility in Soria, Spain, to develop components and whole systems for autonomous hybrid
systems.
Africa. Africa has seen relatively little use and development of small wind technology to date.
South Africa, the most developed country on the continent, is only now seriously examining
hybrid systems for village electrification. There are a few small pilot wind hybrid projects,
including a 1-kW PV, 6-kW genset, 1-kW wind system by Peninsula Teknicon in Port Elizabeth,
which is used to power a local radio station. There is a 500-W PV, 4-kW genset powering a
remote area school north of Durban in Kwa Zulu, Natal Province. Finally, there are three 150- to
250-kW PV/wind/diesel hybrid systems powering the Hluleka Nature Reserve on the Wild Coast
in the Eastern Cape Province, as well as two other villages in the same area.

Global. A good indicator of potential market size for small- and village wind hybrid systems is
the need for electrification around the globe. Approximately 1.7 billion people around the world
are without electrical service. The largest unserved electrical markets are in Asia and Africa.
Table 2-1 provides relative comparisons among unserved electrical markets around the globe.

Technology Adoption Timeframe

While further innovations are needed for supporting technologies such as energy storage, the
timeframe for technology adoption is not dependent on these. Generally, any site with a Class 2
or better wind resource, such as much of the Midwest, is good enough to justify the investment
for a small wind turbine. Economics for small wind systems are very good in Class 3 or better
wind sites. There is already a robust small wind energy manufacturing industry in China, the
United States, and the United Kingdom.

One of the key drivers will be energy prices, especially as compared to conventional energy and
the likely continued escalation of diesel fuels and electricity costs. There will be an eventual
tipping point at which diesel mini-grids, which can already cost U.S.$.50/kWh or more to
operate, become so expensive to operate that wind hybrid systems could become the system of
choice for many regions. As other energy prices increase over the next 10 to 20 years, the market
for small wind systems will rapidly open (especially grid-connected, the way it has recently
opened for PV).

As the rest of the world becomes electrified, wind will be selected as a better option over
extending the grid for many places. If the grid can be easily extended to a location, chances are
good that it’s already there. The remaining areas to electrify are often difficult to get to and
located farthest from existing infrastructure.

Small wind technology and know-how exist already. We have experience with more than 150
pilot wind hybrid systems around the world. The small wind technology can be rather quickly
adopted and implemented. Additional capacity building will be needed, especially overseas, to
help hasten the pace of adoption.

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 Table 2-1. Electrical Access in Developing Countries by Region (Year 2000)

Total Population Electrical Access

Year 2000 (estimate) With Access Unserved
Millions Millions % Millions %
Total 5,060.0 3,391.7 67.0 1,668.3 29.2
Europe & Central Asia 477.1 472.4 99.0 4.7 1.0
Latin America & 507.8 441.4 86.9 66.4 11.5
Caribbean
East Asia & Pacific 1,798.7 1,582.6 88.0 216.1 11.0
Middle East & North 292.4 256.0 87.6 36.4 10.4
Africa
South Asia 1,343.5 529.5 39.4 813.9 52.2
Sub-Saharan Africa 640.5 109.7 17.1 530.8 66.7
Source: World Bank, 2001. Prepared from country-level estimates using best available data.

Non-Technical Barriers for Technology Adoption

Current small wind technology has not been as widely successful as small solar electric systems,
even though solar is a more expensive technology. Issues regarding interconnection, cost, safety,
and net metering for small wind systems impede market development. Some of the key non-
technical barriers are as follows:

Cost. A key driver for all renewable energy technologies is the installed cost. The adage that
“wind energy is free – but it’s not cheap” is a problem, especially for the smaller wind turbines.
The cost is particularly high for village systems. Many of these systems are initially subsidized
by the government, but then there are no funds available for the long-term operation of the
system.
Education. Education of people at all levels, including the general public, is a barrier to
widespread wind technology adoption. Local maintenance personnel and installers need to be
trained to reduce dependence on foreign knowledge and expertise. Utility and government
planners should be trained so they can understand how wind can be a viable, economic, and
reliable source of energy that can be employed without dependence on foreign assets.
Information that is understandable to local users needs to be disseminated (workshops) during
system planning. Information for the general public about wise energy use will go a long way in
reducing the village power micro-grid loads during the initial operation.
Regional infrastructure. There is a critical mass of systems required in any region to develop
and retain sufficient technical expertise to properly maintain systems. With enough systems
installed in a region, regional utilities obtain economies of scale for administration, operation,
and maintenance. Using a minimum of half local materials/construction methods would reduce
overall system costs and involve the locals at the onset of a project. Keeping the size of projects

20
manageable for the anticipated grid size is a method of keeping maintenance costs down.
Systems can be worked on without significant outside involvement of tools and materials for
unexpected repairs. Increasing in-country training of systems developers, installers, and
operators would allow for quicker response to system errors, making more people available
system-wide to notice discrepancies or poor system performance. Suppliers need to offer a
minimum 2-year warranty on parts, labor, and travel. If conventional generation is included, the
units should be supplied in country, which would reduce dependence of small countries on
developed countries.

Developing industry in the host country can pay off in the long run for U.S. manufacturers.
Reducing shipping costs and down time by having materials readily available will make local
government more apt to choose them over a competitor. Showing that the technology can be
turned over to properly trained in-country representatives and letting them "work the territory,"
instead of U.S. representatives coming in as outsiders, should pay handsome dividends, as well
as taking advantage of favorable exchange rates in managing company payrolls.

Image. The small wind industry sometimes suffers from a poor image in some sectors. This is in
part due to a number of installed substandard small wind turbines that were not very reliable.
Overseas, the image is even worse, as almost any garage shop can make a perfunctory wind
turbine out of a car alternator and fan blades. These homemade units do not have the same
reliability as well-engineered production units.

Safety concerns also exist for installing and operating units, as well as for living in proximity to
an operating unit. When a wind turbine that is designed to feather its blades is operated in high
winds, it sounds like a Formula One racecar, and neighbors become concerned that the unit is
about to self-destruct. Likewise, turbines have been known to throw blades, etc. So decisions to
install a wind turbine next to highly populated areas, such as a school, may require extra thought
and preparation. The industry should self-police itself and develop minimal safety requirements
for turbines.

When prototypes of first system installations are made, manufacturers should make a concerted
effort to support viable projects and not just make the sale. Ten village hybrid projects installed
in Mexico in the 1990s left the industry with a poor image after most failed within a few years
and essentially resulted in a national hold on this kind of development.
Developers and manufacturers need to take a long-view approach when working in a country for
the first time. It may be more advantageous to design the correct system instead of selling the
system requested that may not fit the bill. Even if a problem has nothing to do with the wind
turbine (e.g., inverter failure), the wind industry image is still tarnished. One of the ingredients
for SWWP’s success is good customer service (even though SWWP had its fair share of turbine
problems as the technology developed). Pilot and demonstration projects, especially for village
hybrids, require at least 2 years of manufacturer support to ensure that everything works beyond
the project inauguration day.
Institutional. Especially for village hybrid projects, institutional issues are key to the long-term
project success. Too often hybrid projects involve complex technology that the local villagers
cannot possibly operate and maintain. The community has to be involved in the planning process
to determine goals and expectations. The implementation process requires sufficient political

21
will, duration, good administration, and follow-up to be successful. Unrestrained load growth on
a wind-hybrid village system cannot be supported. The industry must overcome the obstacle of
villagers thinking that energy is free and no one at the local level has ownership in the system.
Minimal payment for energy has to be implemented at the local level. It is important for the
small wind industry to work with local partners on maintenance, tariff design, development
coordination, planning tools, and delivery. The ultimate goal of such pilot projects is a
standardized design for commercial replication. Project planning parameters that should be taken
into account include performance, proven technology, loads, diesel retrofits, monitoring, buy-
down, and bundling multiple projects.

Time-Critical Issues
Time critical issues are most often a factor of the project scale: the larger and more complicated
a project, the more that time is an issue. A small individual wind generator of a few hundred
Watts does not face significant time-critical issues for technology selection. The availability of
small wind turbines is generally good in the United States, although such availability may vary
regionally.

Larger village hybrid systems with perhaps hundreds of kilowatts of wind turbines face more
time-critical issues, from possible new technology development (e.g., controllers) to the time and
cost for transport and packaging of units (especially to remote villages). Also, often there are
significant timelines for obtaining project financing for larger projects such as village hybrids.

Incentive Markets
In the domestic market, some states (and federal programs) provide wind energy subsidies and
incentives. These include grant programs such as those offered by the USDA, net metering, and
the production tax credit. Net metering is the only incentive that is really helpful for small on-
grid systems. However, there are no relevant domestic incentives for small-scale, off-grid wind
energy systems.

International markets have a variety of subsidies that are country dependent. Europe has feed-in
tariffs that are beneficial for on-grid wind systems. Unfortunately, like the United States,
European countries do not offer many incentives for off-grid wind systems.

Developing countries have even fewer incentives for small-scale, distributed wind energy
development. In less-developed countries, rural users typically have limited financial means and
usually do not even pay taxes. So the only possible subsidy of interest would be a direct subsidy
for technology buy-down, and some international development programs will do this (e.g., the
USAID/Winrock Dominican Republic small wind project in the late 1990s). The United Nations
Development Program (UNDP) is already supporting small-scale wind development projects in
China and Mexico.

Utility Industry Perspectives

For the most part, the utility industry (which includes rural cooperatives, investor-owned
utilities, and municipal utilities) is not significantly impacted by the use of small wind turbines,

22
either on or off the grid. Utilities can take advantage of small wind systems to limit their
infrastructure investments. The utility did not build the hardware, so it does not have to maintain
the wind energy systems. Individual small wind energy systems that are connected to the electric
grid have essentially no impact on the grid and make the utility essentially indifferent to their
application.

In developing countries, small wind systems can be an attractive option for utilities in lieu of
extending the conventional grid to remote communities over difficult geographical hurdles.
Some utilities operate independent diesel mini-grids that can use small wind turbines (given the
appropriate resource) as a complementary fuel source that can help reduce diesel fuel
expenditures and transportation.

V. Technical Barriers Issues and Assessment

Barriers for Small-Scale Turbines
There are many reliable and rugged wind turbines on the market for small wind systems. Small
wind turbine technology has been around for some time, particularly for off-grid applications.
The growth of small wind turbines providing grid-connected electricity is a relatively new
market application, but it represents significant growth opportunities, some of which have
already been realized. DC systems have an advantage of being more readily understood in
remote areas due to exposure to automotive battery systems; however, AC power is more readily
transported, and AC appliances are more available. Some of the key technology barriers for the
further development and expanded implementation of small turbine technology are as follows:

Energy storage. One of the largest barriers to widespread small wind technology acceptance is
energy storage, which is expensive. Most wind turbines use lead-acid battery storage, which is an
old battery storage technology. Batteries currently offer the best method of energy storage for
wind systems and help to reduce the on/off cycles of gensets when used at low wind/limited
sunlight times of the day. The greatest fuel savings occur when the gensets are shut down; even a
small amount of storage would aid in those periods when renewable energy flow is just meeting
or slightly under the load needs.

Operation and maintenance (O&M). Wind turbines are rotating machinery, and thus they
require maintenance. Long-term O&M is a problem, especially for installations in remote areas
where there is little maintenance infrastructure. Lack of observation, diagnosis, and repair can
take months or longer if there are no locally trained operators. O&M issues are of greatest
concern in severe environments, such as corrosive coastal or severe arctic environments. Initial
village installations need to be kept relatively small so that maintenance requirements are
manageable. Inverters are expensive and generally not repairable at the local level.

Electrical grounding. Damaging lightning strikes are always an issue for the wind energy
industry, big or small. Wind turbines in the West and Southeast often face significant problems
from and can be shut down due to lightning events. Structural performance, sensitivity to
electromagnetic effects, and grounding techniques make a difference as to wind system
survivability.

23
Long-term reliability of blade coatings. Little research has been conducted on blade surface
technology development and long-term life of coatings. Surface performance, soiling
degradation, and aging are factors that are not currently monitored.

Controls. Power electronic and controls offer enhanced function. The most improvement in
terms of system reliability and ruggedness can be made to the microprocessor or computer
controller. Power monitoring of the grid is also an expensive item, yet a necessary component of
any grid-tied system to keep the voltage/frequency levels suitable for good power transmission
and to maintain suitable power quality. High-speed power switches can be made more rugged
and able to energize on zero crossing of AC-voltage levels to minimize surges and unwanted
harmonics in the microgrid.

Hybrid systems. There is a lack of high-quality, well-documented information of the true

performance and costs of hybrid systems. Through detailed monitoring and evaluation of pilot
systems, a large discrepancy was found between the power produced by small wind turbines and
energy production estimates based on the wind resource and the turbine power curve. The
reasons for this discrepancy vary but can result in as much as a 75% reduction in turbine output.
Partial solutions include the wider use of discretionary loads and improved system control.
System design impact should be considered, and computer models need to be evaluated to
accurately assess this problem [6].

To avoid failure, village hybrid systems must include realistic system sizing and proper
institutional controls from the onset. Planners must allow for anticipated load growth, a realistic
tariff structure, and a means to meet future maintenance requirements. Allowable ranges of
frequency fluctuation can be higher in microgrid applications than in conventional utility grid
systems; a 3% variation is probably acceptable. This allows for simpler controllers and less
stringent efforts on the part of the system controller to maintain frequency levels. Village power
microgrids will often be the first exposure to utility power for many of the users, and they will
not be disappointed with this level of variation over a day when compared with no power
availability.
For wind hybrid systems to be a viable and sustainable energy solution for remote village
applications, an adequate and manageable institutional structure must accompany the technology
intervention. The need for accurate meters installed at each point of service is required to
empower local leaders to establish a use-based tariff that is equitable and manageable. Villagers
need to be trained on how to operate an equitable tariff system. Key lessons learned from village
wind hybrid system experience around the world are as follows [6]:

• Maintenance is critical for long-term system survival.

• System ownership and responsibilities need to be established early.
• Metering is key for successful operation of village hybrid systems.
• Local village support and training are crucial for a successful hybrid system.
• Long-term planning is needed for all village hybrids.
• Corrosion-proof hardware for coastal locations is required.
• Battery charging from the generator is needed to enhance system efficiency and battery
life.

24
Complexity of technical barriers. Maintaining a database of systems to determine what has
worked and failed in other locales would help developers and designers pick components and
controllers with a proven field record and avoid those that need more design or manufacturing
improvements.

Diesel grids need to be retrofitted with hydrogen storage/peak shaving systems, a storable fuel
cell, or heat engines to completely displace non-renewable fuels.

Design tools are helpful to plan or project the savings from hybrid operation; they must be
readily available, user-friendly, and reliable. Simulating the mix of renewables with existing or
planned conventional energy will help developers see the benefits of renewables when they are,
in fact, economically viable. There are several good models to model complex systems,
including the Hybrid Power System Simulation Model (Hybrid 2), the Hybrid Optimization
Model for Electric Renewables (HOMER), ViPOR, and RETScreen International.

Optimal turbine size. For small household systems, optimal turbine sizes vary from about 0.3
kW to 3 kW. For hybrid systems, optimal turbine size is from 5 kW to 50 kW. This size range is
considered the optimal village size, easiest to match with existing components and not too large
to install in remote, undeveloped areas. Turbines are not readily available in size ranges for
modular hybrid systems because there is not enough production volume to keep costs low, and
the sizes currently in production make load matching difficult.

Cost of energy. System costs have been a stumbling block to the sales of small wind systems,
especially for wind-hybrid systems. The key competitors for the small wind industry are diesel
gensets, followed by the PV industry.

A small 1-kW wind system will cost approximately $3,200 to install. In a good wind regime,
assuming a 20% capacity factor, such a unit might produce about 880 kWh/year. The most
inexpensive wind turbines will cost about U.S.$1,000 to $1,200 to install, including all balance-
of-system costs. This translates to a cost of energy of about $0.15 to 0.18/kWh for small wind
turbines in a good wind regime and with little follow-up maintenance. The cost of energy of the
wind turbine itself is about half of this amount; however, the final energy cost is due to the entire
balance of system (inverters, cables, towers, etc.).

Thus, the small wind systems are already cost-competitive in off-grid applications, where diesel
gensets can cost $.40/kWh or more to operate, and off-grid PV systems are almost as much. For
on-grid applications, the small wind systems are not yet economically competitive with retail
grid costs of $0.06 to .10/kWh. Some industry members believe that small turbine costs can be
halved in the next 5 to 10 years, especially as production volumes increase [2]. Thus, in another
decade or two, interconnected small wind turbines should prove competitive with an increasingly
expensive grid power. However, for the meantime, subsidies and incentives will be required for
small wind to compete against grid power.

For wind hybrids, the lack of a manufacturer with modular systems of the same design is a major
problem. If standard-configuration, modular systems were available (instead of a newly

25
engineered prototype or demonstration project), real costs would be reduced. Manufacturers
would be able to buy components in bulk, and a single standard design, tweaked to fit the locale,
would ultimately lead to commercial success.

Seasonal and intermittency wind resource impacts. For off-grid systems, seasonality is a
larger issue. For instance, in the case of the Mexico Xcalak hybrid project, the villagers always
suffered through about 2 to 4 weeks of little power during September, the lowest wind month [6].
This was unacceptable to them, and the issue would have been removed if the diesel generator
were able to charge the battery bank. For other applications, the seasonality also can play a role,
such as for water pumping (i.e., does the wind blow in the summer when the water is most
needed?).

Some utilities (e.g., Xcel Energy, Idaho Power, Kansas co-ops) have installed off-grid solar
energy systems to pump water so that extensive rural lines do not have to be maintained for
small loads. It is conceivable that utilities could also be sold on the same concept for small wind
systems (although in the Midwest there is a tendency for less wind in the summer when water
pumping is of highest priority).

Interface. For small wind hybrid systems, 120- to 240-volt AC single-phase and 240- to 480-
volt 3-phase microgrids are the two most common system voltage/configurations. Single-phase
systems are most commonly selected for lighting and residential use, while the 3-phase is
selected to handle industrial loads and to take advantage of the cheaper 3-phase gensets
available. There are also many small off-grid wind systems used for battery charging, normally at
12 or 24 V.

Some components are incompatible when a wind turbine is combined with controllers, batteries,
and PV or diesel gensets. While the individual components can be obtained from current
manufacturers, it is often the designer’s problem to size and integrate components to provide the
best overall system. The integration of mismatched components will yield a working system, but
not one that gives the best energy value over the life of the system. For off-grid systems,
component mismatch is larger since there are more components than for grid-tied AC systems.

VI. Recommended Areas of Technical Concentration

Technical Challenges
Technical challenges focus on systems integration but also include innovative designs of
controller/inverter integration or simply modifying current wind turbines to allow battery
charging or autonomous operation. Some of the key areas for future technical research are as
follows:

Energy storage. Small wind can be used in combination with other generation or with energy
storage capability alone to meet small to medium loads. Adding some storage can improve fuel
savings by reducing diesel start/stops and by reducing idling. Idling units consume 30% of full-
load fuel rates. This also requires a reliable starting mechanism for each independent genset. But
the battery bank comes at a high initial cost, and battery maintenance is an additional system
operating expense. There may be other, newer energy storage technologies, such as NiMH

26
batteries or fuel cells that can be used to replace more traditional lead-acid battery technology.
Additional research should be performed on short-term battery storage to reduce diesel cycles
during low/medium wind conditions when lightly loaded gensets are least efficient.

Controllers. Controls and metering need to be assessed for differing applications. Controllers
and the control strategy that will simplify the coordination and connection of many
manufacturers’ units into a seamless system are a top research priority. The highest priority
should be given to controllers, which determine the operational stages and integration with the
conventional diesel gensets. Testing of the controllers near system limits of stability for extended
periods of time is imperative. However, efforts also need to be placed on a standard methodology
and a robust and reliable control plan. While some fluctuations are allowed, overall power
quality will not be compromised. The operating stages are diesel, hybrid, and renewable power.
Adding variable-sized diesels with complex controllers is a second method to better match loads
to resource; starting a 30-kW diesel instead of a 100-kW diesel for a 20-kW load is preferable
over the long term. There are limited developers and suppliers of controllers that are compact
and rugged enough to last in field conditions for the life of the system. This limited availability
results in high initial costs and a lack of opportunity to develop a standard controller for general
applications rather than a specific high-cost controller for each system as it is specified.

Technology improvement. Optimizing rotor/controls for small wind turbines, along with
optimizing the overall system layouts/controls should be completed. Among the prime targets
are:

• New blade designs for light wind regimes

• Low Reynolds Number airfoils
• Axial permanent magnet generators
• Switched reluctance generators
• Passive yaw/passive power regulation
• Energy storage.

Hybrid village systems. Research has to be directed at reducing cost and improving
performance and reliability. Many of these problems are intertwined with institutional issues at
the local and regional level. Even though standardization and modular components would help
reduce costs, the main problem is to have the standard, modular components in an integrated
working hybrid system that is robust and has high availability. Economies of scale are needed to
reduce costs for remote villages.

A standard design with modular components must be developed for village hybrid systems. This
would allow resources to be added as the load grows within the original design. A new design for
each village power system is a waste of engineering effort and cannot reduce costs. Low-
maintenance and easy-to-maintain and easy-to-operate systems must be developed.

Computer models need to be validated against village hybrid systems at three stages:
planning/design, installation, and after at least 2 years of operation. A simplified spreadsheet tool
of expected performance and costs, with graphics output, for planners who are not technical
experts must be readily available.

27
A database on problems of village systems at the following three stages must be developed:
planning/design, installation (first 3 months of operation), and after at least 2 years of operation.
Unless a database of component failures is available, it is difficult to determine where research
emphasis should be placed. The current NREL village power database should be extended to
include this information.

Targets to improve the amount of operating time in hybrid mode are:

• Reduce wind speed cut-in of turbines by increased rotor area

• Use as high a penetration of turbines as can be economically afforded to increase the
wind band percentage time
• Increase the reliability of system controller to supply synchronous capacitance to
maintain grid frequency with no diesel operation
• Rugged dump loads to shed unneeded power into useful storage at times of high
wind/low village load.

