This blog is designed to highlight the diversity of views and news stories on urban energy topics that appear daily in the media. They are intended to provoke discussions on how cultural, geographic, political, and institutional influences shape the way energy markets operate and energy policies are made in cities around the world.
The U.S. wind turbine industry was created by farmers more than a century ago. First tapped to pump water in places such as the Central Valley's Stockton – once known as the "City of Windmills" – and then to generate electricity, small scale wind turbines have long been held as symbols of self-reliance. The technology offers a host of economic, environmental and reliability benefits, spurring economic development in often depressed, rural regions of the United States and the world, powering farms, ranches, schools and homes.
With large utility-scale wind farms sprouting up across the nation, the small wind industry – providing individual turbines for on-site use – is also growing up. General Electric is investing in the sector, and the devices are now available at national chains such as Home Depot.
Despite these positives, there are also some dark clouds threatening the small wind market. For example, recent scams in California tried to soak up state funding, halting the nation's most popular rebate program for small wind turbines. In response, consumer protection groups have increased efforts to require that products are "certified" to be eligible for government incentives, a sign that the industry is finally coming of age.
The good news is that California still ranks among the top 10 U.S. markets for small wind power; the bad news is that the hold on the nation's longest-standing small wind incentive has hurt sales during a recession, resulting in important lost economic activity for the state. And while the United States has traditionally dominated the small wind market, growing activity in Europe and China is challenging the domestic small wind industry in new ways.
A small wind history lesson
Shortly after the Gold Rush in the Sierra Nevada was over, the first small windmills were popping up in California. Instead of grinding grain – which was the primary application in Europe – these American windmills pumped water. The center of this new kind of "wind farming" was in Stockton. One visitor to the region commented that Stockton's nickname of "City of Windmills" appeared "appropriate to the traveler who approaches the town on a windy day and at a distance sees little save a multitude of great arms revolving furiously above the trees and house tops."
Sacramento, too, was known for wind farming. In 1859, Jacob Dickerson's windmill took first prize in the Sacramento State Agricultural Fair, and he boasted that more than a hundred of his locally manufactured windmills were still working.
At the time, close to a dozen windmill manufacturers were located in Northern California. Initially, these windmills were made of wood. But competition from manufacturers back East led to the introduction of steel windmills in the early 1890s. Nonetheless, aided by mail order houses such as Sears Roebuck and Montgomery Ward, out-of-state firms continued to offer cheaper alternatives than in-state producers. By 1905, only four California firms employing 19 workers remained in business, two of them in San Jose. By 1914, only one firm endured.
It was do-it-yourselfers tinkering in their backyards that started the small wind movement to generate electricity in the United States in the rural Great Plains, places where utilities did not extend electricity service. The nascent wind industry then faced a challenge from the public power movement in America, prompted by Franklin D. Roosevelt's New Deal, which led to a massive effort to expand the electric grid. Some wind farmers even threatened to dynamite the massive transmission towers that would traverse their properties.
The most successful small wind energy entrepreneur in history was Marcellus Jacobs, who came up with a wind turbine that became the unrivaled mainstay for "off-the-grid" rebels in the United States. He secured more than a dozen patents on what came to be the world's first state-of-the-art small wind electricity generator. The first Jacobs wind turbine in 1922 consisted of a rear axle from a Model T and a fan from an old water pumper. In his heyday, he employed up to 260 people and produced more than $50 million worth of wind turbine machinery before closing his doors in the 1950s. Jacobs' turbines are still on the market, being manufactured since 1986 by Wind Turbine Industries Corp. in Prior Lake, Minn.
Today's small wind landscape
While massive utility-scale wind turbines like those that dot the landscape at Montezuma Hills in Solano County have surged as a global industry – representing more than half of the new power plant capacity installed in the United States last year – the small wind industry has been struggling. According to Pike Research, approximately 97 percent of all small-scale renewable energy installations are solar photovoltaics, an option that requires less maintenance and that has enjoyed investments, first from large Japanese companies such as Sharp Electronics, and more recently from low-cost Chinese firms.
