Reprinted from

June 19, 2009 2:27 PM CDT
Small wind turbines see gust in sales, thanks in part to tax credits
by Bob Geiger Staff Writer
 

Minnesota Auditor Rebecca Otto, and her husband, Shawn, operate a 12-kilowatt wind turbine at their home in Marine on St. Croix. The turbine provides 80 percent of power they use

When it comes to wind power, small is beautiful.

The same credit crunch that’s depressed real estate has also made banks skittish about lending huge sums for utility scale wind farms, but the downturn is having no effect whatsoever on small wind-turbine manufacturers.

In fact, thanks to the federal government’s renewable energy tax credits, manufacturers of wind turbines with generating capacity of 100 kilowatts or less rose 78 percent in 2008, according to the Washington, D.C.-based American Wind Energy Association (AWEA).

In addition to qualifying for tax benefits, owners of small turbines, many of them set up on agricultural or rural residential property – can sell excess energy back to utilities at the same rate as they buy electricity.

Combined, such small wind turbines now feed a total of 17.3 megawatts of new wind power onto the U.S. power grid, or slightly more than 11 General Electric 1.5 megawatt turbines, the workhorse of domestic wind farms.

Some high-profile state residents, including Minnesota Auditor Rebecca Otto, use small wind turbines. Otto and her husband, Shawn Otto, bought a 12-kilowatt wind turbine that provides 80 percent of power for the couple’s Marine on St. Croix home.

That prevents 14,000 pounds of coal from being burned each year to power the home, according to Otto’s website, www.rebeccaotto.com.

Reflecting this trend is Pipestone-based Next Generation Power Systems Inc., a wholly owned subsidiary of publicly owned Juhl Wind.

NextGen, as the subsidiary is also known, this week announced orders for 14 rebuilt 33 kilowatt wind turbines, representing $880,000 in revenue for the company.

“We’re well on our way to doubling our sales this year,” said Dennis Williams, plant manager for NextGen, which registered $450,000 in sales during 2008.

The federal 30 percent investment tax credit (ITC) on equipment renewable-energy purchases significantly cuts the $40,000 to $130,000 cost for small turbines.

Said John Mitola, president of Juhl Wind, in a news release: “We are taking steps to strengthen this business unit to take further advantage of the sizable market opportunity available to us in small wind and solar systems,” in a news release.

Those steps, Mitola added, include recruiting new dealers and distributors and planned expansion of its manufacturing capabilities: “We believe it is just the tip of the iceberg.” In addition to farms, the company says, such small turbines are well-suited for on-site wind generation in property owned by colleges, universities and school districts.

An AWEA poll of small turbine manufacturers, whose systems are increasingly popular among farmers, indicated that even with the slow economy, small turbine sales could grow up to 30-fold in the next five years.

One reason is a shift by wind developers to the ITC, which replaces a previous $4,000 cap, according to NextGen’s Williams. He added that some states offer renewable-energy incentives that can be combined with the ITC.

Before Congress extended the ITC in February, many small wind generators sold wind to electric utilities, receiving a 2 cent-per-kilowatt hour tax credit for energy produced through a Production Tax Credit, or PTC, over a 10-year span.

The PTC is still an option, although many renewable energy investors large and small favor the more immediate payback provided by the ITC.

NextGen is a recycler of sorts, buying wind turbines from California wind farms and reconditioning them by installing new gears, bearings, seals electronic controls and hydraulic systems.

“I look at it as we’re recyclers,” Williams said. “We’re part of the green revolution.”

But going green requires spending some green. Each 33-kilowatt turbine costs $70,000 to $75,000. Depending on the height of the turbine tower, which ranges from 50 feet to 120 feet, the total cost of installation can rise to $120,000 or more.

Williams said most of NextGen’s 14 turbine orders came from eastern Minnesota, north-central Iowa and Ohio.

Minnesota is an attractive market for small wind producers because of so-called “net-metering” legislation passed in 1983, when DFLer Rudy Perpich was governor.

The net-metering law applies to all renewable-energy generation up to 40 kilowatts, and is available to all customer classes and utilities throughout the state. It requires state utilizes to pay the prevailing retail price – between 8 cents and 9 cents per kilowatt hour – for excess generation.

Another small turbine manufacturer that stands to benefit from renewable energy tax incentives is Duluth-based Ventera Energy Inc., which manufactures 10 kilowatt and 12 kilowatt wind turbines that, depending on the tower height, cost up to $40,000.

A spokeswoman for Ventera Energy said Thursday that the company has nearly 150 wind turbines on back-order – underscoring demand for energy independence even during a recession.