Water desalination (salt or brackish water). Many areas with fresh water limitations have
brackish or saline water availability in differing aquifers. This is especially true of coastal
regions where there is also a good wind resource, as well as many desert regions. Wind energy
could be applied to desalination techniques that could prove to be a huge industry. Likewise,
fresh water can be stored fairly inexpensively. Technical challenges include assessing direct
(high-efficiency) desalination opportunities and integration with wind turbines. This could be a
particularly interesting market sector for off-grid small wind.

28
 Table 2-2. Summary Information Table: Small-Scale Remote Power (Residential or Village)

Domestic Market Off-Grid Only Regions of Specific Interest

(Specify units – MW potential, # of units) (not year-dependent)
2010 16,000 turbines/yr, 11 MW 1. Western states (ranches, etc.)
2015 40,000 turbines/yr, 28 MW 2. Tribal lands (Alaska, Navajo)
2020 85,000 turbines/yr, 60 MW 3. Islands, sailboats (New England,
Washington)
International Market Off-Grid Only Countries of Specific International Interest
(Specify units – MW, # of units) Off-Grid
2010 24,000 turbines/yr, 17 MW 1. China

2015 60,000 turbines/yr, 42 MW 2. India

2020 150,000 turbines/yr, 105 MW 3. Caribbean

Key Technical Barriers

1. Energy storage

2. Reliability/BOS lifetime

3. Undersized/underdesigned

4. Maintenance availability

Key Market Barriers

1. Cost
2. Lack of market investment
incentives
3. Training/education
4. Image (noise, safety, reliability
concerns)
Expected Turbine Size Range
0.3 kW to 60 kW United States
0.1 kW to 10 kW International
Expected Turbine Coupling
Mechanical (High speed:__; Low speed:__; proposed nominal speed:_____ )
Electrical (Voltage: 12 to 48 DC, a few hybrids at 240/480 V AC; 1- or 3-phase)
Thermal (Temperature: ____ )
Other: ___________

29
VII. Conclusions
The known problems have not changed much over the past few years. The major problems
involve cost, low performance and reliability, and institutional problems. Also the maintenance
should be allocated so that the villagers do not feel that the new power source is simply a right or
gift from a benevolent government but is their responsibility to operate and upkeep. Charging
even a pittance to ensure that the benefactors of the power are also the ones supporting its
operation would make each one responsive to the real costs and value of this energy. This could
also curb the unlimited growth in power use as more and more villagers become used to the
advantages and benefits of reliable electricity. Village systems that were designed for 10% load
growth over 5 years and experienced increases of 20% to 30% in a single year can quickly be
overtaxed and fail prematurely.

Some key barriers facing the small wind industry for widespread adoption of small wind systems
(both off-grid) include the following:

• Deployment challenges
• Untrained dealer network and high dealer pricing
• Questionable (unverified) wind resources
• Lack of available towers
• Lack of market investment incentives.

Planners should develop regional utility systems or cooperatives for village power systems for
administration and maintenance. The hybrid system is still operated at the local village. There
must be enough systems in a region or a state for a viable infrastructure. The main
recommendations for further development of the use of distributed wind power in isolated power
systems are as follows:

• Develop the use of wind power in isolated systems as concerted actions in

national and international programs rather than as individual projects.
• Join forces in development of international standards for decentralized power
systems with renewable energies.
• Develop best practice guidelines as dynamic documents with common references
and based on updated experience from recent projects.
• Promote wind power in small- to medium-size systems following simple and
proven approaches; e.g., by repeating and/or downscaling pilot and demonstration
systems with positive track records.
• Filter down from the large-scale systems any technological achievements
adaptable to smaller systems.
• Invest research and development in small systems to support development of
rugged technology applicable for remote communities.
• Use modeling assumptions from the hardware reality for the types of systems that
will be applied.
• Install experimental systems only at test benches prepared to serve as
experimental facilities.

30
 • Encourage the industry to offer medium-scale wind turbines (10 kW to 300 kW)
for hybrid system applications; large wind turbine manufacturers need to give
priority to allocation of production line capacity for smaller machines.

In summary, the technical capacity to design, build, and operate isolated power systems with
high penetration of wind power exists, but the mature product and the market have not met.
Interesting markets, such as water desalination, have not been significantly explored. The above
recommendations are seen as moves that would lead to development of the use of wind power in
distributed power systems, but as in any technological development process, financing is needed.

VIII. References
1. King, W.R.; Johnson, B.L. III. Worldwide Wind/Diesel Hybrid Power System Study:
Potential Applications and Technical Issues. SERI/TP-257-3757. Golden, CO: Solar
Energy Research Institute (now the National Renewable Energy Laboratory), April 1991.
2. Kruse, A. Personal communications, Southwest Windpower, March and November 2006.
3. Hughes, P.; Reeve, B. "The Alaskan Market for Wind Energy." Windpower 1999
Proceedings, American Wind Energy Association.
4. Dou, C. Personal communication, Bergey Windpower, March 2006.
5. Avia, F.; Cruz, I.; Arribas, L.M. "R&D& D: The Key for Opening the Market of Wind
Energy Autonomous Systems." Windpower for the 21st Century Proceedings; September
2000, Kassel, Germany.
6. Foster, R. E. ; Orozco, R.C.; Romero, A. “Lessons Learned from the Xcalak Village
Hybrid System: A Seven Year Retrospective.” 1999 ISES Solar World Conference
Proceedings, July 4-9, 1999, Jerusalem, Israel. International Solar Energy Society, Israel
Ministry of Science, Volume I, p. I-319-328.

31
Chapter 3. Residential Power

Prepared by:
Heather Rhoads-Weaver and Meg Gluckman, eFormative Options, L.L.C.
Amy LeGere, NetGenuity
Brian Antonich, Windustry
Jonny Holz and Steve Grover, ECONorthwest
Craig Hansen, Windward Engineering
Mick Sagrillo, Sagrillo Power & Light
Ed Kennell, Clean Energy Products
Thomas Wind, Wind Utility Consulting
Ron Lehr, American Wind Energy Association
Thom Wallace, Ecofusion Multimedia

I. Executive Summary
The distributed wind industry is poised for rapid market growth in response to continuing energy
price hikes and increased demand for on-site power generation. However, in order for distributed
wind to reach its mainstream market potential, the industry must overcome several hurdles,
primarily in system costs, interconnection, and installation restrictions.
This study provides a preliminary assessment of the grid-connected residential wind market, with
an emphasis on potential market size and critical technical and market barriers. It recommends
high-priority research, policy, and outreach efforts to address these obstacles. This study is
designed to assist the U.S. Department of Energy (DOE) Wind and Hydropower Technologies
Program and NREL in their consideration of future technical and other programmatic
investments.
The study confirms substantial and growing market potential in this sector; the dominant role of
the United States distributed wind turbine (DWT) industry in domestic and international markets;
and compelling reasons to continue research, development, and dissemination efforts to foster
continued market expansion. Findings are based on surveys and interviews with key industry
participants, a review of published and unpublished articles and studies, and the industry
familiarity and expertise of the team members who conducted this study.
The small wind turbine and distributed generation markets are emergent in nature, with
approximately 2,900 residential grid-connected turbines totaling 14.5 MW installed worldwide
as of 2005. United States turbine manufacturers provide an aggressive outlook for the DWT
market, forecasting approximately 32% annual growth in grid-connected residential sales.
Historically, the residential grid-connected sector has comprised less than 5% of total small
turbine sales (up to 100 kW). However, manufacturers expect that portion to grow to more than
20% by 2020. As a mid-point forecast between lower and upper bound estimates, this study
projects that this sector of the DWT market will grow to about 78,000 units totaling 830 MW
worldwide by 2020.
Currently, United States manufacturers dominate the world market, but new turbines from China,
India, and Europe will provide stiff competition for U.S. products in overseas markets and

32
potentially in the U.S. market as well. China and United Kingdom provide examples of strong
government support for DWT product development and market incentives.
Historically the most significant barrier to residential market growth has been high total installed
costs, which essentially reflects the cost of energy generated. The economics of residential DWT
are highly variable, with an average cost of energy in the range of $0.08-0.12/kWh required to be
competitive with conventional generation sources. The most common alternative to residential
DWT, solar photovoltaics (PV), currently has total installed costs of about $7-10/W or around
$0.20-0.35/kWh without incentives, compared to $4-7/W or $0.12-0.15/kW for grid-connected
DWT. In order to achieve significant market expansion in the U.S. grid-connected market,
reductions in DWT total installed costs to $2-3/W are needed. This can be achieved through
technology improvements along with policy support. Drivers of market growth include financial
incentives, favorable net metering, standardized interconnection policies, and high retail
electricity rates. Key technical challenges include the lack of performance standards and ratings,
product reliability, low-wind-regime technologies, and quiet operation.
Oversight of performance certification and compliance testing is urgently needed to address
critical reliability and credibility issues in order to support major expected growth in the grid-
connected residential wind market. A third party familiar with the issues of both inverter and
turbine manufacturers is in the best position to bridge the gap and provide innovative system
solutions. These are important roles for an independent national testing laboratory to fill.
With large wind turbine and PV manufacturers scrambling to keep up with demand, this study
describes how the distributed wind industry can overcome long-standing stumbling blocks and
play an important role both in the United States and internationally in supplying power at the
point of end use. Efforts to enhance the viability of the DWT industry will have major global
benefits in securing future energy supplies and meeting increased demand for decentralized,
affordable clean power.

II. Application Background

Residential distributed wind generation, for the purpose of this study, is defined as small wind
turbine systems, typically 1 to25 kW, connected to the utility grid on the customer side of the
meter to supply electricity for residential applications, also referred to as grid-tied or grid-
connected residential DWT.
Small wind energy systems provide clean, renewable power for on-site use and help relieve
pressure on the nation’s power grid, while providing domestic jobs and contributing to energy
reliability and security. The United States pioneered this technology in the 1920s, and it is the
one renewable energy technology that the United States still dominates. American companies
lead in both technology and world market share. In contrast to utility-scale wind turbines that no
longer have a strong U.S. manufacturing base, more than 90% of small wind turbines installed in
the United States are still manufactured in the United States.
Based on industry statistics, the 1- to 10-kW segment of the residential DWT market currently
has the widest product coverage, with numerous market newcomers expected in various sizes
[1]. Growing current and potential markets for these turbines are found in industrialized as well
as developing countries.

33
Small wind turbine systems are typically procured by property owners. Manufacturers market
their systems through distributors, dealers, and directly to customers. Local dealers or installers
typically install grid-connected systems, although some customers install their own systems with
inspections conducted by certified electricians. The wind resource, turbine size and model,
micro-siting, and installation requirements such as tower height and foundation are site-specific.
Many states, counties, and utilities are promoting distributed wind generation for its clean energy
benefits and contribution to renewable portfolio standards, energy reliability, and energy
independence.
Widespread deployment of small wind turbines can increase the public’s familiarity with wind
turbine visual impacts, attract mainstream media coverage, and pave the way for local
community support for larger wind developments. Small turbines, in particular installations at
schools and other high-visibility locations, can become an important asset in reducing fears about
unfamiliar technology, which in turn can help reduce the expense and unpredictable nature of
siting and permitting large wind developments. Small turbines can be installed in selected
neighborhoods to increase public awareness of residential wind options and provide an additional
benefit by educating students on how electricity is made and the benefits of wind power.
Neighborhood DWT installations can also help utilities increase customer interest and
participation in voluntary green power programs and provide local “advertisements” of utilities’
involvement in renewable energy.

III. Current Status of Grid-Connected Residential Distributed Generation

The Future
Residential DWT installed capacity has historically comprised less than 5% of total sales of
small wind turbines (up to 100 kW) [worldwide]. However, manufacturers expect that portion to
grow to more than 20% by 2020 [2]. The U.S. Department of Energy Renewable Energy Plant
Information System (REPiS) has documented nearly 1,200 small wind turbines (up to 100 kW)
totaling 16 MW as of 2005 in 45 states. Approximately 70% of the DWT systems and 40% of
the DWT capacity documented in the REPiS database are estimated to be grid-connected
residential applications [3].
Based on a review of available market data, this study estimates that approximately 700 wind
turbines totaling 3.5 MW were sold worldwide for residential grid-connected applications during
2005, with 500 of these totaling 2.5 MW sold in the United States. This study estimates that the
cumulative grid-connected residential installed capacity was 2,900 units totaling 14.5 MW
worldwide as of 2005, with 1,800 of these units totaling 9 MW installed in the United States.
Market challenges. Because economics are a significant barrier to market adoption and growth
of grid-connected DWT, it is important to examine factors contributing to turbine system costs.
Key determining factors include turbine size (rotor diameter, rated capacity), average wind speed
at hub height, power output control/limitation technology, and applied grid control technology.
External factors include infrastructure and transport logistics costs, permitting costs and time,
and other location-specific conditions.
From the perspectives of power generation potential (kWh/kW), return on investment, and cost
of energy (cents/kWh), current small turbine designs are at a disadvantage compared with much
larger utility-scale wind turbines. Small turbines are relatively more expensive to manufacture

34
(both materials and labor) and their limited hub heights (because of cost, setback requirements,
aesthetics, etc.) result in comparatively less energy production. In addition, their low volume
currently manufactured impede cost reductions with series-scale production [4]. The lack of
performance standards, independent testing and consistent ratings for DWT contribute to product
reliability concerns in the market. Complex interconnection standards and the reluctance of
utilities to adopt net metering and DWT incentive programs further constrain the market and
hinder market efficiencies. Dealers and installers increasingly report that the insurance industry
is requiring additional insurance coverage for DWT owners. Finally, small wind turbines are not
consistently addressed in state renewable portfolio standards (RPS), incentive policies, and
consumer education campaigns.
In the United Kingdom, the most commonly perceived barriers to residential distributed
generation are permitting, expensive metering, lack of installation targets and incentives, high
cost, and low consumer awareness. As in the United States, the United Kingdom experiences a
high correlation between incentives and installations [5].
Utility acceptance. The market for grid-connected residential wind is primarily rural
homeowners and small businesses. Many domestic residential sites appropriate for wind power
are served by rural electric co-ops (RECs), which typically view net metering and distributed
generation as cross-subsidies and inconsistent with co-op principles that members share equally
in the investment, risk, and benefits of the co-operative [6]. The official position of the National
Rural Electric Co-operative Association (NRECA) is that net metering results in reduced co-op
revenue while the fixed costs remain the same and that the co-op’s other consumers ultimately
subsidize the self-generating consumer [7]. While RECs do hold a large territory, many other
utilities in more populated areas do not oppose net metering. However, most utilities still require
significant education, softening of interconnection requirements, and generally an improved
understanding of the benefits of capturing consumer investments in DWT.
Potential new market segments. While the rural residential market has been the primary target
for United States grid-connected small wind systems, new initiatives are exploring the urban and
suburban markets. Among others, a U.S. manufacturer is aggressively pursuing small wind for
the suburban residential market with new turbine technology and shorter towers. It can be
anticipated that at least 1 year of market experience will be required to determine if this is a
viable market segment for DWT and to identify the key technical and market barriers for this
market segment, as well as the best practices for suburban residential market penetration.
Several efforts are underway internationally to develop roof-top mounted [8] and building-
integrated DWT designs [9], but so far none have proven commercially viable. It is premature to
anticipate the feasibility of such designs, especially until extensive testing establishes that they
pose no potential threat to the integrity of the structures on which they are mounted. The
concepts are mentioned simply as examples of enabling technologies that may have the potential
to significantly augment the distributed generation market in the future.
IV. Market Barriers Issues and Assessment
Expected United States Market
Market targets. Historically, rural properties have been the primary market for residential-scale
wind distributed generation systems. The industry is increasingly focused on the rural residential
market, with new attention on the large-lot suburban residential market. As shown below in

35
Figure 3-1, a 2004 survey of readers of Home Power Magazine (3,573 respondents) indicated
that 38% intended to utilize renewable energy in a rural home, 27% in a suburban home, and
16% in an urban home, with more than 40% of respondents planning to install wind turbines
[10].

Figure 3-1. Renewable energy system end-use information from Home Power readers’ survey

Market potential. The growth potential of the U.S. residential DWT market presents a unique,
timely opportunity. Moreover, trends show that growth may occur at significantly increased rates
if critical market barriers are overcome. A new market survey of the grid-connected residential
wind market was conducted for this study in January 2006 1. This most recent survey found that
the leading U.S. DWT manufacturers are projecting an average annual growth rate of 32% for
the U.S. grid-connected market through 2020, with their potential domestic market share as high
as 9,500 units totaling 26 MW in 2010, 21,000 units totaling 70 MW in 2015, and 41,000 units
totaling 130 MW in 2020. These projections provide an aggressive outlook for the DWT market
and signify that manufacturers are confident that the market is poised for strong growth.
It is important to note that predictions about the percentage of future DWT market growth vary
greatly and often depend heavily on the degree of expected state and federal support for DWT.
The DWT market study conducted by the American Wind Energy Association (AWEA) in the
spring of 2005 [11] found that in ideal market conditions (i.e., with sufficient policy support),
annual U.S. sales of DWT could reach $55M by 2010. The same study forecasts a slow growth
scenario based on scaled-back projections from only the established industry players, estimating
annual U.S. sales at $27M in 2010 if the key barriers are not addressed. These estimates
represent higher and lower bound average annual growth rates of 24% and 9%, respectively;
however, some industry members believe that these projections are too conservative. With
increased monitoring of these market trends, it is becoming increasingly evident that the DWT
industry has the potential to become one of the leading renewable energy distributed system
industries for residential homes in the United States.

1
See the Acknowledgements section for a list of survey participants.

36
In 2002, AWEA set a bold industry goal of installing 50,000 MW of total DWT capacity (3% of
domestic electricity demand) by 2020 based on census data for appropriately sized lots and
acreages, and put the total potential domestic market at 15.1 million homes 2. The AWEA report
estimated that more than 80% of the United States DWT market will be grid-connected
residential systems with an average turbine size of 7.5 kW. Reaching 50,000 MW by 2020 would
require average annual growth of around 60% over the next 15 years. Although this is an
ambitious goal, given the recent annual market growth of 40% [12], it may be obtainable with
adequate incentives, research and development (R&D) funding, and other policy support at state
and federal levels.
In consideration of these studies and familiarity with current industry trends, this study
conservatively estimates that cumulative U.S. on-grid residential wind turbine installations in
2010 will have a lower bound of 5,100 units totaling 29 MW and an upper bound of 7,400 units
totaling 44 MW, with average annual growth rates of 9% and 28%, respectively. An increase in
the average turbine size for this sector from 5 kW in 2005 to 9 kW in 2020 is projected as a
result of the availability of new products. As shown in the Summary Information Table (Table 3-
5), assuming the same growth rates in the number of units, this study’s lower and upper bound
United States estimates are 10,000-26,000 units totaling 72-211 MW in 2015 and 18,000-92,000
units totaling 170-1,000 MW in 2020, resulting in a midpoint forecast for the United States grid-
connected residential market sector of 55,000 units totaling 590 MW in 2020.
One of the conclusions of this study is that the residential wind industry would benefit from a
new, detailed potential market analysis. An in-depth market study focused on consumer
motivations would provide valuable information to inform research, product development,
marketing, and policy decisions.
Regions of interest. The criteria for states in the United States with strong residential DWT
markets include high residential electricity rates and/or loads, adequate wind resources, financial
incentives, clear and reasonable permitting requirements, positive public perception of small
turbines, state or utility public education and awareness campaigns, and simplified
interconnection processes.
Taking into consideration relevant economic variables, a 2004 study by Lawrence Berkeley
National Laboratory calculated simple payback for DWT break-even turnkey costs in the United
States [13]. The top ten states for DWT simple payback at $2.50/W were reported to be
California, New York, New Jersey, Rhode Island, Vermont, Hawaii, Montana, Maine, Alaska,
and Illinois. 3 Since then, California and Illinois rebate funding levels have declined, and
Massachusetts and Washington have introduced significant DWT incentive programs. Fifteen
states have renewable energy funds with $3.5 billion in aggregate for renewable energy from
1998 to 2010: California, Connecticut, Delaware, Illinois, Maine, Massachusetts, Minnesota,
Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, and Wisconsin
[14]. However, so far only a few of these have established funding mechanisms for DWT.

2
The 2002 AWEA Roadmap estimated that by 2020 there will be 43.2 million homes with more than 0.50 acre of land
and that 35% of these homes will have a sufficient wind resource to generate electricity from DWT.
3
The model assumed a 10-kW system, 25-year system lifetime, 8% IRR on investment, operating and maintenance
at 1.5¢/kWh, cash payment, and wind production valued at full average residential electricity rate.

37
Responses to the survey conducted for this study confirm that the states of specific interest for
the grid-connected residential market fall into three primary regions:
• West Coast (California and Washington State)
• Northeast and Mid-Atlantic (New York, Massachusetts, Pennsylvania, Vermont)
• Midwest/Central (Texas, Ohio, Minnesota, Iowa, Wisconsin, Colorado).

Correlations to residential PV. Considerable market information is available for the residential
PV industry that could be useful to the DWT industry. Examples include trends in grid-
connected PV installations and forecasts, 4 cost of energy, consumer demographics, purchase
criteria, effectiveness of incentives and market drivers, and potential applications and market size
for hybrid wind/PV systems. This insight can help inform marketing and technology decisions
for the potentially large suburban residential market that some small wind turbine manufacturers
are beginning to target.

Figure 3-2. Renewable energy end-user information from Home Power readers survey

4
The U.S. Department of Energy’s Energy Information Administration (EIA) forecasts residential grid-connected PV
to be 127 MW of installed capacity in 2010, 141 MW in 2015, and 157 MW in 2020. The calculations are based on 2-
kW residential systems.

38
It is also important to note that the PV industry has significant public support and resources to
advance policy incentives, obtain research funding, and conduct public education and awareness
campaigns. Coordination between the DWT and PV industries based on similar interconnection
technologies and overlapping target markets could prove effective for developing
recommendations beneficial to both industries. Customer motivations and resource information,
such as that collected by Home Power Magazine in a 2003 reader’s survey (Figure 3-2) can
provide important insights for marketing both PV and DWT.