Momentum had been shifting. In 2008, a small wind federal tax credit was offered by the government for the first time, but it was capped at $4,000; in 2009, this cap on federal tax credits was removed and consumers were also allowed a 30 percent federal grant option. A surge in applications for complementary state subsidies made the small wind industry a victim of its own success, with many state small wind programs shut down or put on hold, including California's, which was one of the first states to offer rebates for small wind in the mid-'90s.
California's story has a twist. The California Energy Commission received more than 1,500 applications for incentives for small wind turbines within the past year. Unfortunately, about 85 percent of the requests, totaling $38 million, were for rebate amounts close to or equal to the total installed cost of the entire small wind turbines and linked to a single firm: DyoCore of Carlsbad. There was something clearly wrong, leading to a staff investigation which revealed that DyoCore made false claims on performance with energy production pretenses more than seven times what is theoretically possible.
In response, the Energy Commission called timeout this spring, realizing that consumers had little interest in, or the expertise to, verify performance claims. In late July, the Energy Commission staff initiated a formal legal complaint against DyoCore, seeking removal of the turbine from the eligibility list for rebates, and asking the state attorney general to prosecute, if warranted.
Unfortunately, the suspension of the nation's largest small wind incentive program has penalized the entire industry. Yet it has also added momentum to implement testing standards and certification requirements. The Small Wind Certification Council is now seeking to incorporate certification requirements into state funding programs for small wind turbine to offer consumers a clear guide on performance and safety with "apples to apples" comparison ratings. Go to www. smallwindcertification.org/ applicant-turbines/.
U.K. is hot global market
A new policy comparison Web tool funded by the U.S. Department of Energy, and which is now available at www.windpolicytool.org, can calculate paybacks for consumers on their investments for small wind turbines in all 50 states. An analysis performed by eFormative Options, the National Renewable Energy Laboratory and Pacific Northwest National Laboratory verifies that California is still in the top 10 – assuming its program gets back on track later this year. Other states that rank highly include New York, Oregon and Vermont.
Nearly all domestic manufacturers of small wind turbines confirm a rough year in 2011 due to uncertainty surrounding availability of state financial incentives. "There is always a push and pull in the market," observed Chad Palmer of Wind Turbine Industries Corp., which sells a 20 kW Jacobs machine and had a banner year in 2010. He said that his firm is setting its sights offshore by seeking certification in order to sell into the U.K. market, which is probably the hottest global market right now, with Italy also coming on strong.
Bergey Windpower of Norman, Okla., is also seeking certification to sell into the U.K. market. "They have an excellent Feed-In Tariff program in the U.K., which pays 40 to 50 cents per kilowatt-hour, and great wind, especially to the north, in Scotland," said Mike Bergey, the company's CEO.
Here at home, other barriers to success include competition from Asia. "We've lost millions of dollars to cheap, substandard imports, which are selling at half the cost of mainstream companies. And that's why we are such strong supporters of certification standards," Bergey added. Even the nation's most successful company, Southwest Windpower, which sells the smallest turbines for the residential market, is reporting that sales in 2011 in the United States have dropped substantially over the past year, and that the firm now expects the majority of future income to come from overseas.
Globally, the United States is clearly losing its long-standing global leadership position on small wind to Britain. According to a market forecast prepared by Pike Research, the U.S. small wind market is expected to grow at a compounded annual rate of 16 percent until 2015, accumulating more than 51 megawatts of small wind capacity that year. During that same year, the U.K. will add 56 megawatts, a corresponding growth rate of 23 percent.
The small wind industry's other wild card is China, which became the world's largest wind power market in 2010, and which has historically played a critical role in reducing manufacturing costs due to low labor rates. While quality control issues still persist, China is now looking to expand its presence and market share in the international small wind arena.
The small wind industry may never reach the success of either the utility-scale wind industry or solar photovoltaics. But California and the nation would benefit immensely from a growing small wind market and recapturing the global leadership role the country has enjoyed for more than a century. What better way is there to diversify and democratize the regional energy economy than with a technology that pulls clean energy right out of thin air?