Expected International Market

U.S. DWT manufacturers are in an excellent position to take advantage of the international DWT
market. AWEA estimates that more than 40% of U.S.-manufactured DWT are exported [15].
Currently, two U.S. manufacturers, Bergey Windpower and Southwest Windpower, are both
recognized as the world’s dominant market leaders in terms of sales volume [16]. A recent study
conducted by Marbek for the Canadian Wind Energy Association indicated that 96% of reported
sales in Canada are attributed to three U.S. manufacturers: Bergey Windpower, Southwest
Windpower, and Aeromax [17]. The international export market, therefore, presents a
considerable economic opportunity for U.S. manufacturers, both for grid-connected residential
DWT as well as off-grid, remote applications.
The 2006 market survey conducted for this study confirms a robust international export growth
outlook. The leading U.S. DWT manufacturers are projecting an average annual growth rate of
34% for the non-U.S. grid-connected market through 2020, indicating a potential U.S. export
market of 3,200 units totaling 11 MW in 2010, 10,000 units totaling 31 MW in 2015, and 22,000
units totaling 66 MW in 2020.
Other estimates of the international DWT market come from AWEA’s 2005 DWT market study
and a 2002 study by Garrad Hassan Consulting. The AWEA study estimates that the
international small wind market is roughly the size of the total domestic market and that 40% of
DWT manufactured in the United States are exported. A 2002 article in REFOCUS magazine by
United Kingdom-based Garrad Hassan Consulting projects a five-fold increase from 2002 for
global small wind sales. This estimate equates to 150 MW/year, or 150,000 turbines/year
assuming $5/W total installed costs and an average turbine size of 1 kW [18].
A number of countries have shown considerable interest in DWT technologies. In 2005, Canada
and the United Kingdom published studies about their potential markets for small wind. A 2005
United Kingdom study on “microgeneration” anticipates up to 5 GWh of energy from residential
wind by 2030 (1.5-kW systems), with a doubling by 2050 and with small wind supplying 4% of
United Kingdom’s electricity requirement [19]. The study, commissioned by the UK Department
of Trade and Industry, estimates an upper bound of nearly 120 MW and a lower bound of 20
MW of installed DWT capacity by 2020, depending on the amount of government support.
The Canadian study reports a total potential of 120,000 units for grid-connected residential, 3-
kW average capacity, and total capacity of 360,000 kW. The study references U.S. programs and
market adoption rates and concludes that the Canadian DWT market requires incentives in four
areas: market development (federal rebate and provincial incentives), policy development (net
metering and streamlined environmental processes), technology development (standardized
testing and demonstration programs), and education and awareness-raising (model

39
interconnection agreements and installation guidelines for siting, zoning, permitting, and
interconnection) [20].
Lawrence Berkeley National Lab reports that China manufactured 12,000 small wind turbines in
2000 and that the Chinese market has been strongly supported by government policies and
incentives [21]. In February 2005, China passed a groundbreaking law to promote renewable
energy. However, while China has a great potential for wind, as in much of the world, its
primary market is off-grid rural electrification [22].
In consideration of these studies, the large DWT market share held by U.S. manufacturers, and
familiarity with current industry trends, this study conservatively estimates lower and upper
bound international annual growth rates of 11% and 28%, respectively. These rates are slightly
higher than those estimated for the domestic residential DWT market as a result of the likelihood
that new international residential markets will continue to emerge and expand. As with the U.S.
market, the average international turbine size for this sector is expected to increase from 5 kW in
2005 to about 9 kW in 2020 as a result of the availability of new products.
As shown in the Summary Information Table (Table 3-5), using these estimated growth rates for
the number of units, cumulative international on-grid residential wind turbine installations in
2010 are estimated to have a lower bound of 2,500 units totaling 14 MW and an upper bound of
3,300 units totaling 19 MW. Lower and upper bound international grid-connected residential
wind installation estimates are 4,800-11,000 units totaling 34-86 MW in 2015 and 8,700-37,000
units totaling 82-410 MW in 2020, resulting in an international mid-point forecast for this sector
of 23,000 units totaling 250 MW in 2020.
Regions of interest. Responses to the survey conducted for this study indicate that the major
international markets for grid-connected residential wind fall in these three regions:
• Asia (Japan, China, India)
• Europe (United Kingdom, Spain, Italy, Germany, Netherlands, Greece)
• Central and South America.

Technology Adoption Time Frame

There are some technologies on the horizon that could stymie the implementation of worldwide
residential DWT. Fuel cells are often cited as a potential future example. However, commercially
available fuel cells that do not rely on ever-tighter supplies of natural gas will not be available
for several decades. By contrast, the recent United Kingdom “microgeneration” study forecasts
mass-commercialization of DWT in 2015, with electricity prices the most important market
change for small wind [23].
A much more immediately available technology, and one that “competes” with small wind in
various applications today, is PV. Given the current public benefits programs, PV is more
competitive than wind in the 1- to 3-kW category. In addition, currently PV systems can be
ordered, permitted, and installed in a fraction of the time that is required to install a comparably
sized residential wind turbine. However, in areas that do not have incentives for PV, residential
wind is cost-competitive and easily installed for those facing reasonable zoning, permitting, and
interconnection requirements. While PV is often viewed as a competitor, market growth can be
anticipated in hybrid wind/PV systems.

40
That said, there are still pressing hurdles that the DWT industry needs to overcome to reduce
consumer hesitation with the technology, specifically in regard to reliability and timeframe for
installation. In addition, the limited availability of cost-effective, state-of-the-art, synchronous
inverters is a constraint to 3-kW (and larger) grid-connected variable-speed turbine types. While
the manufacturers of these inverters also manufacture products for the grid-tied PV market, the
inverter itself controls DWT generators differently than PV systems. When a small wind turbine
manufacturer develops a new turbine model, inverter manufacturers may find it risky to invest in
a new product line without the prospect of selling substantial numbers. Inverters and system
electronics continue to be the least reliable component of small wind technology, which in turn
has stalled innovation [24]. Some companies, such as SMA of Germany and Magnetek of the
United States, have designed inverters for a number of residential wind turbines.
Development of new small wind turbines that do not require an inverter for grid-intertie
applications is another direction being pursued by a few designers. This would bypass the above-
mentioned dilemma. However, current development on these concepts has been greatly slowed
by lack of R&D funding. Multiple paths for inverterless small wind turbines should be employed
to seek the best solution to connecting DWT to the grid in a timely manner, including direct-
drive induction generators and gear-driven systems.
Another significant time-sensitive barrier to current small wind turbine designers is the lack of
effective computer modeling covering all components of a small wind turbine, in a variety of
wind conditions including furling wind speeds. Quickly addressing this need could expedite
crucial design improvements to help meet required cost targets during this critical window of
opportunity to maintain U.S. dominance in this sector.
Towers are one of the greatest challenges for DWT. Towers for large wind turbines are generally
less than 20% of the hardware cost. For small wind turbines, towers often comprise 40%-80% of
the hardware cost. A concerted effort to develop more cost-effective designs with composites or
other materials should be explored.
Non-Technical Barriers for Technology Adoption
The January 2006 survey (Table 3-1) conducted for this study indicates that economics, lack of
incentives, zoning, public perception challenges, and interconnection issues are the most
significant barriers to residential DWT market adoption. Up-front costs also are rated as the key
decision-making factor in a recent Canadian DWT market study [25].
Economics
Most consumers carefully weigh the economics of DWT systems, taking into consideration total
installed costs, out-of-pocket costs, perception of value and return on investment. Factors
contributing to DWT system costs are listed above in the market challenges section. Reductions
in total residential DWT installed costs from the current range of $4-7/W to $2-3/W after
incentives will be necessary for significant market expansion in the U.S. grid-connected market
[26]. This estimate is based on an analysis of PV module shipments vs. price (Figure 3-3) and an
assumption that since PV and small wind are competitors in the grid-connected market, small
wind must be priced competitively with PV.
Lengthy and costly permitting processes, requirements to access state incentive funds
(environmental analyses, site assessments, installation inspections, lengthy applications), and
other site-related processes also drive up total installed costs because dealers and installers

41
typically assist consumers with these steps. Inconsistent “rated output” turbine model
designations may be an additional factor in reducing consumer confidence and perceived value.

42
 Table 3-1. 2006 Survey Responses on Grid-Connected Residential Wind Market Barriers

Residential Wind Market Moderately Moderately Biggest Response

Not an Issue Medium
Barriers Low High Barrier Average

Economics / out-of-pocket costs

0% (0) 2% (1) 26% (11) 55% (23) 17% (7) 3.86
(total installed cost)

Economics/perception of value (cost

0% (0) 10% (4) 26% (11) 43% (18) 21% (9) 3.76
of energy, return on investment)

Lack of incentives (rebates, buy-

2% (1) 22% (9) 17% (7) 49% (20) 10% (4) 3.41
downs, loans)

Restrictive zoning 10% (4) 18% (7) 28% (11) 28% (11) 18% (7) 3.25

Connecting to the grid (rural

5% (2) 22% (9) 29% (12) 34% (14) 10% (4) 3.22
electric co-op)

Visual impacts/neighbor concerns 0% (0) 34% (14) 24% (10) 27% (11) 15% (6) 3.22

Inadequate net metering/net billing 10% (4) 20% (8) 34% (14) 24% (10) 12% (5) 3.10

End User convenience/complexity

7% (3) 22% (9) 39% (16) 24% (10) 7% (3) 3.02
(siting, installation, maintenance)

Wind myths (reliability, sound,

7% (3) 27% (11) 24% (10) 41% (17) 0% (0) 3.00
aesthetics, safety, avian impact)

Lack of utility-sponsored programs

7% (3) 24% (10) 34% (14) 29% (12) 5% (2) 3.00
and marketing for wind

Permitting costs and time 7% (3) 27% (11) 37% (15) 20% (8) 10% (4) 2.98

Low public awareness/support 10% (4) 22% (9) 32% (13) 34% (14) 2% (1) 2.98

Lack of tax incentives (sales,

10% (4) 24% (10) 34% (14) 27% (11) 5% (2) 2.93
property)

Connecting to the grid (investor-

10% (4) 30% (12) 33% (13) 25% (10) 3% (1) 2.80
owned utility)

Lack of consumer access to wind

22% (9) 32% (13) 41% (17) 5% (2) 0% (0) 2.29
resource information/maps

43
 Figure 3-3. Constructing a demand curve for DWT – experience from PV [27]

Lack of Incentives
Federal, state, and local governments have a role in establishing policies and incentives that
affect market adoption of residential distributed generation. Both the small wind and PV markets
have seen growth surges following the introduction of state financial and policy incentives and
extensive public education campaigns. The most recent federal tax credit for small wind turbines
was 1985; 2005 federal legislation did not include small wind in a residential tax credit for PV.
At the local level, industry participants consistently report that the work required to remove or
reduce DWT permitting barriers is time consuming and cost-intensive. However, actively
engaging federal, state, and local governments in addressing the key economic, permitting, and
public education barriers can ensure the realization of the energy security, self-sufficiency, and
reliability that DWT promises.
Zoning, permitting, neighbor perception, and public awareness. Restrictive zoning (tower
height, setbacks) and environmental requirements (state environmental assessments) contribute
to the complexity, time, and costs required to install residential grid-connected systems. Model
zoning ordinances and standardized data on sound, safety, reliability, rated output, setback
requirements, and biological impact should be developed to streamline the zoning, permitting,
and incentive application processes.
The industry would benefit from a national public education campaign to promote awareness
among consumers and public policy makers and to create market demand. These campaigns
would promote the benefits of DWT and address concerns about wind energy in general
(reliability, acoustics, aesthetics, safety, avian impact). A separate campaign targeted at utilities
could provide education on the topics listed above and promote economic and customer
satisfaction benefits for utilities. DWT system cost and payback calculators, wind resource maps,
and consumer guidebooks, such as those on the Wind Powering America Web site [28], need to
be maintained and enhanced to aid consumers with residential DWT purchase decisions.
Connecting to the grid. Interconnection standards are important to streamline installations and
reduce up-front costs for consumers. Increased awareness and support among investor-owned

44
utilities (IOUs) and RECs will be necessary for small wind to be included in utility marketing
efforts. As most preferred residential wind turbine sites are rural and fall in REC service
territories, the unwillingness of many RECs to interconnect distributed generation is a significant
market barrier for residential wind. New business models for both private and public utilities
such as turbine leasing, sales, installation, maintenance, and turn-key “green energy” programs
can be advanced as incentives for utilities to promote small wind. A marketing and public
awareness campaign for RECs could assist in resolving grid balance and cross-subsidy issues.
Overcoming barriers. The majority of the barriers listed above are consistent with the 2002
U.S. Small Wind Turbine Industry Roadmap [29] that identified the following key market and
policy barriers:
• Market: Lack of effective standards, low visibility of the industry and technology,
misconceptions about the wind resources, insufficient capitalization, complicated
financial impact, lack of multilateral bank funding for export markets.
• Policy: Lack of federal incentives, restrictive zoning, NIMBY (not in my backyard) and
environmental concerns, excessive interconnection requirements and unequal billing
policies, undervaluation of green energy, disincentives in the tax code, lack of state-based
and national incentives, interconnection standards, and national models for net metering
and zoning rules.
Since the publication of the 2002 Roadmap, the industry has made progress on addressing many
of the challenges identified, in developing turbine standards, promoting small wind applications,
contributing to state and national policy discussions, and developing zoning models. A leading
industry member predicts that innovative turbine designs significantly reducing the cost of
energy will lead to tremendous success for the small wind industry [30].
Time-critical nature of small wind technology. Residential-scale wind technology is driven by
a range of customer needs and desires. These include customer requirements for reliable sources
of electric power, the desire to reduce utility bills by self-generation, and customer interest in
owning and running wind turbines. On-site electric power can be reliably provided by a number
of other technologies, including fossil- and renewable-fueled generators, PV, fuel cells, batteries,
and small hydro generators. These technologies can also serve to reduce utility bills. Other
efficiency and conservation methods include solar hot water, solar and geothermal heat
collectors and cooling, and building designs that include passive solar features, such as solar
lighting strategies. Therefore, several alternatives are competitively available for nearly all
customer motivations.
The main market drivers that impact customers’ choices among technologies are the cost and
perceived value of wind turbines available, effective incentive programs, the strength of provider
firms’ marketing and customer response capabilities, zoning and interconnection policies, and
high fuel prices. Most of these issues lead to broad-scale patterns characterized by gradual shifts
in market demand, rather than immediate or crisis-mode response. However, spikes in fuel prices
can motivate customer decisions to investigate and invest in alternatives that reduce customer
costs and risks, so it is important that advances in DWT technology are made in a timely manner
to address the adoption timeframe issues discussed previously in this report.

45
Subsidy Market for Residential Wind Distributed Generation
Market drivers. The most significant drivers of residential DWT market growth in the United
States are state incentives (buy-down programs, production incentives, tax credits or exemptions,
favorable financing), favorable policies (net metering, standardized interconnection), and high
retail electricity rates [31]. The DWT market has seen growth surges following the introduction
of state financial incentives and extensive public education campaigns. Policy actions, such as
state renewable portfolio standards, can increase interest and sale of renewable energy systems.
Green marketing programs such as green tags, renewable energy credits, and utility green rates
will have increasing impact on DWT market dynamics in the near future. These programs also
serve as a metric for consumers’ willingness to pay more for green energy products.
Several states and utilities have some form of incentives or enhanced buy-back rates for
distributed generation, but in many cases these programs are not available for DWT or are not
significant enough to move the market. One example of DWT’s exclusion is the $0.15 premium
paid to net-metered PV systems by WE Energies in southeastern Wisconsin. In 2005, the state of
Washington introduced a feed-in law to pay up to $2,000/year for both solar and wind generation
at $0.15/kWh; however, implementation of the program has been stalled. Massachusetts and
New Mexico have enacted similar production-based incentives directed toward PV. Market
experience in California and New York has shown that up-front financial incentives of
approximately 50% are required to accelerate residential DWT market adoption. Annualized net
metering can also be a market stimulus in areas with high retail rates.
Currently there are no federal incentives targeting small wind. However, Congressional and
industry support is increasing for a federal investment tax credit following the passage of the
30% investment tax credit for PV in the 2005 Federal Energy Policy Act as an opportunity to
“level the playing field.” Although residential wind is eligible for the USDA Farm Bill Section
9006 grants, the grants are only available for agricultural producers and much of the scoring
weight of applications is placed on the cost of energy, therefore limiting the applicability of this
program to residential wind projects. [Editorial note: The USDA 9006 grants are available to
rural homeowners and businesses, not just agricultural producers. Although the cost of energy
alternatives is one of the many criteria, it is not a majority portion of the scoring weight.]
Typically, Renewable Portfolio Standard rules do not effectively address small wind, although
states and advocates are showing increased interest in including set-asides or extra credit for PV
in RPS policies. Table 3-2 provides a summary of U.S. state small wind programs as of January
2006 [32].
Utility Industry Impact of Residential Distributed Generation
Investor-owned utilities. An increase in the number of residential wind turbines would likely
have minimal impact on the IOU industry because the grid penetration on any particular feeder
line is not likely to be very high. Therefore, the electrical impact and revenue loss for the local
utility will be minimal from residential wind turbines. It should be noted that utilities are
somewhat skeptical of DWT, in part a result of the common concerns about wind safety,
interconnection, and reliability.
Rural electric co-ops. As stated earlier, although some RECs support residential-scale
renewable energy systems, most view distributed generation as a cross-subsidy and inconsistent
with co-op principles that members share equally in the investment, risk, and benefits of the co-
op. Many RECs also perceive safety and reliability issues with distributed generation.

46
Co-ops in many areas of the country have grid capacity that could serve to aggregate and export
distributed generation. Some minor technical modifications may be required at the utility
substation to enable it to handle bi-directional power, but there are no technical reasons that the
rural distribution system cannot act like a collector system for gathering distributed wind power
and delivering it to the substation and higher voltage transmission system. Using the rural
electric distribution system would provide economic diversification and fair-policy benefits for
co-ops, economic returns for co-op members, and benefits to augment the national grid system.
Utilizing utilities to create market demand. There is a business opportunity for RECs and
IOUs to provide DWT sales, lease, installation, and maintenance services as a new revenue
source and customer service option. Offering turnkey systems to green-energy program
customers, similar to programs in place for PV, would benefit both the small wind industry and
consumers.

47
Table 3-2. Small Wind Programs by State

48
V. Technical Barriers Issues and Assessment
Technology Barriers for Distributed Wind Generation
The introduction of new grid-connected small wind generators in recent years along with major
market growth demonstrate the public’s desire to invest in residential-scale DWT. Economic
factors including total installed cost, cost of energy produced, and payback, as noted throughout
this study, drive the distributed generation market. While some industry participants are
optimistic that DWT technology can reach cost targets to produce energy for approximately
$0.05/kWh within the next few years, a more realistic near-term target may be the retail cost of
energy. The average U.S. retail rate was $0.09/kWh in 2004 [33]. Technological advances, in
addition to improved policy and financial incentives, can help the DWT industry to meet these
targets and effectively compete in the residential distributed generation market.
As shown in Table 3-3, the January 2006 survey of key industry participants conducted for this
study indicated that the most important technical challenges for the grid-connected residential
wind market are consumer credibility and the lack of effective performance standards, testing,
and ratings; product reliability, performance, and manufacturer support; the lack of equipment
choices for low wind regimes; and quiet operation.
Performance standards, testing, and ratings. Establishing hardware certification, conducting
certified field tests, and releasing consumer-friendly standardized ratings for small wind turbine
performance and sound levels are urgent priorities for the residential DWT industry in order to
assure consumers, zoning authorities, funding agencies, and lenders that small turbines are safe
and will perform as expected. This activity is critically important to increase industry credibility
and help prevent exaggerated claims and unethical marketing as new incentives become
available. In several cases, including Oregon and California, the lack of effective standards and
consistent ratings has delayed the implementation and funding of state rebate programs. Without
credible, widely used performance and reporting standards for small wind turbines, there is a risk
that some inexperienced manufacturers might sell unsafe or poorly performing systems that
could damage the reputation of the entire wind-energy industry.
Product reliability, performance, and manufacturer support. Power electronics, the most
unreliable element of DWT systems, would benefit from increased robustness, with more
attention paid to efficiency and power quality. Integrated monitors could report on long-term
system performance and track maintenance issues. Adding capabilities for PV inputs and
alternate outputs (such as resistance heat or battery charging) could increase utility confidence.
Small grid-tie inverters need to be more tolerant of ground faults and lightning, while also able to
load the turbine in absence of the grid to reduce acoustics and rotor loading. Manufacturer
support has been difficult because different companies usually build the inverter and the turbine.
A fresh look at small direct-drive induction machines is warranted as they offer the promise of
eliminating the inverter without introducing reliability problems of gearboxes. Most direct-drive
DWT alternators would also benefit from more powerful super-magnets, reduced cogging, and a
steeper or exponential output curve. Maximum power point tracker (MPPT) technology could
also aid DWT performance.
Technologies for low-wind regimes. The highest percentage of people interested and willing to
install small wind turbines do not live in high-wind regimes suitable for large commercial wind
farms but in moderate Class 2 and 3 sites. There is a significant need for easily constructed DWT
designs that function adequately and reliably in low wind regimes, work in turbulent

49
environments, and produce enough energy to satisfy the needs of these homeowners with an
anticipated long service-free life.
Survey respondents recommended R&D efforts for supervisory control systems that coordinate
wind turbine operation with load management (discretionary electric loads, heating loads,
refrigeration loads, etc.), energy storage to enhance the performance and economics of
distributed wind, and improved electronics and integration systems. Several industry players
believe that towers need to be much taller because in some cases the doubling of tower height
from 20 m to 40 m adds as little as 10% to system cost while increasing energy capture by 35%.
It should be noted, however, that a major industry player believes that a high-performance
turbine on a short tower is needed to address zoning restrictions and aesthetic considerations in
order to penetrate the potentially large suburban residential market. Regardless, new lighter-
weight tower materials and self-erecting capability, when coupled with simpler footing and
anchor systems, could reduce costs and enhance aesthetics for all turbine designs.
Reduction of acoustic emissions. As rotors are optimized for Class 2 and 3 wind resources,
higher tip speeds during gusts will create greater acoustic challenges as the optimal tip-speed
ratio will occur at lower wind speeds. Lower tip-speed ratios and higher blade solidity are worth
investigating. Computer models are needed to predict the complex behavior of passive rotor
control strategies along with quantifying blade, wind shaft, and tower reactions to help manage
rotor speed during governing and in unloaded conditions. Small changes to a blade design (such
as the tip or leading edge shape) can greatly aid in reducing acoustic emissions without the need
for redesigning the entire system. NREL’s initial R&D in this area has made promising
advances; however, more research and product development are needed to achieve consistently
quiet operation.

Complexity of Technology Barriers

The technology barriers discussed previously are not unique to any single small grid-tie wind
turbine manufacturer but are common to all. Addressing these challenges will require
considerable time and monetary resources beyond the capabilities of most manufacturers.
Performance certification along with examining reliability issues is the natural role of a single
independent national testing laboratory. Standards can be proposed by the industry, but
compliance testing must be overseen by an outside source. A third party familiar with the issues
of both inverter and turbine manufacturers is in the best position to bridge the gap and provide
innovative system solutions.
Many of the reliability improvements outlined in Section V can be applied incrementally in the
form of minor detailed design changes or exchanging one component for a more reliable but
otherwise equivalent component. Improved alternators, generators, and power electronics can be
introduced to a design with relative ease if their basic specifications (such as the torque vs. RPM
curve) are not significantly changed.

50
 Table 3-3. 2006 Grid-Connected Survey Responses

Biggest
Not an Moderately Moderately Response
Residential Wind Technical Barriers Medium Immediate
issue Low High Average
Challenge
Credibility with consumers/lack of
6% (2) 17% (6) 28% (10) 31% (11) 19% (7) 3.42
effective performance standards & ratings

Product Reliability 6% (2) 18% (6) 35% (12) 26% (9) 15% (5) 3.26

Sound levels/quiet operation 6% (2) 21% (7) 44% (15) 26% (9) 3% (1) 3.00

Manufacturer support 6% (2) 29% (10) 26% (9) 35% (12) 3% (1) 3.00

Installation 3% (1) 38% (13) 29% (10) 21% (7) 9% (3) 2.94

Hardware & shipping costs 9% (3) 40% (14) 26% (9) 14% (5) 11% (4) 2.80

Power electronics & software 9% (3) 30% (10) 42% (14) 15% (5) 3% (1) 2.73

Maintenance costs 9% (3) 35% (12) 44% (15) 12% (4) 0% (0) 2.59

Engineering or reengineering of specific

16% (4) 36% (9) 36% (9) 12% (3) 0% (0) 2.44
turbine components

High cut-in speed/complete turbine

13% (4) 47% (15) 28% (9) 9% (3) 3% (1) 2.44
redesign

Designing self-erecting capabilities 21% (7) 30% (10) 33% (11) 15% (5) 0% (0) 2.42

Some of the improvements may require major system redesigns. Certification may lead to
substantial redesign of a system if that system is found to be unsafe. A new airfoil may change
the rotor loads and performance so much that the supporting structure and controls would also
need to be adjusted. In most cases, the use of a new tower would not require redesign of the
turbine, but there may be situations, particularly for larger and/or constant-speed systems, where
system changes would be necessary.
While excessive sound levels from wind systems remain a large consumer issue, especially for
residential DWT to access the suburban market, for some manufacturers acoustics are farther
down the priority list. One possible reason is the complexity of the issue and the necessity of
hiring outside expertise largely beyond the manufacturers’ resources. In addition, because of its
complexity, variable geometry rotors have yet to be modeled satisfactorily. Such modeling
would surely benefit all passive controlled machine manufacturers, as well as manufacturers of
blade-pitch-governed machines that furl in high winds beyond their rated capacity and during
unloaded operation.
A dynamic look at a furling rotor under the influence of wildly varying angles of attack with
specific attention paid to acoustic emissions would greatly aid the advancement of small wind
technology. Development of such a model is likely beyond the scope of a single small turbine
manufacturer, but it would benefit nearly all small turbine designs.

51
Expected Turbine Size for Residential Distributed Generation
Small wind systems for grid-connected residential applications require turbines in the 1- to
25-kW range. The appropriate turbine size for residential applications is site specific and cannot
be generalized. This wide range in turbine size takes into account variations in residential
consumptions for different types of homes and energy conservation measures, the wind resource
available, seasonal load variations, and economic incentives, such as net metering. This turbine
range is also consistent with the wide variation in residential lot sizes and related zoning
provisions (e.g., smaller turbines for more densely populated areas).
The January 2006 survey of key industry participants conducted for this study revealed that the
most common size for the residential market falls in the 1-kW to 25-kW range (96% of the
responses falling within this range) based on the average U.S. residential consumption of 10,900
kWh per year [34]. Currently, turbine models rated at 1, 2.5, 3, 10, and 20 kW are commercially
available. Within this range of available turbines, there are notable gaps for 5- and 15-kW
systems where development and substantial market growth could be seen if products become
available. Turbines at the larger end of this range are expected to see only limited residential use
because they have less attractive economics related to high upfront costs, limitations on three-
phase service in residential areas, height and setback restrictions on many residential lot sizes,
and reduced production where there are height restrictions. Smaller turbines must be highly
efficient to offer significant power output and competitive cost per installed kW of capacity.
The DOE’s consumer guide for small wind electric systems states that for a typical home with an
annual electricity consumption of 10,000 kWh, depending on the wind resource, a 5- to 15-kW
wind turbine is required to make a significant contribution to this demand [35]. In the United
States, load varies substantially by region and season as well as household size. Table 3-4
provides a breakout of average residential load by state and region [36]. This information further
supports the need for various turbine sizes for the residential distributed generation market.
Feedback from dealers and installers reveals that many residential consumers install distributed
generation systems to offset electricity costs and benefit the environment; few expect to export
significant amounts of electricity to the grid [37]. Small wind residential systems, in the absence
of annualized net metering, are generally sized to generate approximately 80% of the residential
load to maximize the offset of retail energy.

52
 Table 3-4. Average Customer Load in kWh/year, by State and Segment

Required Cost of Energy

The survey conducted for this study indicated a range of $0.05-0.19/kWh in the retail cost of
energy required for wind systems to compete in the grid-connected residential market without
incentives, with most responses between $0.08 and $0.12/kWh. Consumers generally desire a
payback period of 8 to 12 years, assuming nominal rate increases. In addition to electric rates,
standby demand charges can impact the economics of small residential projects.
Because residential DWT is usually an alternative to grid-connected electricity, its cost must be
close to the cost of commercial energy to the end user for the project to be economically
competitive. The residential retail electricity rates vary widely across the U.S. (Figure 3-4), with
state averages ranging from about $0.06 to $0.18/kWh as of 2004 [38]. This data is useful to
calculate the required cost of energy for DWT economic returns and to identify the key states for
expected DWT market growth. The most common alternative to residential DWT, PV, currently
costs about $7-10/W or around $0.20-0.35/kWh without incentives, compared to $4-7/W or
$0.12-0.15/kW for grid-connected DWT sited in adequate wind resources [39].

53
 Figure 3-4. United States residential average retail price of electricity by state, 2004 (cents/kWh)

Seasonality and Geographic Nature of Wind Resource

In general, most grid-connected rural residential areas with adequate wind resources are suitable
for small wind turbines. However, turbulence resulting from the presence of trees, obstructions,
and uneven terrain remains a significant problem for residential wind systems, particularly for
the large suburban market and with towers that have less than 10 m clearance above nearby
obstacles.
Coastal marine environments can also cause problems for turbine operation over time. Power
electronics in unheated spaces suffer from corrosion of connections, relays, and contactors. In
warmer climates, serious tower erosion, slip ring corrosion, and shorting of windings can greatly
reduce system life.
The structure of net metering laws can have a significant affect on the economics of residential
systems. Seasonal wind variations are strong in many regions with the result that a residential
turbine may produce more energy than the consumer demands in some months and much less in
others. Banking of excess generation on a yearly basis allows customers to accumulate electricity
credits in the winter and spring when winds are typically strongest and use them in months when
less wind is available. Annual net metering enhances the value of wind energy and reduces the

54
cost and complexity of evaluating a site by eliminating questions regarding seasonal matching of
load and wind.
NREL’s research conducted to date has greatly aided performance in cold climates and with
roughness-tolerant blades and is an example of how federal research and development programs
can assist the industry.

Impact of Intermittency on Residential Wind Energy

The intermittency and variable nature of wind generation reduces the value of the electricity
generated to some utilities. However, for residential applications, net metering essentially
mitigates the intermittency issue because it lets wind turbine owners bank their excess generation
with the utility for later use when the wind turbines are not generating enough power to meet site
loads. If net metering is not available, intermittency of the wind resource reduces the amount of
wind-generated electricity that can be used because any excess cannot be banked and must be
granted or sold to the utility at “avoided cost.” Therefore, the owner has an incentive to undersize
the wind turbine so as to minimize the excess sold back to the utility; because smaller wind
turbines typically cost more per kWh, systems become less attractive without net metering.
Wind resources typically are not well correlated with utility load profiles. Therefore, utilities still
need to size their systems for peak load. While the cumulative amount of residential distributed
generation may be significant, peak load correlation may be promoted as added value with
utilities at the local level when there is a peak-coincident wind regime. Improved wind resource
maps will be necessary to improve turbine siting and resource matching.
A research and demonstration project for supervisory control systems that coordinate wind
turbine operation with load management (discretionary electric loads, heating loads, refrigeration
loads, etc.) and/or energy storage to enhance the performance and economics of distributed wind
may be helpful to the grid-connected DWT industry.
Interface between Turbine and Wind-Distributed Generation
Typically, the interface of residential wind turbines is 120/240V AC at 60 Hz as this is the
standard voltage and frequency of most residential loads. Smaller wind turbines in the range of 1
to 10 kW use permanent magnet alternators that generate AC of variable frequency and voltage
level, which must be converted using a power electronic inverter to DC and back to AC at
120/240V at 60 Hz. Most residential loads have single-phase service, limiting the size options
available for turbines without significant upgrades to the typical home’s electrical service. Larger
wind turbines are three-phase because of the simpler, more robust design of induction machines.
Any applications that smaller turbines might power in a residential setting will already have the
ability to interface with 120/240 V and 60 Hz AC. The development of more versatile, efficient,
reliable, and robust controllers/inverters with higher power quality is needed to improve the
interface of small wind systems with residential service.
VI. Recommended Areas of Technical Concentration
The Future
The United States dominates the international small-wind turbine industry, and the major
industry participants are small, privately owned companies. Other governments (e.g., United
Kingdom, China) are providing technical and market support for their fledgling small turbine

55
manufacturing industries. Federal assistance in the form of R&D, performance standards, testing,
and ratings will be required for U.S. manufacturers to continue to dominate and compete in the
DWT market.
Recommended areas of technical concentration for the grid-connected residential wind sector fall
into four primary areas.
Performance standards, testing, and ratings. In several cases, the lack of effective standards
and consistent ratings has delayed the implementation of state rebate programs for small wind
systems. The industry must establish hardware certification, conduct certified field tests, and
release consumer-friendly standardized ratings for small wind turbine performance and sound
levels. If these standards can be established, consumers will have reliable data upon which to
base purchase decisions, and industry credibility will be enhanced. The existence of industry
standards will also deter exaggerated product claims and unethical marketing. The industry
requires federal assistance to develop performance standards, testing, and ratings.
Reliability and performance. Power electronics are the most unreliable element in any wind
system. Numerous technical enhancements are needed for increased robustness, reliability, and
efficiency: integrated monitors, capabilities for PV inputs and alternate outputs, lightning-
tolerant components, acoustic and rotor loading enhancements, and maximum power point
tracker technology. Direct-drive turbine alternators would benefit from more powerful super-
magnets, reduced cogging, and a steeper or exponential output curve. Addressing reliability
problems with gearboxes for direct-drive induction machines without inverters is also warranted.
Low-wind regime technologies. New turbine technologies are required for cost-competitive
energy in low-wind regimes, often characteristic of the suburban residential areas, which offer
huge potential for distributed generation. Turbines must function reliably in low wind regimes
(Class 2 and 3) and turbulent environments resulting from topography, vegetation, or ground
structures. R&D investments include supervisory control systems that coordinate turbine
operation with load management, improved electronics and integration systems, and lighter-
weight towers with self-erecting capability.
Acoustics. Lower tip-speed ratios, higher solidity, and blade design will help reduce acoustic
emissions. Computer models to predict the complex behavior of variables to help manage rotor
speed are also needed.

56
 Table 3-5. Summary Information Table: Residential Power

Domestic Grid-Connected Residential Wind Market Potential*

Potential Market Size (cumulative installations)
2005 9 MW 1,800 Units
2010 29-44 MW 5,100-7,400 Units
2015 72-211 MW 10,000-18,000 Units
2020 170-1,000 MW 18,000-55,000 Units
Regions of Specific Interest
1. West Coast (California and Washington State)
2. Northeast and Mid-Atlantic (New York, Massachusetts, Pennsylvania, Vermont)
3. Midwest/Central (Texas, Ohio, Minnesota, Iowa, Wisconsin, Colorado)
International Grid-Connected Residential Wind Market Potential*
Potential Market Size (cumulative installations)
2005 5.5 MW 1,100 Units
2010 14-19 MW 2,500-3,300 Units
2015 34-86 MW 4,800-11,000 Units
2020 82-410 MW 8,700-37,000 Units
Countries of Specific Interest
1. Asia (Japan, China, India)
2. Europe (United Kingdom, Spain, Italy, Germany, Netherlands, Greece)
3. Central and South America
* Grid-connected residential capacity has historically been less than 5% of the total DWT market (up to
100 kW); however, that portion is expected to grow to more than 20% by 2020.
Key Market Barriers
1. Economics (total installed cost, cost of energy generated, payback period)
2. Lack of incentives (financial and policy, state and federal)
3. Zoning, permitting, neighbor perception, and public awareness
4. Connecting to the grid (interconnection standards, IOU, and REC issues)
Key Technical Barriers
1. Lack of performance standards, testing, and ratings
2. Product reliability
3. Technologies for low-wind regimes
4. Sound levels / quiet operation
Expected Turbine Size Range:
1 kW to 25 kW, market void for 5-kW and 15-kW turbines
Expected Turbine Coupling
Voltage: 120V to 240V, 60-Hz AC, the standard electrical service of most residential homes

57
VII. Conclusions
Small wind energy systems provide clean, renewable power for on-site use and help relieve
pressure on the nation’s power grid while providing domestic jobs and contributing to energy
security. America pioneered this technology in the 1920s, and it is the one renewable energy
technology that the United States still dominates. American companies lead in both technology
and world market share. In contrast to utility-scale wind turbines that no longer have a strong
U.S. manufacturing base, more than 90% of small wind turbines installed in the United States are
still manufactured in the United States.
Actively engaging federal, state, and local governments in addressing key economic, policy,
permitting, and public education barriers can ensure the realization of the energy security, self-
sufficiency, and reliability that DWT promises. The DWT market will be vitally enhanced by
cost-competitive and easily obtainable equipment, with production rates keeping up with
growing market demand. Technology advances with rotors, towers, and controllers can
substantially improve DWT performance, as well as ease installation complexity and
maintenance. Industry standards, consistent policy and financial incentives, and public education
campaigns will all help enable residential wind turbines to compete vigorously in the distributed
generation market. On the other hand, if there are not credible, widely used performance and
reporting standards for small wind turbines, there is a risk that some inexperienced
manufacturers might sell unsafe or poorly performing systems that could damage the reputation
of the entire wind energy industry.
Federal assistance in the form of R&D, support for performance and rating standards
development, and testing facilities and expertise will be required for U.S. manufacturers to
continue to dominate and compete in the DWT market. A third party familiar with the issues of
inverter and turbine manufacturers is in the best position to bridge the gap and provide
innovative system solutions. Performance certification along with examining reliability issues is
the natural role of a single independent national testing laboratory. Standards can be proposed by
the industry, but compliance testing must be overseen by an outside source. Residential
distributed wind generation would benefit from technology enhancements and public awareness
programs to shift the business paradigm of rural electric co-ops to include support services for
members generating wind power as a “cash crop.” Co-ops could aggregate wind power from
members for sale to outside parties, upgrading their extensive distribution and transmission
infrastructure for bi-directional power. Both IOUs and co-ops could offer sales, leasing,
installation, and/or maintenance of wind turbines for rural residential members.
The residential wind industry would benefit from a new detailed potential market analysis. With
the emergence of more accurate wind resource maps, new low-wind turbine technologies,
updated census data, and analysis of economic and social market drivers, a new in-depth market
study focused on consumer motivations would provide valuable information to inform research,
product development, marketing, and policy decisions.
Widespread deployment of small wind turbines can increase the public’s familiarity with wind-
energy generation, attract mainstream media coverage, help mitigate concerns about visual and
avian impacts, and pave the way for local community support for large wind developments.
Small turbines, in particular installations at schools and other high-visibility locations, can
become an important asset in reducing fears about unfamiliar technology, which in turn can help
reduce the expense and unpredictable nature of siting and permitting large wind developments.

58
For example, small turbines can be installed in selected neighborhoods to increase public
awareness of residential wind options and provide an additional benefit by educating students on
how electricity is made and the benefits of wind power. Neighborhood DWT installations can
also help utilities increase customer interest and participation in voluntary green power programs
and provide local “advertisements” of utilities’ involvement in renewable energy.
The international market, and more importantly the international impact on the growth of the
residential DWT market, is much larger than the capacity estimates indicate. The added
megawatts of distributed grid-connected electricity can make a huge difference to people around
the world. Energy security and grid stability can be greatly improved by spreading distributed
generation over a broad area. Efforts to enhance the viability of the DWT industry will have
major global benefits in securing future energy supplies and meeting increased demand for
decentralized, affordable clean power. Mainstream adoption of DWT can enhance awareness and
support for the entire wind-energy industry.
VIII. Acknowledgements
The authors thank the following individuals for providing invaluable industry insight and
information for this study: Robert Preus, Abundant Renewable Energy; Michael Bergey, Bergey
WindPower; Lawrence Mott, Earth Turbines; Larry Sherwood, Interstate Renewable Energy
Council; Jim Green, NREL; and Jennifer Oliver and Andy Kruse, Southwest Windpower.
We thank the following organizations who provided important perspectives in the DWT survey
conducted for this study: Abundant Renewable Energy; Aerofire Windpower; Aeromax;
Alternative Energy Institute; Appalachian State University; AWS Truewind LLC; Baca Green
Energy, LLC; Bergey Windpower Co.; California Energy Commission; Conergy Inc.; DC Power
Systems; Detronics Ltd; Earth Turbines, Inc.; EMS, LLC; Energy Options; Enertech, Inc.; ETM
Solar Works; Halus Power Systems; hullwind.org; Interstate Renewable Energy Council;
Intertribal Council On Utility Policy; Kidwind; Lawrence Berkeley National Laboratory; Lorax
Energy Systems, LLC; Maine State Energy Program; Minnesota Department of Commerce;
National Conference of State Legislatures; Northern Arizona University; Northern Power
Systems; NYSERDA; PPM Energy; Responsive Load Limited; Shuttleworth & Ingersoll; SMA
America; Solar Coaching; Southwest Windpower, Inc.; Suntec Energy Supply; Sustainable
Automation LLC; Sustainable Energy Developments, Inc.; The Stella Group, Ltd.; The Wind
Turbine Company; Ventera Energy Inc; and Vermont Department of Public Service.

IX. References
1. Windkraftanlagenmarkt 2005. Annual special edition of Erneuerbare Energien, Sun Media,
Hannover, Germany, April 2005. Reported in Renewable Energy World, “WIND: Small is
Beautiful,” September-October 2005, p. 123.
2. Rhoads-Weaver, H. American Wind Energy Association, 2006.
3. Leyshon, J. National Renewable Energy Laboratory, 2006.
www.nrel.gov/analysis/repis/whatisRepis.html
4. Renewable Energy World. “WIND: Small is Beautiful,” September-October 2005, p. 123.
5. UK Department of Trade and Industry, Energy Saving Trust ™ Econnect elementenergy,
“Potential for (UK) Microgeneration Study and Analysis,” 2005.

59
6. Jim Green, National Renewable Energy Lab. Conversation with Amy LeGere, January 2006.
7. National Rural Electric Cooperative Association White Paper on Wind Power, 2003.
8. Mid Wales Energy Agency. “Domestic Roof-Mounted Wind Turbines,” A publication for the
RES-e Project. 2005.
9. Renewable Devices, SWIFT Rooftop Wind Energy System, 2006.
www.renewabledevices.com
10. Home Power Magazine, Reader Survey. 2004.
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Level,” 2005. www.awea.org/AWEA_SWT_Market_Study_6-05.pdf.
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2002. www.awea.org/smallwind/documents/31958.pdf; REFOCUS, “Small Wind Turbines:
The Unsung Heroes of the Wind Industry,” March/April 2002.
13. Ryan Wiser, Lawrence Berkeley National Laboratory, “Building a Market for Small Wind,”
March 2004.
14. Database of State Incentives for Renewable Energy, 2006. www.dsireusa.org.
15. American Wind Energy Association, “Home and Farm Energy Systems: Reaching the Next
Level,” 2005. www.awea.org/AWEA_SWT_Market_Study_6-05.pdf.
16. Renewable Energy World, September-October 2005. p. 121.
17. Marbek Resource Consultants Ltd, “Survey of Small (300 W to 300 kW) Wind Turbine
Market in Canada.” 2005.
18. REFOCUS, “Small Wind Turbines: The Unsung Heroes of the Wind Industry,”
March/April 2002.
19. UK Department of Trade and Industry, Energy Saving Trust ™ Econnect elementenergy,
“Potential for (UK) Microgeneration Study and Analysis,” 2005.
20. Marbek Resource Consultants Ltd, “Survey of Small (300 W to 300 kW) Wind Turbine
Market in Canada,” 2005.
21. Ryan Wiser, Lawrence Berkeley National Laboratory, “An Overview of Domestic and
Global Markets for Wind Power Systems,” July 2004.
22. China Business Weekly, March 17, 2005 and www.martinot.info/china.htm.
23. UK Department of Trade and Industry, Energy Saving Trust ™ Econnect elementenergy,
“Potential for (UK) Microgeneration Study and Analysis,” 2005.
24. Renewable Energy World, “WIND: Small is Beautiful,” September-October 2005, p. 123.
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Market in Canada,” 2005.
26. Ryan Wiser, Lawrence Berkeley National Laboratory, “An Overview of Domestic and
Global Markets for Wind Power Systems,” July 2004.

60
27. Ryan Wiser, Lawrence Berkeley National Laboratory, “An Overview of Domestic and
Global Markets for Wind Power Systems,” July 2004.
28. www.eere.energy.gov/windandhydro/windpoweringamerica/tools.asp.
29. American Wind Energy Association, “The U.S. Small Wind Turbine Industry Roadmap,”
2002. www.awea.org/smallwind/documents/31958.pdf.
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31. Ryan Wiser, Lawrence Berkeley National Laboratory, “An Overview of Domestic and
Global Markets for Wind Power Systems,” July 2004.
32. Larry Sherwood, Interstate Renewable Energy Council, June 2006.
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Power Industry Report.
34. U.S. Department of Energy, Energy Information Administration, Energy use for 2004:
Based upon 118,763,768 residential customers and 1,293,586,727 MWh in retail sales to
residential customers. www.eia.doe.gov/fuelelectric.html.
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Electric Systems: A U.S. Consumers Guide,” 2005.
www.windpoweringamerica.gov/pdfs/small_wind/small_wind_guide.pdf.
36. Navigant Consulting, Clean Power Research, “PV Grid Connected Market Potential under a
Cost Breakthrough Scenario,” September 2004. Prepared for The Energy Foundation.
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38. U.S. Department of Energy, Energy Information Administration. 2004 Annual Electric
Power Industry Report.
39. Mike Nelson, Northwest Solar Center. Conversation with Heather Rhoads-Weaver, April
2006.

X. Bibliography
American Wind Energy Association. Home and Farm Energy Systems: Reaching the Next
Level. 2005. www.awea.org/AWEA_SWT_Market_Study_6-05.pdf.
American Wind Energy Association. The U.S. Small Wind Turbine Industry Roadmap.
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Marbek Resource Consultants Limited. Survey of Small (300 W to 300 KW) Wind Turbine
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March 2004.

62
Chapter 4. Farm, Industry, and Small Business

Prepared by:
Ken L. Starcher and Vaughn C. Nelson, West Texas A&M University, Alternative Energy
Institute
Robert E. Foster and Luis Estrada, New Mexico State University, Southwest Technology
Development Institute
I. Executive Summary
Wind energy has proven to be one of the most economical, modular, and readily connected
renewable technologies. Its use in agricultural, production plants, and small business/home
applications will continue to grow for the next 20 years and beyond.
This report is a summary of the expected growth areas, the growth rates, the necessary turbine
style/sizes, and the barriers to sustainable market growth for the farm, industry, and small
business wind market sector.
The prime barrier is cost. Too few turbines are currently produced to obtain the economies of
scale through volume production. Thus, favorable life-cycle costs will not be realized to sell
these mid-size turbines alone. The economic payback has to be on the order of 4 to 7 years to be
attractive compared to other similarly sized investments for agribusiness. The cost of energy
(COE) is in direct competition to that of utility-provided energy at $10–$15/MWh.
The second barrier is lack of installed infrastructure for the ongoing sales and maintenance of a
distributed array of many types of turbines. Enough income must exist within 150 miles of a
central service site to support $1 million/year in sales (20-25 turbines/year of 50-kW units). An
installed base of 300 turbines is needed for an area to support a maintenance facility fulltime.
However, a model of similar scale exists for the large farm implement market, covering the same
size area, expected sales per year, and installed repair/re-supply base.
The lack of enough matching turbines to the loads is the third most important barrier to the
implementation of wind for the farm and small-business market. A 10-kW unit will meet all
small loads. These units are available and easily connected through net billing laws in most states
already allowing this size unit. Likewise, 50-kW turbines are in production and can help meet the
farm-ranch-small irrigation market. Unfortunately, 100- to 250-kW units for center-pivot
irrigation and agri-processing industry are very limited. And the 250- to 500-kW units for large
industrial loads are no longer made in any significant quantities.
One way to improve the potential sales is not to focus on turbine sales alone, but to develop the
market in combination with demand-side energy management and full service of the turbines
after installation. This would reduce owners’ worries regarding long-term O&M and also ensure
that energy produced was used at the best value to the turbine owner (displacing energy that
would have been purchased at retail rates from the utility).

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II. Application Background
Wind energy use in the agricultural sector has a history of more than 1,000 years. Transportation
of goods from source to market by sailing vessels and the use of wind for food processing and
land reclamation in Europe demonstrate that wind power has enjoyed a long, broad-based
acceptance as an energy source.
During the past century, the wind has provided water for ranching and transportation
requirements of American railways, providing a ready corridor for products to go from the
Midwest producers to the populated consumer locations on the coasts. Before rural
electrification, electric power was often supplied by small wind chargers with an on-site storage
system of batteries. Wind power allowed rural residences to be entertained and informed and
provided electric light and the powering of small appliances.
Urban communities were also able to use renewables with the passage of the Public Utility
Regulatory Policy Act (PURPA), allowing the interconnection of qualified renewable energy
products. The generator size limits have only recently been raised to 20 MW by the Federal
government. This should help promote the use of small wind for the farm, industry, and small
business market sector.
III. Current Status of Activities for this Application
A 1990 report on the wind market in the Great Plains [1] described an annual market of 10,000,
6,000, and 4,000 units for turbine sizes of 10 kW, 50 kW, and 250 kW, respectively. But this was
true only if all production could be valued at retail rates. Using this $10/MWH value resulted in
$660 million/year of expected value to the wind turbine owners. That report also stated that wind
turbines would start to be fully economic in small business, agribusiness, and industrial-sized
applications in 2000 to 2005.
The development of wind turbines for the farm, industry, and small business market has been
overshadowed by the development of wind turbines for the utility-scale market. Manufacturers
have not emphasized production of the smaller turbines in more than 20 years, allowing the
greater profits and market share to be driven by the megawatt-class turbines. Articles like those
in North American Windpower reveal that small projects scattered in a wide geographic area can
offer substantial system benefits [2]. Even though there is a penalty for single or small projects
(5%-15% increased cost/turbine), they can be matched by better distribution of income/value
than direct sales of electricity to utilities from a centralized wind plant. Small- and medium-sized
wind turbine manufacturers exist all over the world [3], but the volume of machines needed to
meet the expected market is not currently available.
The value of displacing conventional energy versus direct sale of energy can be substantial (retail
rate of $6-8/MWh versus wholesale rate of $2-3/MWh). The loss of Production Tax Credit
(PTC) assistance from the independent sales of electricity is a burden for on-site users of wind
energy, but not one that is too onerous to bear in these smaller configurations. The advantage of
the increased value of displaced energy produced on site compared to direct sale of energy to a
utility means that turbines can return value to the owner faster if interconnect can be allowed at
higher power levels.

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IV. Market Barriers Issues and Assessment
Expected Market in the United States
The American Wind Energy Association (AWEA) conducted a complete market survey of more
than 250 wind industry members. The results were included in a report on other barriers [4]. The
questionnaire revealed the following areas of concern in the small wind (<100 kW) industry:
economics, lack of consistent incentives, zoning-permitting, and interconnection issues.
Additional views were collected from the U.S. Department of Agriculture and consultations with
manufacturers of mid-size and small-size turbines.
The market can take advantage of changing regulations to create sustainable growth for wind for
small businesses and farms, given the Federal support in the United States of interconnection
rules and individual states net-billing agreements. The turbine sizes that are most useful need to
generate about 750 – 1,000 MWh per year in a decent (upper Class 3) wind regime. This is
equivalent to a 250- to 300-kW unit. These sized units, returning $40,000 – $60,000/yr, would
have simple paybacks in approximately 10 years. But this approach can only work if net billing
is allowed and all the energy is used on-site (no wholesale sale of excess energy to the utility).
This would help address the respondents’ concern that economics is the driving factor in the
turbines’ perceived value.
Currently, the readily available turbine sizes are smaller than the long-term market sizes (10 to
50 kW, not 250 to 400kW), resulting in higher installed cost/kW. Economics are such that, even
with net billing, it is difficult to recoup the initial cost of the system within a 15-year time frame.
This has to be reduced to 10 years or less payback to obtain a rate of return that is acceptable for
the high capital investment.
These smaller wind systems have worked in the United States, and when properly sized along
with utility cooperation, the systems performed with few start-up problems or long-term
difficulties [5]. But even the more successful projects have increased in size toward the utility-
scale turbines because those are most readily available for projects. Also, siting projects in states
with significant incentives (Illinois, Minnesota, Iowa, Colorado) shows that where local value is
placed on renewables, it is readily implemented.
There is no specific problem with the turbine technology; the former sizes and designs are
simply no longer in the production stream. The units that are available are at a premium because
of low production volumes. Good turbines that are technically sophisticated are commercially
available, but only for the smaller-size loads/energy use projects, delivering 100 to 150 MWh per
year. But this energy level is not enough to offset the energy needed in most agricultural or food
processing industries that are considered potential wind energy users.
Non-technical barriers are mostly political in nature. The lack of consistent interconnection
standards across states hurts the utilization of wind in some markets. The wide range of net
billing techniques used in different states means that there are widely varying returns for units
even in areas of similar wind power potential. There is no simple solution for these policy
differences, but focusing on the states with the better wind resources and agricultural/industrial
base (Midwest, Rockies, Southeast coast) to improve the existing net billing rules would provide
the most fertile ground for future wind energy growth for this market sector.
The existing mid-size turbine designs are from the 1980s and have historically been rugged,
reliable, and readily reproduced. However, they are no longer the desired turbine sizes of choice

63
for the utility-scale market and have fallen off the production horizon. This shows that large,
megawatt-scale turbines have begun to displace conventional energy sources and that
conventional energy costs have increased sufficiently so that wind is a viable economic
consideration. But at present, the utility market is driving megawatt-size wind turbine
production.
Current manufacturers are using the turbines that are still in production and trying to match these
smaller-scale energy loads (120 – 175 MWh/year) to the performance of available turbines. A
recent meeting in Amarillo, Texas, hosted by Entegrity Wind Systems [6] (formerly Atlantic
Orient Corporation) introduced several agricultural businesses to the idea of wind turbines
displacing conventional energy use on the farm and the expected economics for such systems.
The best incentives for the wind systems are currently the Federal funds available through
Section 9006 of the U.S. Farm Bill and the guaranteed loan program of the U.S. Department of
Agriculture. State programs have inconsistent support for renewables for the mid-size turbine
market sector, with New Jersey the only state allowing the interconnection of up to 2-MW
turbines and allowing net energy billing over a 12-month time frame.
The expected wind energy markets for farm, industry, and small businesses are for any business
that has energy use and sufficient resource to justify the use of wind energy. This includes the
following:
• Agriculture industry
o Meat packing (large use of hot water/cooling facilities year round)
o Food processing (industrial-scale plants that operate annually)
o Peanuts, cheese, confined feedlots, etc.
o Irrigation (center pivot units of 1/8 to 1/2 mile radius)
• Machining
o Foundries (metal heating and industrial-sized movements of metal)
o Metal smelting
• Small business – similar to home-size markets, similar-sized turbines.
These industries and businesses have traditionally been found in rural areas of the United States
and as such have fewer impediments to zoning and use of wind energy because they have more
suitable land space for turbine installation.
The expected COE has to be within 10% of the conventional sources of energy with expected
annual growth in conventional energy to be 3% to 5% per year. Most agribusinesses will begin to
lock in or hedge costs that they see as rising with other resources or long-term purchase
agreements if they see the real costs as being equal to the projected costs in a 3- to 4-year time
frame. Long-term planning for many businesses often includes an analysis of these types of
operational expenses.
A case in point is the Owens-Corning fiberglass plant in Amarillo, Texas, which has considered
installing wind turbines on the property to offset long-term energy costs every 2 to 3 years over
the past 8 years. Conventional power purchase has been deemed the least-cost option. But the

64
next period of review may change because the projected energy cost growth has doubled
compared to estimates from 2004.
Studies of the seasonal wind resource variation show that the change in crop type and the
watering schedule can be adjusted to meet the wind resource, allowing for maximum energy use
during the production season. The variation with wind on power output is well understood, but
with good cooperation between the user and the local utility/cooperative, the electrical problems
are minimal and the only concern is the length of time the billing can be carried on the books.
The New Jersey model allows wind energy from strong months to be used in the lower-
production months. This is a good model that other states should consider; it would work well in
any of the target areas: Midwest, Rocky Mountains, and Southeast coast.
By using the standard utility inter-tie connection, the mid-size wind systems can be standardized
for the U.S. grid. Making the flow of energy seamless from the utility to the user and back is the
goal. This retains the benefit of the production on-site and having the conventional energy source
as the backup to supply all the energy needed for the plant/business operation at any time,
whether or not the wind is blowing.

Expected International Market

Internationally, the market will be driven by the need for energy and the desire for clean energy,
with economics also as a consideration but with the other two factors playing a more deciding
role for or against wind. Again the desire is for the larger-scale turbines placed in very good
wind regions for a better economic return on investment. But in many cases overseas, there is
subsidized support for conventional energy prices at the federal level, and so the cost paid by the
consumer is lower than the true value of energy. This places wind energy at a disadvantage
unless strong federal policies offset the value for the energy from renewables. The feed-in tariff
rules in Germany have aided the industry there for years, setting a very good value for the
electricity sent to the utility grid. The Peoples Republic of China has a state goal for the use of
renewables at local and industry levels. The current 5-year plan demands the use of a set amount
of renewables. This type of support will continue to push the wind markets in those countries in
the future.
V. Technical Barriers Issues and Assessment
Studies have consistently shown that most potential users of small- to mid-size wind turbines for
the farm, industry, and small business sector request ruggedness and reliability (low long-term
maintenance). Users do not want to be burdened with a system that takes too much time from
their other ongoing operations. Unfortunately, without a vast installed dealer network, some
service and oversight has to come from the local users of wind systems. So if potential users are
more familiar with required procedures, expected performance, and the typical operational
characteristics of the turbine they plan to use, they will be better able to monitor non-optimal
conditions, controlling the turbine or shutting it down until a trained repair crew can make sure
the turbine can be returned to full-time operational use.
The second most important concern is that because wind turbines are tall, they can attract direct
lightning strikes. In the past, the conventional wisdom was that full lightning protection was
impossible and that steps to minimize or offer alternate paths for the bolt/surge to dissipate
without damage to components of the turbine were available, but not foolproof. Improved blade

65
production methods have allowed for lightning pathways to be incorporated into the fabric of the
blades and thus allow for the discharge of high-static conditions before they can build up to
lightning-bolt levels. Improved electronics protection on the utility interconnection and the
systems-controller sensors and electrical connections has improved turbine life and reduced
downtimes.
For those units that are considered small scale but still require utility inter-tie inverters, the
reliability and longevity of these electronics units is of concern. Experience shows that even with
recommended grounding and protection devices, the possibility for inverter damage from direct
or nearby lightning strikes is never fully mitigated. The loss for the user is lost energy while a
unit is repaired, as well as the replacement costs for electrically and mechanically removing the
unit to return it for repair and then properly re-installing the unit once it is returned.
None of these perceived barriers alone will stop the use of the technology. The wind turbine
should still be considered like any other piece of industrial equipment; it is used to produce
energy when the conditions are right and requires some small degree of supervision and
attunement so that proper operation is readily noticed. When it’s not “quite right,” it is removed
from service until it is repaired.
The turbine sizes are in two stages. The smaller systems of 10 to 60 kW would be used for the
home and small businesses/farm. The mid-size turbines of 250 to 400 kW would be used for the
larger industrial operations that can utilize the energy from a system this size, while maintaining
the utility interconnection on this scale and installing the electrical connections on the owner’s
side of the utility meter. This distributed energy method of using what is needed on site would
reduce stress on the utility lines, rather than becoming a large negative load outside the utility
control. It would avoid many of the megawatt-scale system problems associated with utility
system stability and interaction but still be of sufficient scale that a good economic return can be
realized over time, thus making the mid-size wind turbines attractive to individual business
operations.

VI. Recommended Areas of Technical Concentration

Technical problems are not as great a concern as the perceptual and economic issues. Large wind
is getting a large boost from Federal and state incentives for large wind farm facilities
(accelerated depreciation, Production Tax Credits, etc.). Unfortunately, this same level of support
for farm/industry-sized turbines has been much less substantial.
California offers a generous state buyback policy of $2,500 for the first 7.5 kW, then $1,500/kW
up to 30 kW. Ohio is another state with aggressive support for wind energy of similar scale. New
Jersey has the fewest limits for a wind turbine system (2 MW installed capacity and 12-month
billing for net metering). Other states offer programs (for a comprehensive overview of available
incentive programs, refer to the Database of State Incentives for Renewable Energy at
www.dsireusa.org [7].
A future incentive program might be based on the non-emission/creation of NOx or SOx.
Distributed wind systems should be allowed to have their fair share of any tradable credits or
value once carbon-based trading for greenhouse gases becomes widespread (probably in the next
decade).

66
A ready market for distributed wind energy systems would be to allow rural electric cooperatives
to install and operate their own wind facilities to offset energy costs from their wholesale
supplier. This would match the rural connection, make the co-ops a maker of renewables rather
than a skeptic of renewables, and match the expected windy areas of the nation to the key
electrical providers in these areas.
A new possible boost to development will be the 25 x ’25 program that is endorsed by several
key agribusiness firms and farm cooperatives. While the main focus of these programs is the use
of agriculture products in non-conventional energy sources (biofuels/biomass), the adoption of
the targets of 25% of the U.S. energy sources coming from our rich agricultural lands by the year
2025 will boost the use of dedicated wind energy sources. While most of the rhetoric included in
the proposal that concerns wind energy is directed to large-scale wind farms, the benefit of
distributed energy will have to be included in meeting this ambitious goal in the desired time
frame. The expected impact to the numbers of units that can be installed is considered to be an
increase on the order of 10% to 15% of the projections made in the summary table. Since there is
no specific target or plan yet in place for this initiative, no impact is predicted from it. It is shown
in our figures in the summary table.
Finally, educational development for small businesses, industry, and farms on how to use mid-
size wind turbines to help meet their energy needs could be very helpful. Most potential users are
simply not aware of how wind energy can help offset their energy costs, nor do they understand
the technology or net metering. A few well-placed, successful, and publicized industry pilot
installations could help lead the way toward larger-scale adoption across the industry sectors.
VII. Conclusions
The key concern for the wind industry will always be maximizing profit. When there is a market
for a product or turbine type/size, such as the farm, industry, and small business market, a
manufacturer will step up to meet that market potential. This will only happen when a long-term
profit can be made for the company. When turbine sizes are available to meet a particular need,
end users will compare costs to install/operate/maintain the turbine versus purchasing energy and
will choose the option that makes economic sense. Unfortunately, the manufactured wind turbine
sizes are, for the most part, below or above the required turbine sizes that can readily serve the
farm, industry, and small business market.
However, things may change as larger-capacity net metering policies gain in popularity. One
turbine manufacturer is in production right now for a 50-kW unit and is willing to ramp up
production; indeed, they are trying to generate market interest to make this a sustained turbine
size/style. They are placing turbines in areas of increased public view to gain valuable public
acceptance, as well as providing the performance information online to demonstrate how the unit
is operating over time.
The wind industry turbine manufacturers have drifted into producing higher-return, larger
megawatt-scale turbines. Currently, one manufacturer [8] has a prototype 250-kW turbine
undergoing testing, but this prototype has yet to be produced in volume. The designs are there,
but production volumes of these turbines are currently very low and, thus, costs are high. Mid-
size turbines are no longer in the production plans of major manufacturers.
The main issues for the farm, industry, and small business wind energy sector are more political
than technical. The growth of this market sector will largely hinge on increasing fuel prices, net

67
metering, and potential government incentives for clean energy technologies. The market will
grow, but the rate of growth will depend on the convergence of these factors.

Table 4-1. Summary Information Table: Farm, Industry, and Small Business

Domestic Market
Regions of Specific Interest

(with net billing) (not year dependent)

2010 200-300 turbines/yr 1. MidWest (Great Plains)
2015 500-700 turbines/yr 2. Inter-Mountain (Rockies)
2020 1,000 – 1,500 turbines/yr 3. Southeast Coastal Areas
International Market Countries of Specific International Interest
(dependent on incentives) (not year-dependent)
2010 100-200 turbines/yr 1. Western Europe
2015 200-300 turbines/yr 2. China/India
2020 400-600 turbines/yr 3. Russia
Key Technical Barriers
Underdeveloped turbine sizes for irrigation market
Maintenance availability
Grounding/lightning susceptibility
Inverter Reliability and Availability
Key Market Barriers
Net annual energy billing
System costs, initial and long-term operation
PTC/PPA unavailable to farmers/small businesses if energy not sold to third party
Rural electric co-ops’ permission to inter-tie
Expected Turbine Size Range
250 kW to 500 kW irrigation, industrial-sized loads
10 kW to 60 kW net-billing applications, on-site use of energy
Expected Turbine Coupling
Mechanical (High Speed:__; Low Speed:__; Nominal speed:_____ )
Electrical (Voltage: 240 to 480; AC X , DC__; Variable__ Constant X )
Thermal (Temperature: ______ ) Other: ___________

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VIII. References
1. Miller, J.D.; Willard, G. “Market for Wind Turbines in the Great Plains.” Windpower 1990
Proceedings; September 24-28, 1990, Washington, D.C., pp. 206-210.
2. Estill, G. “Industry at Large: Community Wind.” North American Windpower, March 2006,
Vol 3, Number 2, pp.18-21.
3. Nybroe, C. www.windmission.dk/workshop/wind sites.html.
4. Market & Technical Barriers for Small-Scale Community Wind Applications, NREL/DOE
draft document.
5. Windustry Case Studies. www.windustry.org/community/projects.htm.
6. Entegrity Wind Systems, March 13, 2006, Amarillo, Texas, Ambassador Hotel – USDA,
Bushland meeting/tour. Presentations and tour of systems for agricultural use of wind
energy on the farm and ranch.
7. Database of State Incentives for Renewable Energy. www.dsireusa.org.
8. Bergey Windpower Co. Wal-Mart installations at super stores with renewable energy and
sustainable energy focus,
www.walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=445&contId=5642,
www.walmartstores.com/Aurora/index.html#.
9. The Wind Turbine Company. www.windturbinecompany.com/milestones/index.html.

XI. Bibliography
Consumer Energy Center, California, Emerging Renewables Program.
www.consumerenergycenter.org/erprebate/program.html#rebatelevel.

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Chapter 5. “Small-Scale” Community Wind Power

Prepared by:
Heather Rhoads-Weaver and Meg Gluckman, eFormative Options, L.L.C.
Brian Antonich and Lisa Daniels, Windustry
Jonny Holz and Steve Grover, ECONorthwest
Craig Hansen, Windward Engineering
Mick Sagrillo, Sagrillo Power & Light
Ed Kennell, Clean Energy Products
Thomas Wind, Wind Utility Consulting
Ron Lehr, American Wind Energy Association
Amy LeGere, NetGenuity
Thom Wallace, Ecofusion Multimedia
I. Executive Summary
This study estimates potential market growth and evaluates the major market and technical
barriers that currently impede the development of “small-scale” community wind, a subset of the
larger community-owned wind market utilizing turbines of 1 MW or less, to assist NREL, DOE,
and the Wind and Hydropower Technologies Program in assessing potential technical research
areas with large market opportunities. Market and technical questions are explored to identify
high-priority areas for the Program to consider for future investment.
A clear and available market for “small-scale” community wind is established. The current size
of this market segment is estimated at 11,000 turbines currently installed internationally, totaling
8.2 GW, which is approximately 20% of the 2005 EU wind market. As a mid-point forecast
between lower- and upper-bound estimates, we expect this sector of the distributed wind turbine
(DWT) market to grow to about 130,000 units, totaling 99 GW, by 2020. The U.S. “small-scale”
community wind market and U.S. participation in the international market are currently facing
major market and technical constraints that may be reduced or eliminated with focused Program
support.
This study concludes that the “small-scale” community market would be enhanced by research
and development efforts, with the following high-priority research areas identified and
recommended to be considered in further, more detailed studies:
• Conducting grid-integration studies to identify the potential for “small-scale” wind
development that would decrease or eliminate the need for transmission system upgrades
• Advancing innovative designs for mid-size turbines, rotors, and towers optimized for Class 3
winds, addressing productivity, installation, and maintenance issues
• Designing, testing, and certifying advanced remote-monitored controllers to simplify the grid
interconnection process and to support weak rural distribution systems
• Developing technical training programs for mid-size turbine technicians (windsmiths)
• Developing easy-to-use computer tools for analyzing project economics and modeling wind
resources to assist with siting, seeking project financing, negotiating power purchase
agreements, and taking advantage of incentives

70
• Developing a set of regional model zoning ordinances and educating local planning officials
to aid in the adoption of responsible siting requirements, while streamlining approval
processes for “small-scale” community wind.
II. Application Background
The scope of this study addresses “small-scale” community wind, a subset of the larger
community-owned wind market. “Small-scale” community wind is defined as projects utilizing
mid-size turbines of 1 MW or less in nameplate capacity, where an entity from the local area has
a significant financial stake in the project outcome. “Small-scale” community wind projects
typically connect to 13.8-kV or lower distribution lines, either behind the meter—thus offsetting
a portion or all of the electricity used on-site by a load in the community—or using a dedicated
transformer with all energy sold to the interconnecting utility.
“Small-scale” community wind projects currently represent a decreasing segment of the larger
community wind market because projects with larger turbines are becoming more economical,
and turbines below 1 MW are increasingly less available for such projects. The trend can be seen
in Figure 5.1, which shows large community wind projects in the advanced planning stages and
projected to be commissioned by 2010. This study primarily examines the smaller segment
shown in Figure 5.1.
In recent years, with advances in turbine production and technology, wind energy has become
competitive with traditional forms of electrical generation, and community stakeholders have
latched onto wind-derived energy as a way to diversify and revitalize rural economies and
become more energy independent. Numerous schools, universities, farmers, Native American
Tribes, small businesses, rural electric cooperatives, municipal utilities, and even abbeys have
installed their own mid-size and large wind turbines to promote environmental responsibility and
keep energy dollars local.
According to Windustry’s community wind project database, about 270 MW of community-
owned wind projects are currently installed in the United States, representing $250 million in
investment in rural communities. Of these, about 110 MW meet our definition of “small-scale”
community wind, utilizing wind turbines under 1 MW. (See Appendix A for a table of “small-
scale” community wind projects.)

71
 U.S. Community Wind Market Growth Forecast
1,800
1,600 Large Community Wind Development
1,400
Small-Scale Projects (1 MW or less)
MW (upper bound)

1,200
1,000
800
600
400
200
0
2005 2007 2010
Year

Figure 5-1. United States large- and small-scale community wind energy market upper-bound
growth forecast

Unique business structures have been developed to aid community wind projects in taking
advantage of federal and state incentives, such as the “flip” structure that involves an equity
investor with a large passive tax appetite to allow community-owned projects to utilize the
federal Production Tax Credit (PTC). Typically the equity investor is majority owner of the
project for the first 10 years, when the tax credit is available to the project. The equity investor
then flips its stake in the project to the community owners, usually accompanied by a payment
from the community owners to the investor. This flip typically occurs in Year 11 or when the tax
investor reaches the target return on investment, which is allowed to occur later.
Because of the wind industry’s increasing focus on multi-megawatt turbines, the “small-scale”
community wind sector is facing a major challenge of product availability. New cost-competitive
mid-size turbine designs will be needed to ensure the future of the “small-scale” community
wind market.
III. Current Status of Community Wind
The PTC has fostered rapid growth in large-scale wind development with periods of stagnation
resulting from the advance planning requirements of large wind projects, typically 2 to 3 years,
and the timing of extensions of the incentive, which have expired three times since it was created
by Congress in 1992. This boom-and-bust cycle has caused apprehension for wind turbine
manufacturing firms interested in opening facilities in the United States and led to major
shortages of equipment, personnel, and business and legal expertise for smaller wind project
developments while the incentive is available. Large wind turbines above about 900 kW are
essentially unavailable for purchase for community wind projects until 2008, after the current
PTC expires. In addition, very few suppliers are currently producing turbines in the 100- to
1000-kW range.
Elected officials across the United States and internationally are showing increased support for
small and community wind. The 2005 Federal Energy Policy Act included a provision initiating

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Clean Renewable Energy Bonds (CREBs) [1] that allow electric cooperatives, government
agencies, tribal governments, non-profit organizations, and other entities that cannot utilize the
PTC to apply for low-interest bonds to help finance wind and other renewable energy resources
for local economic development. CREBs are an important new financing instrument for project
ownership structures without a tax appetite and that don’t quality for the PTC.
The state of Minnesota recently passed into law Community-Based Energy Development
(C-BED), a special rate structure requiring utilities in the state to enter negotiations with
qualifying, locally owned wind energy projects for payments in the first 10 years of the power
purchase agreement at a higher rate than the past 10 years. The front-loaded payments are
calculated based on a maximum of 2.7 cents/kWh net present value and the purchasing utility’s
discount rate that is used for daily business operations. This rate structure does not impact the
utility’s bottom line but greatly aids the wind project with debt service over the first 10 years of
the project, helping to acquire financing, one of the major barriers for “small-scale” community
wind project developments.
The state of Iowa recently passed a tradable production tax credit that can be sold to a third
party. This incentive was passed to help level the playing field between large corporate-owned
wind projects that can easily take advantage of the federal PTC and locally owned community
projects for farmers, schools, and other non-profit organizations that are either tax-exempt or
cannot take advantage of the federal PTC. The program provided incentives for up to 90 MW of
wind projects and was fully subscribed within 3 weeks of its first availability.
Currently, there are at least 440 MW of new community-owned wind projects in the advanced
planning stages, located mostly in the Midwest. The Governor of Minnesota has pledged that 800
MW of new C-BED projects be developed within the state. However, community wind project
developers are expecting to utilize turbines larger than 1 MW for nearly all of this new capacity
because of their better economics. Nebraska, Texas, and Colorado are also emerging as leaders
in the community wind market. Other states, including Oregon and Washington, have taken an
interest in community wind, commissioning several studies to examine the barriers, economic
impacts, and best models for community wind energy development [2].
John Deere recently provided equity investments in several wind energy projects in Minnesota,
Texas, and other rural areas in the United States and abroad, creating a business unit to provide
project development, debt financing, and other services to farmers interested in harvesting the
wind. Deere’s new wind-energy initiative, supporting the company’s goal of “helping its
customers improve their profitability and productivity,” signifies major growth potential in the
market segment in attracting such a leading financial service provider.
More than 500 participants attended Windustry’s third national Community Wind Energy
Conference in Des Moines, Iowa, in March 2006 to learn about new models, best practices, and
new state and federal programs that will promote community wind energy in the future.

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IV. Market Barriers Issues & Assessment
Expected U.S. Market for “Small-Scale” Community Wind Applications
To date, about 110 MW of “small-scale” community wind capacity is installed in the United
States, primarily in the Midwest [3] 5. Minnesota’s experience with community wind may be
viewed as an indicator of the potential market for community wind in the United States given
sufficient incentives, adequate wind resources, and an ample supply of cost-effective mid-size
wind turbines. In 1997, Minnesota enacted a production incentive available for the first 100 MW
of “small-scale” wind projects (less than 2 MW each) that applied. After 5 years, the limit was
reached, and in 2003 the state legislature extended the incentive to cover an additional 100 MW.
This time, the incentive was fully subscribed within 6 months [4].6 Even more indicative of
potential growth is the fact that community wind projects in Minnesota are becoming cost
competitive with larger commercial projects [5].
To estimate the future domestic market of “small-scale” community wind, this study examined
both the DOE Energy Information Administration (EIA) U.S. wind capacity growth estimates
and historical U.S. wind capacity growth. Because community wind has recently emerged in the
U.S. market, these numbers do not specifically account for community wind growth but can be
used in conjunction with recent “small-scale” community wind trends to create a reasonable
estimate for future growth. Because “small-scale” community wind often competes with
commercial wind in the market, using total wind capacity projections to estimate growth for this
sector is not an unreasonable assumption.
Some areas have developed markets specifically for community wind energy. In November
2005, the Governor of Minnesota announced his administration’s objective to have 800 MW of
Community-Based Energy Development (C-BED) projects commissioned by 2010. With
growing interest in several states including Colorado, Oregon, and Massachusetts, similar
markets could be created for “small-scale” community wind projects, creating substantial market
growth even greater than the wind industry in general.
EIA estimates that total U.S. capacity will grow at an average annual rate of 11% from 2005 to
2010 and then 3% from 2010 to 2020 [6]. However, from 1998 to 2003, installed wind capacity
grew an average of 28% per year [7], and growth from 2004 to 2005 was a record 35% [8]. This
study estimates a conservative annual growth rate for “small-scale” community wind to be 8%.
With favorable policies, economic conditions, and sufficient supply of competitively priced mid-
size wind turbines, the estimated average annual growth rate for this sector could be as high as
28%.
As shown in the Summary Information Table (Table 5-3), this study estimates that the
cumulative installed U.S. capacity of “small-scale” community wind in 2010 has a lower bound
of 220 units, totaling 160 MW, and an upper bound of 500 units, totaling 380 MW 7. These
estimates are based on the 110 MW of installed “small-scale” community wind capacity as of

5
See Appendix A for a listing of community wind projects utilizing 100-kW to 1-MW wind turbines.
6
Some of the projects listed in this cited report are turbines over 1 MW and therefore do not fit the definition of “small-
scale” community wind for this study.
7
Estimates assume an average turbine size of 750 kW, which is the current average for U.S. “small-scale”
community wind projects utilizing turbines 1 MW or less, documented in the Windustry database.

74
2005, the current average “small-scale” community wind turbine size of 750 kW, and the
estimated lower- and upper-bound growth rates discussed above. Assuming the same growth
rates, the lower- and upper-bound estimates for the cumulative installed U.S. capacity for this
sector are 320 to 1,700 units totaling 240 to 1,300 MW in 2015 and 470 to 6,000 units totaling
350 to 4,500 MW in 2020.
Regions of interest. Based on projects installed and planned as documented in Windustry’s
community wind database, as well as responses to the January 2006 survey of 46 key industry
participants conducted for this study, ten of the states of specific interest for the “small-scale”
community wind market fall into three primary regions:
• Midwest (Minnesota, Iowa, Nebraska, Texas, North Dakota, South Dakota, Illinois)
• Northeast and Mid-Atlantic (including Massachusetts, New York, Vermont)
• West (Colorado, Montana, California, Oregon, Washington, Alaska).

Expected International Market for “Small-Scale” Community Wind Applications

The European Union (EU) has been the historic leader in community wind. In 2000, about 80%
of installed wind turbines in Europe could be considered community wind [9]. By the end of
2005, Europe had 40.5 GW of installed capacity and therefore close to 32 GW of community
wind [10]. Since Europe is by far the largest market for community wind, assuming that 25% of
these turbines are 1 MW or less with an average turbine size of 750 kW, a fair estimate of the
current international market in this sector is 11,000 turbines totaling 8.1 GW.
From 1995 to 2005, Europe realized an average annual growth in wind capacity and number of
installations of 32% and 22%, respectively [11]. Using this historical information and recent
trends, this study estimates the future international market for “small-scale” community wind to
have a lower-bound annual growth rate of 10% and an upper bound of 22%. The slightly higher
lower-bound estimate, compared to the U.S. estimate, reflects the fact that the “small-scale”
community wind market is already firmly established in the EU. The upper-bound estimate is
lower than the U.S. estimate for this sector, reflecting the maturity of the European market and
the overall direction of the EU wind market toward large offshore wind development.
Starting with the estimated total installed capacity of 8.1 GW in 2005 and assuming an average
turbine size of 750 kW, this study estimates that the international cumulative installed capacity in
2010 will have a lower bound of 17,000 units totaling 13 GW and an upper bound of 29,000
units totaling 22 GW (Table 5-3). Assuming the same growth rates, our lower- and upper-bound
estimates for cumulative international installed capacity are 28,000 to 79,000 units totaling 21 to
59 GW in 2015 and 45,000 to 210,000 units totaling 34 to 160 GW in 2020.
Regions of interest. Responses to the survey conducted for this study indicate that the major
international markets for “small-scale” community wind, offering substantial export
opportunities for U.S. manufacturers of mid-size turbines, fall in the following regions:
• Europe (Germany, Spain, Denmark, Norway, Netherlands)
• Asia (China, India, Russia)
• South America/Central America

75
• Africa
• Canada.
Germany and Spain are of particular interest and currently are leading the EU in growth and
installed capacity. These two countries accounted for 58% of the total wind capacity growth in
the EU in 2005 and 70% of the total installed capacity in the EU [12]. Canada shows signs that it
will follow the lead of many European nations by enacting feed-in tariff laws to encourage wind
energy growth. To date, only Ontario has enacted a feed-in tariff, but there has been growing
support by other Canadian provinces to enact similar tariffs.
“Small-Scale” Community Wind Technology Adoption Time Frame
The entire wind industry would benefit from a concerted media campaign with increased news
coverage of positive reports on the successes of wind power, similar to current press conferences
on “clean coal” and nuclear energy, and highly visible recommendations to elected officials to
maximize the use of abundant wind resources for clean electricity generation within the next two
decades. Global energy supplies are at a point where as much wind as possible needs to be
installed on a short time frame to prove it can be successfully integrated into the grid and other
existing infrastructure. Because distributed wind generation can be installed in a shorter turn-
around time than large-scale wind farms, identifying and addressing the barriers for “small-
scale” community wind should be considered a high-priority activity. Field studies on the
distribution grid need to be conducted before and after distributed wind generation is installed so
the costs and benefits can be clearly documented and highlighted for administrative and policy
proceedings. Results and recommendations are critical in building arguments such as in Illinois,
where Commonwealth Edison (ComEd) has proposed energy fees for community wind projects.
ComEd plans to track the penalties for imbalance that FERC allows without giving credit for
benefits such as reinforcing the grid.
Utilities often highlight the negative impacts of distributed generation in interconnection policy
proceedings; however, the benefits to the grid are rarely recognized. For example, distributed
wind turbines installed in strategic locations can provide reactive power support with substantial
benefits to weak feeders that experience voltage-regulation problems. Technical guidance and
strategies are critically needed for using the grid more efficiently.
Given the boom-or-bust cycles in the utility-scale wind turbine industry, small community wind
project developers are often squeezed out of the market when manufacturers deal almost
exclusively in large volume orders rather than the one or two turbines that many community
wind projects seek. This is leading some community wind developers to consider smaller
turbines in the 50-kW to 500-kW range as a viable alternative to the more cost-effective multi-
megawatt turbines. Only a few turbine suppliers, including Energy Maintenance Services,
Fuhrlander, and Entegrity have products available to fill this growing niche.
The lack of available mid-size wind turbines has led to other problems with the development of
“small-scale” community wind projects. Because the PTC is difficult for most community wind
project owners to utilize on their own because of the requirement for large passive tax appetites 8,

8
Passive tax refers typically to tax paid on rent, interest, and dividends, as opposed to earned income. A 1-MW
wind project with a capacity factor of 33% has the potential to utilize about $55,000 per year based on the PTC’s
current level of 1.9 cents per kWh, which is above the level of many community members or groups wishing to
(footnote continued)

76
equity partner investors must be found before financing can be secured. Power purchase
agreements must be negotiated with the host utility, and insurance must be secured based on
specific equipment orders. All of this means that the developers of community wind projects
must juggle many balls, and the falling of one means the unraveling of an entire project. Once
the project developer identifies an interested equity partner and secures financing, the availability
of the PTC narrows the potential construction window. Inside that window, the developer must
secure firm delivery on the turbine, tower, transmission/interconnection requirements, critical
construction equipment including an adequate crane, permitting (including conditional use
permit or zoning approval), project financing, and a power purchase agreement before the
expiration of the PTC. While larger projects face these same obstacles, they are in a much better
position to gain the attention of equipment manufacturers, contractors, investors, and financers.
Some “small-scale” community wind project developers have turned to the used wind turbine
market for hardware to install in lieu of new equipment. There are several challenges with this.
First of all, this equipment is typically not optimized for Class 3 sites where there is much
interest in small wind projects. More important, these older designs are not able to take
advantage of the technology advances that have occurred in the past two decades and often have
not completed a comprehensive “remanufacturing” process.
Finally, some investors are beginning to look at biodiesel, landfill gas, biomass, cogeneration,
and ethanol as investment opportunities. Unfortunately, if mid-size wind turbines cannot meet
the needs of investors and owners in a reasonable time frame and supplement these technologies,
the distributed generation market will move forward without the significant participation of
“small-scale” community wind.
Based on analysis of critical path technologies, the following measures are expected to enhance
the viability of the “small-scale” community wind market:
• Conducting more in-depth analysis of the steps needed to transition the utility grid from the
one-way distribution of energy that it was originally designed for into an efficient multi-
direction system that not only distributes electrons but also acts as an aggregator for
electricity produced in rural areas.
• Incorporating voltage support capability into turbine designs to increase benefits from
distributed wind generation in areas with weak grids. The technology already exists and
needs to be made available to the U.S. market. One mechanism would be the development of
a national standard or grid code for voltage support from distributed wind, similar to the
Irish, Danish, and German grid codes, incorporating standard interconnection technical
requirements for wind energy conversion systems.
• Designing reliable, easily installed, and easily maintained advanced mid-size wind turbines
that are optimized for Class 3 wind regimes based on existing designs. This could be
accomplished in a year with sufficient funding. Bringing that design to the prototype stage
would take another year, followed by at least 2 years of beta testing. It would take another

invest in wind energy. Tax-free institutions such as public schools, government agencies, and non-profit
organizations suffer from the inability to utilize this incentive.

77
 year to prepare the new product for the market, bringing the total timeframe for adoption to 5
years.
• Developing advanced controllers that meet a certified national standard. These could be
designed in a year, with field testing and certification by a certifying agency like
Underwriters Laboratories (UL) consuming another 2 years.
• Developing user-friendly computer tools for analyzing “small-scale” community wind
project economics to assist with seeking project financing, negotiating power purchase
agreements, and taking advantage of incentives.

Non-Technical Barriers for “Small-Scale” Community Wind Technology Adoption

As shown in Table 5-1, responses to the January 2006 survey of key DWT industry participants
conducted for this study indicate that the most significant market barriers for “small-scale”
community wind are turbine availability, economics, interconnection, and permitting 9. New
legislation supporting locally owned wind projects could include incentives for rural electric co-
ops to develop their own projects and/or partner with their members, financial vehicles allowing
capital for distributed wind projects to aggregate, and interconnection standards.
Turbine availability. As described above, large-scale wind turbine production continues to be
driven by the PTC, which results in turbine shortages for the “small-scale” community wind
market, inflated costs, and an industry emphasis on the largest turbines commercially available.
Economics. Coordinated public policy and consumer awareness programs are needed to aid
“small-scale” community wind development in meeting market demand. Economic factors, in
order of importance, include the following:
• Total installed cost
• Return on investment (perception of value)
• Inadequate net metering/net billing
• Lack of project financing
• Permitting costs and time
• Lack of utility-sponsored programs and marketing for wind
• Lack of financial incentives (rebates, buy-downs, loans)
• Lack of tax incentives (sales, property).
Interconnection. Connecting to the grid with rural electric co-ops and investor-owned utilities is
ranked as an important market barrier for “small-scale” community wind. Increased awareness
and support among public and private utility personnel will be necessary for wind to be included
in utility-marketing distributed generation programs. A marketing and public awareness program
targeted at utilities would benefit “small-scale” community wind, with particular emphasis on

9
Online survey of key industry participants conducted in January 2006 for this study.

78
outreach to rural utility representatives highlighting customer satisfaction and community
stakeholder benefits of generating electricity with locally owned mid-size wind turbines.
Permitting and siting. The development of a set of regional model zoning ordinances for mid-
size wind turbines with consideration given to proper setbacks for sound levels and safety,
attention to avian issues and wildlife areas, and visual impacts on the landscape, with different
conditions based on land use and the size of projects, could help to streamline permitting
processes for “small-scale” community wind projects. Dissemination of best-practice
recommendations and education of local planning agencies can aid in the adoption of responsible
and appropriate siting requirements for community wind projects.

79
 Table 5-1. 2006 Survey Responses on “Small-Scale” Community Wind Market Barriers

Moderately Moderately Biggest Response

Community Wind Market Barriers Not an issue Medium
Low High Barrier Average

Turbine availability 3% (1) 15% (5) 29% (10) 29% (10) 24% (8) 3.56

Economics/out-of-pocket costs (total

0% (0) 12% (4) 30% (10) 48% (16) 9% (3) 3.55
installed cost)

Economics/perception of value (cost

3% (1) 11% (4) 34% (12) 37% (13) 14% (5) 3.49
of energy, return on investment)

Connecting to the grid (rural electric

9% (3) 12% (4) 26% (9) 32% (11) 21% (7) 3.44
co-op)

Connecting to the grid (investor-

9% (3) 16% (5) 28% (9) 38% (12) 9% (3) 3.22
owned utility)

Inadequate net metering/net billing 9% (3) 24% (8) 24% (8) 33% (11) 9% (3) 3.09

Lack of financing 3% (1) 26% (8) 35% (11) 32% (10) 3% (1) 3.06

Permitting costs and time 6% (2) 23% (7) 45% (14) 16% (5) 10% (3) 3.00

Visual impacts/neighbor concerns 7% (2) 30% (9) 23% (7) 37% (11) 3% (1) 3.00

Lack of utility-sponsored programs

6% (2) 25% (8) 38% (12) 25% (8) 6% (2) 3.00
and marketing for wind

Lack of incentives (rebates, buy-

9% (3) 27% (9) 27% (9) 30% (10) 6% (2) 2.97
downs, loans)

Restrictive zoning 6% (2) 28% (9) 44% (14) 6% (2) 16% (5) 2.97

Lack of tax incentives (sales,

12% (4) 21% (7) 36% (12) 27% (9) 3% (1) 2.88
property)

Low public awareness/support 10% (3) 29% (9) 29% (9) 29% (9) 3% (1) 2.87

Owner/Operator
Convenience/Complexity (siting, 13% (4) 23% (7) 37% (11) 27% (8) 0% (0) 2.77
installation, maintenance)

Wind myths (reliability, sound,

10% (3) 32% (10) 32% (10) 26% (8) 0% (0) 2.74
aesthetics, safety, avian impact)

Lack of consumer access to wind

26% (8) 32% (10) 42% (13) 0% (0) 0% (0) 2.16
resource information/maps

Time-Critical Nature of “Small-Scale” Community Wind Technology

Community wind projects are characterized by desires to own productive wind assets for the
benefit of investor groups, public, educational, tribal, special district, or cooperative corporate
entities. Often the motivation is to invest for the benefit of a local (usually rural) area by keeping
money in the local economy, rather than paying for imported fuel resources or returning

80
investment profits to remote owners. The projects aim to create, and keep, an economic surplus
by using local wind resources, owning the means of production locally, and supplying power on
an export basis to bring money into the local economy. These projects are normally of a scale
that requires power purchase agreements with utilities or access to real-time markets that can
absorb power in addition to the requirements of the local owning entity. At the same time, the
scale of these projects does not generally offer access to markets for the lowest cost power
because they are generally too small to achieve the economies of scale of larger commercial
projects.
Critical timing issues impact numerous characteristics of “small-scale” community wind
projects, including the following:
• The availability of the federal PTC or a comparable incentive and whether “small-scale”
community projects can find business and tax structures to benefit from it
• For turbine prices and availability, mechanisms for encouraging the aggregation of “small-
scale” community wind turbine purchases and the cooperation between community wind and
large commercial projects can be created to help address these issues
• For access to low-cost financing, Clean Renewable Energy Bonds (CREBs), for example, are
limited in amount and have short application deadlines 10, and USDA grant programs are not
guaranteed to be fully funded
• The staying power of community wind power proponents is a factor. The leadership required
to mount and sustain a community wind project proposal can be exhausted by the need for a
long campaign to structure an entity, identify land, access wind data, complete required
studies, obtain a conditional use permit or zoning approval, and secure easements, turbines,
transmission access and terms, and negotiate a power purchase agreement
• Policy and program support is needed. There is tremendous potential for the renewable
energy initiatives in the Farm Bill to grow to be a significant aspect of the rural economy, but
technical guidance is needed to prepare the rural infrastructure in anticipation of more
distributed wind generation. Once the grid integration issues are addressed, policies can be
developed to give priority to local generation. Because the economics of the power from
smaller wind projects do not readily win contracts in bulk-power markets focused on lowest
costs, sources of additional support, either in policy or financially, must be located, engaged,
and brought to bear on projects. The timing and effectiveness of programs and policies that
support “small-scale” community wind projects have an important impact.
• The output of community projects can usually only be sold to a single buyer: an electric
utility. Because most projects are in rural areas and many rural areas do not have access to
effective competitive wholesale electric energy markets, the cooperation of an electric utility
will be required to purchase the power produced by the community-owned project. Utility
cooperation varies widely, depending on the market and policy conditions that impact utility
generation acquisitions. Policy can create markets for community wind, as evidenced by
initiatives in Iowa and Minnesota that are leading the way.

10
Made available on 1/1/2006, applications are due 4/26/2006 for all CREBs to be issued before 1/1/2008.

81
Subsidy Market for “Small-Scale” Community Wind
The U.S. government offers a variety of incentives for wind projects, including USDA Farm Bill
Section 9006 grants, the Production Tax Credit 11, an accelerated depreciation system, and the
Renewable Energy Production Incentive (REPI) 12; however, few are optimal or available for
mid-size turbines. Community wind projects are beginning to receive some subsidies from states,
although the current state subsidy market is still limited. In Minnesota, noteworthy exceptions
are Xcel Energy’s standardized purchase tariffs; Renewable Energy Production Incentive
(Minnesota REPI); tiered tax rates 13; Xcel Energy Renewable Development Fund; and
standardized interconnection policies are noteworthy exceptions. Low-interest loans, grants, tax
deductions, and technical assistance are also available in some states [13].
In the international community, particularly in EU countries, feed-in tariffs 14 have led to
substantial community wind markets [14]. Germany has had a renewable tariff policy since 1991
and currently has more total wind capacity (more than 18,000 MW) than any other country in the
world [15]. Ten countries 15 currently have some variation of a feed-in tariff for wind generation
[16].

Utility Industry Impact of “Small-Scale” Community Wind

Community wind projects utilizing turbines less than 250 kW in size have negligible electrical
impact on the distribution grid, whereas a 2-MW wind project can have a potentially significant
electrical impact on a 12.47-kV rural distribution grid and limit locations for connection to the
distribution grid. Excess generation from most community wind projects is sold directly to the
local distribution utility or its wholesale provider at the established “avoided cost” or a relatively
low wholesale rate in the 3¢ to 4¢ per-kWh range. Under this arrangement, the wind generation
does not reduce the retail revenue of the local utility and thus should not affect the local utility’s
finances. Instead, the wind turbine becomes just another bulk power resource used by the
wholesale power supplier in the area. Therefore, even though there are some exceptions, the
local distribution utility should be indifferent to community wind generation.
Mid-size wind turbines used to provide power to schools or businesses under net metering
policies can cause noticeable reductions in small utilities’ retail revenue. In these instances, the
local utility may discourage a large number of these installations. However, in general, “small-
scale” community wind should have minimal impact, if any, on the utility industry’s electrical
system or finances.

11
The Renewable Electricity Production Tax Credit (PTC) has expired three times since it was first enacted in 1992.
The PTC provides $0.019/kWh and is currently effective until the end of 2007.
12
REPI provides $0.015/kWh and was effective until the end of 2006.
13
For more than 12 MW, the tax is 0.12 cents/kWh, between 2 MW and 12 MW the tax is 0.036 cents/kWh, and for
projects between 0.25 MW and 2 MW the tax is 0.012 cents/kWh.
14
Feed-in tariffs create a standard permitting process and a fixed price for electricity purchased from specified
renewable electricity generators.
15
This number does not include the United States, although Minnesota has initiated a limited renewable tariff and
California currently has a renewable feed-in tariff for PV. Countries that currently have renewable tariffs for wind
generation include Austria, Brazil, China, France, Germany, Greece, PEI (Canada), Portugal, Spain, and The
Netherlands. For a complete listing of international renewable energy policies, see the International Energy Agency
Global Renewable Energy Policies and Measures Database at www.iea.org/textbase/pamsdb/grresult.aspx?mode=gr

82
V. Technical Barriers Issues and Assessment
Technology Barriers for “Small-Scale” Community Wind
Four primary technical barriers have been identified that are slowing the widespread application
of “small-scale” community wind projects. These barriers are listed in order of importance and
share some commonality over a wide range of turbine sizes. Table 5-2 shows responses to the
January 2006 survey of key DWT industry stakeholders conducted for this study on technical
barriers for “small-scale” community wind.
Grid interconnection and integration. Interconnection processes could be greatly simplified by
more sophisticated remote-monitored controllers, which are certified to meet a national standard.
Such controllers can allow the turbine to support weak rural distribution systems while taming
voltage excursions, flicker, and supplying reactive power support to the system, as well as
monitoring system health and logging important system events.
Distributed generation grid-integration studies completed to date are just a starting point. More
in-depth analysis is needed on what is required to transition the utility grid system from the one-
way distribution of energy that it was designed to do into an efficient multi-direction system that
not only distributes electrons but also acts as an aggregator for electricity produced in the rural
areas of the countryside. The national grid is woefully inadequate to function this way today. The
discussion must progress to understand what technologies are required to move forward.
Turbine and tower options. Technology is needed to optimize the next generation of mid-size
wind turbines for Class 3 wind regimes. Advanced rotors with lower rotational speeds could
yield longer fatigue life and lower acoustic emissions. Innovative tall towers, especially for
refurbished machines, would boost energy capture while diminishing turbulence.

Installation and maintenance. Reliability and maintainability are becoming more of an issue
for community wind projects as challenges with heavy crane access, a lack of trained
technicians, and parts shortages are leading to delays in installation and increased turbine
downtime. Easing the installation complexity while increasing the reliability and service
intervals of future mid-size wind turbines, along with simplifying the troubleshooting and
maintenance regimen, could make the community wind machine just another agricultural
implement. The development of “wind smith” technical programs to provide for a larger set of
skilled turbine technicians to aid in operations and maintenance of community-owned projects
will be key.
Performance projections. Although current resource assessment techniques have yielded
satisfactory results, a more timely means of quantifying a wind regime must be found. Wind
resource modeling coupled with short-term on-site measurement and correlation to a base station
has been helpful for numerous sites in Iowa. Wind resource assessment programs specifically
targeting “small-scale” community wind projects coordinated with rural economic development
agencies could greatly aid the market. Wind forecasting, which is becoming fairly common in
the larger wind farms, could be applied to distributed systems and add value to their energy
product.
Community wind can make it possible for small rural groups to take an active role in their
energy future while providing all the benefits of placing clean generation close to the point of
use. By spreading distributed generation over a broad area, energy security and grid stability can
be greatly improved.

83
 Table 5-2. 2006 Survey Responses on “Small-Scale” Community
Wind Technical Barriers

Biggest
Not an Moderately Moderately Response
Community Wind Technical Barriers Medium Immediate
issue Low High Average
Challenge

Grid interconnection 7% (2) 7% (2) 28% (8) 38% (11) 21% (6) 3.59

User-friendly peformance ratings for

4% (1) 29% (7) 38% (9) 29% (7) 0% (0) 2.92
mid-sized and refurbished turbines

Hardware & shipping costs 11% (3) 30% (8) 37% (10) 7% (2) 15% (4) 2.85

Manufacturer support 4% (1) 28% (7) 48% (12) 20% (5) 0% (0) 2.84

Installation 8% (2) 35% (9) 35% (9) 19% (5) 4% (1) 2.77

Product Reliability 12% (3) 38% (10) 23% (6) 23% (6) 4% (1) 2.69

Maintenance costs 12% (3) 31% (8) 42% (11) 15% (4) 0% (0) 2.62

Power electronics & software 4% (1) 48% (12) 36% (9) 12% (3) 0% (0) 2.56

Sound levels/quiet operation 8% (2) 48% (12) 28% (7) 16% (4) 0% (0) 2.52

Engineering or reengineering of specific

15% (3) 50% (10) 10% (2) 20% (4) 5% (1) 2.50
turbine components

Designing self-erecting capabilities 24% (6) 40% (10) 8% (2) 24% (6) 4% (1) 2.44

High cut-in speed/complete turbine

13% (3) 58% (14) 17% (4) 13% (3) 0% (0) 2.29
redesign

84
Complexity of “Small-Scale” Community Wind Technology Barriers
Each of the barriers discussed in the previous section presents substantial technical challenges
that can be reduced or eliminated by focused R&D efforts.
The electricity grid is regarded as the most complicated system that humankind has ever
constructed. Understanding its limitations and how to utilize it more efficiently should be a
national priority. Building on and expanding the scope of distributed wind generation grid
integration studies, such as those performed by Tom Wind and Mike Michaud, focusing on key
states, can help to show that the traditional approach of extensive upgrades to the transmission
system is not always the most economic and efficient way to expand the market for renewable
energy. Conducting these studies will take the cooperation of utility companies; researchers;
politicians at the local, state, and national level; and community groups examining the actual and
potential impact of distributed wind generation on existing transmission and distribution
infrastructure. More detailed studies must be carried out on the local distribution level to define
where added generation can be connected with minimal system upgrade costs, which typically
are assigned to interconnecting project owners.
A new generation of mid-size turbines designed for low-wind regimes will obviously require the
application of many technologies and require a substantial investment. This process could begin
immediately and take advantage of new technologies or design methods that become available
during the design. Use of innovative tower concepts for new or refurbished systems is likely to
require substantial design analysis to ensure that dynamic interaction problems will not be
induced by the new towers. The basic technology required for this process is available now.
VAR (volt-amperes reactive) support will be very valuable for mid-size turbines located on weak
distribution systems. Power electronics systems should be developed and made available as soon
as possible.
Federal support in the form of technical assistance, information dissemination, and university
research programs will be very important to establishing a trained workforce to operate,
maintain, and design “small-scale” community wind projects. The wind industry is unlikely to
create “wind smith” training programs at community colleges or wind-engineering programs at
universities tailored toward mid-size wind turbines without federal or state support.
The economics of community wind projects rely on credible wind data, turbine-performance
data, and energy projections. It is essential that tools be available for establishing and confirming
mid-size turbine performance projections in a timely manner.

Expected Turbine Size to Meet “Small-Scale” Community Wind Market

The optimal turbine size for the “small-scale” community wind market ranges significantly
depending on ownership, availability of land, ability to contribute significant amounts of
renewable energy to the grid, ability to acquire financing, ease of operations and maintenance,
state incentives, and ease of interconnection. The range most frequently cited in the January 2006
survey conducted for this study was 100 kW-1 MW because of the intersection of many of the
previously mentioned factors. If cost-competitive turbines in this range are made available, many
“small-scale” community wind projects may opt to install one or multiple machines of a smaller
size than the multi-megawatt-class machines advanced by the major turbine manufacturers. They
would do this because of the simpler design and lower capital requirements of the smaller
machines, making maintenance and financing easier. High thresholds on net-metering rules in
85
several states 16 allow for matching turbine size to the load at the site for medium-size loads, such
as schools, businesses, and many manufacturing facilities. Respondents also indicated that
machines in this range are of appropriate sizes to match loads of hospitals, public schools, and
small industry and have a similar return on investment as the multi-megawatt machines with a
smaller investment threshold.
Currently, only a few commercial models are available in this size range, including the Suzlon
950 kW; the Fuhrlander FL 100, FL 250, FL 600, and FL 1000; the EMS 65 kW; and the
Entegrity 50 kW. However, production numbers are limited, and manufacturers are challenged to
keep up with the market growth rate for this size range, making it difficult for “small-scale”
community wind developers to obtain equipment.

Required Cost of Energy to Compete in “Small-Scale” Community Wind Market

The primary alternatives to “small-scale” community wind are large-scale community wind and
commercial wind projects. Based on current incentives that are driving community wind
development in Minnesota (currently $0.01/kWh REPI) and Iowa ($0.015/kWh Personal
Renewable Energy PTC), the necessary cost of energy for most community wind projects to be
competitive is, therefore, roughly within $0.015 of commercial wind farms [17], which is
currently around $0.05/kWh.
The survey of industry participants conducted for this study indicated a range of $0.03-0.15/kWh
in the retail cost of energy for wind systems to compete in the community-scale distributed
generation market, with most responses between $0.05 and $0.08/kWh.

Seasonality and Geographic Nature of Wind Resource

Community wind projects are generally connected to the grid and, therefore, typically have no
need for storage; however, wind regime characteristics are both seasonal and geographic in
nature. Many locations suitable for “small-scale” community wind experience more wind in
winter months but have higher electricity loads in summer months. The more closely the wind
resource matches local load (peak coincidence), the more valuable the wind resource and
economic benefit of the project. Annualized net metering can also aid “small-scale” community
wind market.
Interconnection processes and access to the grid vary considerably on a geographic basis. Windy
rural areas have low population densities and weaker girds than more populated regions, making
costs high and availability low for interconnection points. More in-depth analysis of these issues
will allow for greater understanding of how best to utilize existing resources and more efficiently
design upgrades and additions to distribution systems to facilitate more distributed wind
generation in rural areas.

Impact of Intermittency
Intermittency is a significant issue for “small-scale” community wind applications. Schools and
large businesses purchase electric power under utility tariffs that typically have both demand and
16
In Iowa and Virginia, the size limit for net-metered wind energy facilities is 500 kW, and in California net metering is
allowed up to 1000 kW in name plate capacity (DSIRE).

86
energy charges. If the community wind turbine is used to offset power purchases for a school or
large business, then the intermittent power output may not be able to reduce the demand charge
significantly in the electric power bill. Because up to two-thirds of the electric bill can be for the
demand charge, the power bill savings from the wind turbine would be much less because of the
intermittency. If the school or business could switch tariffs to one that only has energy charges,
then the power bill savings would be at a rate about equal to the retail rate.
One way to mitigate the loss of value caused by intermittency is to install equipment that stores
either electrical or thermal energy. The added cost of electrical storage equipment, such as a
battery and inverter, is typically only justified for smaller off-grid applications where the price of
utility power is high. However, using wind generation to reduce natural gas or fuel oil usage for
heating is potentially cost effective in some cases, especially if heat can be stored in the form of
hot water. The cost effectiveness derives from the fact that a larger wind turbine can be justified
as a result of the increased need for electricity for heating. This type of project also requires a
control system to determine when and how much of the wind generation output is converted into
heat for storage rather than simply used to offset electric usage. Using a wind turbine with a
thermal heat storage unit has the potential to greatly reduce natural gas or fuel oil usage for
heating. One barrier to this concept is the restriction that the Federal PTC only applies to power
sold to a third party, rather than to power used locally for offsetting electrical usage or saving
natural gas.
If the entire output of a community wind turbine is simply sold on a wholesale basis to the local
utility, electricity storage is not likely to be cost-effective because the added cost of the electrical
storage equipment is usually much higher than the cost of incorporating the variable output with
the utility’s other generation resources. Even if the local wind generation penetration is very
high, such as in Denmark, electrical storage would probably only be cost effective on a large
scale at a central facility, such as with pumped hydro or compressed-air energy storage.

Interface for “Small-Scale” Community Wind

Typical interfaces for “small-scale” community wind installations are dedicated three-phase
transformers connecting to distribution feeders (typically 13.8 kV or lower) for projects
consisting of one or a few mid-size turbines, in comparison to dedicated three-phase substations
connected to the transmission system (69 kV and higher) for multiple large-turbine projects.
Appropriate fuses, breakers, relays, and other switch gear are needed for large-scale applications
to ensure power system safety under abnormal operating conditions. Standardization for
appropriate integration studies and required interconnection equipment for single or small
aggregations of large turbines (in the 0.5-20 MW installed capacity range) has happened in many
states in response to increased levels of distributed generation resources on systems. Larger
projects will still require an extensive engineering study to determine the appropriate equipment
necessary to safely interconnect.
Most community wind applications sell power to the grid, although many “small-scale”
installations offset at least a portion of the power coming in. Specific applications typically have
power electronics available to condition the power generated because power from wind turbines
above about 30 kW is three-phase, 60 Hz, and around 600V. The only interface technology
needed is a transformer to step up or down the voltage. Further research in the area of reactive
power compensation, voltage support, and flicker mitigation will add value to distributed wind

87
generation for interconnecting utilities and can help minimize or eliminate the need for
distribution feeder upgrades.
VI. Recommended Areas of Technical Concentration
The U.S. “small-scale” community wind market and U.S. participation in the international
“small-scale” community wind market have major growth potential but are currently facing
major market and technical constraints that could be addressed with focused support. In
particular, turbine production numbers are limited, and manufacturers are not keeping up with
the rate of market growth for this size range, making it difficult for “small-scale” community
wind developers to obtain equipment. Reliability and maintainability are becoming more of an
issue for community wind projects as challenges with heavy crane access, a lack of trained
technicians, and parts shortages are leading to delays in installation and increased turbine
downtime.
The Future
A new generation of mid-size turbines designed for low-wind regimes will obviously require
application of many technologies and a substantial investment. This process could begin
immediately and take advantage of new technologies or design methods that become available
during the design. Use of innovative tower concepts for new or refurbished systems is likely to
require substantial design analysis to ensure that dynamic interaction problems will not be
induced by the new towers.
Based on market and technical issues discussed above, the following high-priority areas are
recommended for future investment with more detailed studies.
Grid interconnection and integration. Interconnection processes could be greatly simplified by
more sophisticated remote-monitored controllers that meet a certified national standard. Such
controllers can allow the turbine to support weak rural distribution systems while taming voltage
excursions and flicker and supplying reactive power support to the system, as well as monitoring
system health and logging important system events.
Distributed-generation grid-integration studies completed to date are just a starting point. More
in-depth analysis is needed on what it will take to transition the utility grid system from the one-
way distribution of energy that it was originally designed for into an efficient multi-direction
system that not only distributes electrons but also acts as an aggregator for electricity produced
in rural areas. The national grid is woefully inadequate to function this way today. What is
required to develop an infrastructure that would more easily integrate distributed wind
technology?
Turbine and tower options. Innovative tall towers, especially for refurbished machines, would
boost energy capture while diminishing turbulence. Easing the installation complexity while
increasing the reliability and service intervals of future mid-size wind turbines, along with
simplifying the troubleshooting and maintenance regimen, could make the community wind
machine just another agricultural implement.
Installation and maintenance. NREL’s expert assistance in the development of technical
training programs for mid-size turbine “windsmiths” can help increase the availability of
installation and maintenance crews for smaller community-owned projects.
Performance projections. Easy-to-use computer tools for analyzing “small-scale” community
wind project economics would assist with seeking project financing, negotiating power purchase

88
agreements, and taking advantage of incentives. User-friendly wind resource modeling with on-
site measurement correlations could make annual power prediction much easier.
Zoning and permitting. Development of a set of regional model zoning ordinances for mid-size
wind turbines with consideration given to proper setbacks for sound levels and tower fall zones,
attention to avian migration patterns and wildlife areas, visual impacts on the landscape, with
different conditions based on land use and the size of projects could help to streamline the
permitting process for community wind projects. National participation combined with education
of local zoning agencies can aid in the adoption of responsible and appropriate siting
requirements of community wind projects.

89
 Table 5-3. Summary Information Table: “Small-Scale” Community Wind Power

Domestic Market Potential for “Small-Scale” Community Wind

(cumulative installed capacity)
2005 110 MW 150 Units
2010 160 – 380 MW 220 – 500 Units
2015 240 – 1,300 MW 320 – 1,700 Units
2020 350 – 4,500 MW 470 – 6,000 Units
Regions (States) of Specific Interest
1. Midwest (Minnesota, Iowa, Nebraska, Texas, North Dakota, South Dakota, Illinois)
2. Northeast and Mid-Atlantic (including Massachusetts, New York, Vermont)
3. West (Colorado, Montana, California, Oregon, Washington, Alaska)
International “Small-Scale” Community Wind Market
(cumulative installed capacity)
2005 8.1 GW 11,000 Units
2010 13-22 GW 17,000-29,000 Units
2015 21-59 GW 28,000-79,000 Units
2020 34-160 GW 45,000-210,000 Units
Regions of Specific Interest
1. Europe (Germany, Spain, Denmark, Norway, Netherlands)
2. Asia (China, India, Russia)
3. South America/Central America
4. Africa
5. Canada
Key Market Barriers
1. Turbine availability
2. Economics
3. Interconnection
4. Permitting/Siting
Key Technical Barriers
1. Grid interconnection and integration
2. Turbine and tower options
3. Installation and maintenance
4. Performance projections
Expected Turbine Size Range
1 MW or less for “small-scale” community wind applications
Expected Turbine Coupling
Voltage: 540 V to 660 V AC
Typically connecting to distribution level voltages of 13.8 kV or less

90
VII. Conclusions
The market for “small-scale” community wind projects is substantial and growing, attracting
increasing attention from policy makers, community groups, and economic development
professionals. With an estimated 150 turbines currently installed nationally in “small-scale”
community wind applications (utilizing turbines 1 MW or less) totaling 110 MW, and an
estimated 11,000 turbines installed worldwide totaling 8.1 GW, forecasts based on recent growth
rates of the entire wind industry indicate the potential for a substantial market in this sector.
Based on lower- and upper-bound growth estimates, this sector is expected to grow to an
estimated 470-6,000 “small-scale” community wind turbines totaling 350 to 4,500 MW in the
United States and 45,000 to 210,000 turbines totaling 34 to 160 GW internationally.
However, major barriers still exist for community groups seeking to invest in wind energy.
Notably, these issues include the boom/bust cycle created by the federal PTC, causing limited
availability of field-tested, economical turbines; components; construction crews; operations and
maintenance professionals; and experts in business, finance, and legal matters.
Significant attention must be paid to the design and delivery of new mid-size turbine models in
the 100- to 1,000-kW range, sized for moderate loads such as schools, businesses, and
government buildings and optimized for Class 3 wind regimes with the capability to provide
reactive power and voltage support to weak distribution feeders. Addition of such capability will
add value to distributed wind energy for utilities, giving it the ability to lessen or mitigate the
need for feeder upgrades and reduce transmission congestion.
New tower technologies, such as self-erecting designs, have the potential to decrease the upfront
costs of construction, as well as reduce or eliminate the scarcity of cranes.
The development of and support for education programs for technicians skilled in routine and
special maintenance of mid-size wind turbines will aid greatly in providing support for current
and future “small-scale” community wind projects, as well as help to create a new job sector.
Extension of the PTC for periods of 5 to 10 years, rather than the past 2- to 3-year extension
periods, could develop a more stable market for wind energy. A more stable overall wind
industry will allow many of the critical market barriers to be addressed by smaller businesses
that can develop expertise in all areas of “small-scale” community wind energy development.
Steady wind industry growth can also help increase equipment availability; business and
financial planning; and crews for construction, operation, and maintenance.
The United States market for “small-scale” community wind and the major international markets
for “small-scale” community wind, offer substantial growth and export opportunities for future
mid-size turbine suppliers, and project developers. Favorable policies, economic conditions, and
the sufficient availability of competitively priced mid-size turbines will help ensure that this
sector continues to grow and enable the DWT industry to become one of the leading renewable
energy distributed generation industries.
VIII. Acknowledgements
The authors thank the following individuals from the following organizations who provided
important perspectives in the DWT survey conducted for this study: Abundant Renewable
Energy; Aerofire Windpower; Aeromax; Alternative Energy Institute; Appalachian State
University; AWS Truewind LLC; Baca Green Energy, LLC; Bergey Windpower Co.; California
Energy Commission; Chinook Wind; Conergy Inc.; DC Power Systems; Detronics Ltd; Earth
Turbines, Inc.; EMS, LLC; Energy Options; Enertech, Inc.; ETM Solar Works; Halus Power
91
Systems; hullwind.org; Interstate Renewable Energy Council; Intertribal Council On Utility
Policy; Kidwind; Lawrence Berkeley National Laboratory; Lorax Energy Systems, LLC; Maine
State Energy Program; Minnesota Department of Commerce; National Conference of State
Legislatures; Northern Arizona University; Northern Power Systems; NYSERDA; PPM Energy;
Responsive Load Limited; Shuttleworth & Ingersoll; SMA America; Solar Coaching; Southwest
Windpower, Inc.; Suntec Energy Supply; Sustainable Automation LLC; Sustainable Energy
Developments, Inc.; The Stella Group, Ltd.; The Wind Turbine Company; Ventera Energy Inc;
and Vermont Department of Public Service. We would also like to thank John Vanden Bosche
with Chinook Wind for serving as a reviewer.
IX. References
1. 2005 Federal Energy Policy Act, www.elpc.org/CREBs/CREB_NRECAguide.pdf.
2. Mark Bolinger, Lawrence Berkeley National Laboratory, “A Survey of State Support for
Community Wind Power Development,” 2004; Stephen Grover, ECONorthwest,
“Estimating the Local Economic Benefits of Community Wind Projects: A Guidebook for
Washington State,” May 2005.
3. Brian Antonich, Windustry, Direct communication with ECONorthwest, 02/08/2006.
4. Mark Bolinger, Lawrence Berkeley National Lab, A Comparative Analysis of Community
Wind Power Development Options in Oregon, 2004. Prepared for the Energy Trust of
Oregon.
5. Mark Bolinger, Lawrence Berkeley National Laboratory. “A Survey of State Support for
Community Wind Power Development,” 2004.
6. U.S. Department of Energy, Energy Information Administration, Energy Outlook 2006
(Early Release), Table 16. Renewable Energy Generating Capacity and Generation.
www.eia.doe.gov/oiaf/aeo/excel/aeotab_16.xls
7. U.S. Government Accountability Office, Renewable Energy, “Wind Power’s Contribution
to Electric Generation and Impact on Farms and Rural Communities,” 2004.
8. American Wind Energy Association, “U.S. Wind Industry Ends Most Productive Year,”
1/24/2006.
www.awea.org/news/US_Wind_Industry_Ends_Most_Productive_Year_012406.html
9. Mark Bolinger, Lawrence Berkeley National Lab, A Comparative Analysis of Community
Wind Power Development Options in Oregon, 2004. Prepared for the Energy Trust of
Oregon.
10. American Wind Energy Association, “U.S. Wind Industry Ends Most Productive Year,”
1/24/2006.
www.awea.org/news/US_Wind_Industry_Ends_Most_Productive_Year_012406.html
11. European Wind Energy Association, News Release, 2006.
12. European Wind Energy Association. News Release, 2006.
13. Database of State Incentives for Renewable Energy. www.dsireusa.org. January 2006.

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14. Mark Bolinger, Lawrence Berkeley National Lab, A Comparative Analysis of Community
Wind Power Development Options in Oregon, 2004. Prepared for the Energy Trust of
Oregon.
15. EWEA, European Wind Energy Association: European Capacity map
2005.www.ewea.org/fileadmin/ewea_documents/documents/publications/statistics/2005stati
stics.pdf .
16. Paul Gipe. Wind-Works.org. www.wind-works.org/index.html
17. Lisa Daniels, Windustry. Phone Interview with ECONorthwest, 1/24/2006.

X. Bibliography
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Growth Expected For At Least Next Two Years. 01/24/2006.
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XI. Appendix A
Table 5-4. Community-Owned Wind Projects Utilizing Turbines from 100 kW to 1,000 kW
# of Date of
Location State Name Owner Size Manufacturer Model Ownership structure
turbines commissioning
Clay-Everly Central School Clay-Everly Central School
Royal IA 95 1 Windmatic 17s-95 1986 School
District District
Belcourt ND Belcourt Turtle Mt. Chippewa 100 1 NEG Micon 100 kW 1997 Tribal
Fort Totten ND Fort Totten Spirit Lake Sioux 100 1 NEG Micon 100 kW 1997 Tribal
Boston MA IBEW Local 103 IBEW Local 103 100 1 Fuhrlaender 100 kW 2005 Locally owned
Marshalltown IA Consumers Energy Consumers Energy 108 1 Micon 108 2004 Locally Owned
Miner County SD City of Canova City of Canova 108 1 NEG Micon 108 3/1/2002 Municipal Utility
Miner County SD City of Carthage City of Carthage 108 1 NEG Micon 108 5/1/2003 Municipal Utility
Richardton ND Richardton Richardton Abbey 125 1 Silver Eagle 125 kW 1997 Locally Owned
Laker MI Laker Elementary School Laker Elementary school 195 3 Nordtank 65 kW 2005 School
Richardton ND Sacred Heart Monastery Sacred Heart Monastery 200 2 Locally Owned
Miner County SD City of Howard City of Howard 216 2 NEG Micon 108 10/1/2001 Municipal Utility
Boise ID Bob Lewandowski Bob Lewandowski 216 2 NEG Micon 108 kW 2003 Locally Owned
Adair IA Schafer Systems, Inc. 225 1 Vestas 225 kW 1994 Locally Owned
Lac qui Parle MN Lac qui Parle High School Lac qui Parle High School 225 1 NEG Micon 225 kW 12/4/1997 School
Camp Williams, Utah National Camp Williams, Utah National
Riverton UT 225 1 NEG Micon 225 kW 2000 Government Agency
Guard Guard
Near Rochester NY Lorax Energy Harbeck Plastics 250 1 Fuhrlaender 250 kW 2002 Locally owned
Joice IA Windway Technologies Northwood-Kensett School 250 1 Nordex 250 2005 School
Nevada IA Story County Medical Center Story County Medical Center 250 1 Nordex 250 kW Locally Owned
Princeton MA Princeton Muni Light Princeton Muni Light 320 1 Enertech 320 kW 1984 Municipal Utility
Nevada IA Nevada High School Nevada Highschool 450 2 WinWorld 200 & 250 kW 1998 School
Akron IA Akron-Westfield School District Akron-Westfield School District 600 1 Vestas 1999 School
Forest City IA Forest City School District Forest City School District 600 1 NEG Micon 600 kW 1999 School
Hull MA Town of Hull Town of Hull 660 1 Vestas V-47 2001 Municipal Utility
Near Valley NE Omaha Public Power District Omaha Public Power District 660 1 Vestas V-47 2001 Municipal Utility
Wall Lake IA City of Wall Lake Wall Lake Municipal Utilities 660 1 Vestas 660 kW 2003 Municipal Utility
Stuart IA Stuart Municipal Utilities Stuart Municipal Utilities 660 1 Vestas 660 kW 2005 Municipal Utility
American Windmill
TX American Wind Power Center American Wind Power Center 660 1 Vestas V-47 2005 Locally Owned
Museum
Camp Williams, Utah National Camp Williams, Utah National
Riverton UT 660 1 Vestas 660 kW 2005 Government Agency
Guard Guard
Clay County MN Moorhead Public Service #1 750 1 NEG Micon 750 kW 1999 Municipal Utility
Clay County MN Moorhead Public Service #2 750 1 NEG Micon 750 kW 8/23/2001 Municipal Utility

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 # of Date of
Location State Name Owner Size Manufacturer Model Ownership structure
turbines commissioning
Eldora-New Providence Eldora-New Providence
Eldora IA 750 1 NEG Micon 2002 School
Community School District Community School District
Lenox IA Lenox Municipal Utilities Lenox Municipal Utilties 750 1 NEG Micon 750 kW 2003 Municipal Utility
Rosebud Sioux
SD Rosebud Sioux Rosebud Sioux Tribe 750 1 NEG Micon 750 2003 Tribal
Reservation
Pipestone MN Pipestone School Pipestone School 750 1 NEG Micon 750 kW 2004 School
Waverly IA Waverly Light and Power Waverly Light and Power 900 1 NEG Micon NM 900/52 2001 Municipal Utility

East of Petersburg ND East of Petersburg Minnkota Power Cooperative 900 1 900 kW 2002 Rural Electric Cooperative

Valley City, Oriska ND Valley City, Oriska Hills Minnkota Power Cooperative 900 1 NEG Micon 900 kW 2002 Rural Electric Cooperative

Lincoln County MN Hendricks Wind I LLC Thomas Daggett 900 1 NEG Micon 900 kW 5/15/2002 Farmer owned
Lincoln County MN Borderline Wind LLC Jay Gislason 900 1 NEG Micon 900 kW 12/31/2003 Farmer owned
Nobles County MN Sieve Windfarm Don & Janet Sieve 950 1 NEG Micon 950 kW 12/2002 Farmer owned
Sprit Lake Community School Spirt Lake Community School
Spirit Lake IA 1,000 2 NEG Micon 250 & 750 kW 1992 & 2001 School
District District
Sibley IA George Braaksma, et al George Braaksma, et al 1,200 2 NEG Micon 600 kW 1996 Locally Owned
Lincoln NE Lincoln Energy System Lincoln Energy System 1,320 2 Vestas V-47 1999 Investor owned utility
Lincoln NE Lincoln Electric System Lincoln Electric System 1,320 2 Vestas V-47 1999 Municipal Utility
F.E. Warren Air
WY F.E. Warren Air Force Base F.E. Warren Air Force Base 1,320 2 Vestas 660 kW 2005 Government Agency
Force Base
Spring View NE Nebraska Public Power District Nebraska Public Power District 1,500 2 Enron Z-46 1998 Investor owned utilty
Springview NE Nebraska Public Power District Nebraska Public Power District 1,500 2 Enron Z-46 1998 Municipal Utility
Alta IA Waverly Light and Power Waverly Light and Power 1,500 2 Zond Z-50 1999 Municipal Utility
Murray County MN Ed Olsen Wind LLC Olsen Farms 1,500 2 NEG Micon 750 kW 12/1/2001 Farmer owned

Pipestone County MN Kas Brothers Wind LLC Richard and Robert Kas 1,500 2 NEG Micon 750 kW 12/2/2001 Farmer owned

Dodge County MN BT LLC 2002 Brandon McNeilus 1,800 2 NEG Micon 900 kW 2002 Locally Owned
Dodge County MN Burmese Children Support Burmese Children Support 1,800 2 NEG Micon 900 kW 2002 Locally Owned
Dodge County MN GarMar Foundation 2002 GarMar Foundation 1,800 2 NEG Micon 900 kW 2002 Locally Owned
Dodge County MN GM LLC 2002 Garwin McNeilus 1,800 2 NEG Micon 900 kW 2002 Locally Owned
Dodge County MN McNeilus Windfarm (2002) Grant McNeilus 1,800 2 NEG Micon 900 kW 2002 Locally Owned
Dodge County MN SG, LLC Silvester Stoeckel 1,800 2 NEG Micon 900 kW 2002 Locally Owned
Nobles County MN Wisconsin Public Power WMMPA and WPP 1,800 2 NEG Micon 900 kW 2002 Municipal Utility
Western Minnesota Municipal
Nobles County MN Local Goverment Joint Powers 1,800 2 NEG Micon 900 kW 1/11/2002 Municipal Utility
Power
Rock County MN Minwind I Cooperative of Farmers 1,900 2 NEG Micon 950 kW 10/2002 Farmer owned
Rock County MN Minwind II Cooperative of Farmers 1,900 2 NEG Micon 950 kW 10/2002 Farmer owned

96
 # of Date of
Location State Name Owner Size Manufacturer Model Ownership structure
turbines commissioning
Dodge County MN Ashland Windfarm Garwin McNeilus 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN Asian Children Support Asian Children Support, Inc. 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Bangladesh Children Support,
Dodge County MN Bangladesh Children Support 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Inc.
Dodge County MN BT LLC 2003 Brandon McNeilus 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN GarMar Foundation 2003 GarMar Foundation 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN GM LLC 2003 Garwin McNeilus 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN Grant Windfarm Grant McNeilus 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN Indian Children Support Indian Children Support, Inc 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN McNeilus Windfarm (2003) Grant McNeilus 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN Salvadoran Children Support Salvadoran Children Support, Inc. 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Dodge County MN Zumbro Windfarm Brandon McNeilus 1,900 2 NEG Micon 950 kW 2003 Locally Owned
Martin County MN SMMPA SMMPA 1,900 2 NEG Micon 950 kW 2003 Municipal Utility
Pipestone County MN Bisson Windfarm LLC Peter & Maurine Bisson 1,900 2 NEG Micon 950 kW 10/1/2003 Farmer owned

Pipestone County MN Boeve Windfarm LLC Gary & Gail Boeve 1,900 2 NEG Micon 950 kW 10/1/2003 Farmer owned

Pipestone County MN Windcurrent Farms Steve & Jane Tiedeman 1,900 2 NEG Micon 950 kW 10/1/2003 Farmer Owned

Pipestone County MN CG Windfarm LLC Corey Juhl 1,900 2 NEG Micon 950 kW 10/1/2003 Locally Owned

Pipestone County MN Fey Windfarm LLC Douglas & Pamula Fey 1,900 2 NEG Micon 950 kW 10/1/2003 Locally Owned

Pipestone County MN K-Brink Wind Farm LLC Aleanor Kruisselbrink 1,900 2 NEG Micon 950 kW 10/1/2003 Locally Owned

Pipestone County MN TG Windfarm LLC Tyler Juhl 1,900 2 NEG Micon 950 kW 10/1/2003 Locally Owned

Pipestone County MN Tofteland Windfarm LLC Dean & Jennifer Tofteland 1,900 2 NEG Micon 950 kW 10/1/2003 Locally Owned

Pipestone County MN Westridge Windfarm LLC Dan & Mary Juhl 1,900 2 NEG Micon 950 kW 10/1/2003 Locally Owned
Western Minnesota Muni
Nobles County MN 1,900 2 NEG Micon 950 kW 12/15/2003 Municipal Utility
Power Agency
Chandler Hills MN Great River Energy Great River Energy 1,980 3 Vestas 660 kW 1998 Rural Electric Cooperative
Lincoln County MN Autumn Hills LLC Northern Alternative Energy 1,980 2 990 kW 2/1/2001 Farmer Owned
Cedar Falls, Algona, Ellsworth,
Iowa District Wind Energy
Algona IA Estherville, Fonda, Montezuma, 2,250 3 Zond 750 1998 Municipal Utility
Project
Westfield Municipal Utilities
Dodge County MN McNeilous, Garwind Garwin McNeilous 3,000 2 Vestas 1500 kW 2004 Locally Owned
Chandler MN Chandler Hills Phase II Great River Energy 3,960 6 Vestas V-47 2001 Rural Electric Cooperative

97
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November 2007 Technical Report
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Distributed Wind Market Applications DE-AC36-99-GO10337
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T. Forsyth and I. Baring-Gould NREL/TP-500-39851
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14. ABSTRACT (Maximum 200 Words)

Distributed wind energy systems provide clean, renewable power for on-site use and help relieve pressure on the
power grid while providing jobs and contributing to energy security for homes, farms, schools, factories, private and
public facilities, distribution utilities, and remote locations. America pioneered small wind technology in the 1920s,
and it is the only renewable energy industry segment that the United States still dominates in technology,
manufacturing, and world market share.
The series of analyses covered by this report were conducted to assess some of the most likely ways that advanced
wind turbines could be utilized apart from large, central station power systems. Each chapter represents a final report
on specific market segments written by leading experts in this field. As such, this document does not speak with one
voice but rather a compendium of different perspectives, which are documented from a variety of people in the U.S.
distributed wind field.
15. SUBJECT TERMS
wind energy; distributed wind; wind turbine; small wind; small wind turbine; wind market

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