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Clearing Up / Bearing Down

[October 12, 2018 / No. 1872]

Small Wind Has a Piece of DG's Present—Does It Have a Future?

SUMMARY: Distributed generation doesn't just mean solar. Small-scale wind, with its output used on-site or locally, is a part of distributed generation. Whether it grows to more than an interesting niche depends on tax and incentive policies, solar pricing and people's comfort with living next to it.

Distributed generation is a popular buzzword of the moment in utility and energy circles, but as modern and current as it sounds, it's actually as ancient a concept as the idea of putting energy to work where you find it.

Long before the electric grid, long before the harnessing of electricity even, mills full of machinery were built next to natural or artificially created elevation differences in flowing bodies of water, because that's where the usable energy was. It couldn't be transmitted elsewhere. Windmills were built in places where a steady breeze of sufficient force could be yoked to do useful work.

The development of the electric grid made it possible to locate the point of consumption hundreds of miles from the point of generation, which led to the building of large, centralized generating stations (typically fueled by coal, oil, nuclear or natural gas) serving an entire region of customers.

Now another technological innovation—the advent of practical, affordable rooftop solar—is promising to shift the model once again, to one in which there are thousands of points of generation. Every warehouse, factory, office building and residence could be its own generating station, supplying at least some of its own demand and feeding surpluses to the grid. Once small-scale, affordable and practical battery-storage systems become prevalent, this will really take off.

Distributed generation as a term in current use usually implies solar, but that's not the only energy form it can take. Advocates of smaller-sized nuclear reactors like the ones Northwest firms NuScale and Terra Power are developing see a model of many smaller local generating plants instead of one giant (and gigantically expensive) centralized power plant.

Then there's wind, which rarely gets mentioned as part of the distributed generation scene. Maybe it should.

Wind power usually plays a part in the discussion in the form of large-scale installations of dozens and sometimes hundreds of high-rise turbines, usually in a remote location with enough room to site that many towers and enough wind to power them.

But small-scale wind has long been a part of the energy scene. If the state symbol of Kansas isn't the farm water-well windmill, it ought to be, given how many one can spot just from the interstate; it's a more iconic symbol of rural life than a barn.

More recently, entrepreneurs have been intrigued by the potential for small-scale wind. Several Washington companies have developed and tried to market small turbines for home, farm and business use, without much commercial success.

Someone else is watching the small-scale wind market—Pacific Northwest National Laboratory, which recently released its annual distributed wind energy report.

Under PNNL's definitions, distributed wind energy is usually consumed on-site or fed into a local distribution network; "system size can range from a 5-kilowatt turbine powering a home to a few multi-megawatt turbines providing electricity to multiple industrial facilities on the same distribution system."

The report counts more than 81,000 turbines in the U.S. fitting that description, representing more than 1,000 MW of capacity. Iowa, Nevada and Alaska are the top three states for cumulative installed base of small-wind generation.

The market for distributed wind is an interestingly mixed bag. In 2017, the report says, 21 states added 83.7 MW of new distributed wind capacity, representing 3,311 units and $274 million in investment. Much of that was driven by installation of large turbines (generating capacity of more than 1 MW). "Federal tax credit expiration dates are likely drivers of many of the large-scale projects," the report said. "Renewable energy project developers teamed with tax equity partners to develop many of these projects."

At the other end of the scale, the small-turbine (up to 100 kW each) market recorded an increase in the number of units deployed versus the two most recent prior years, but a decrease in total installed capacity from 2016 and 2015. The report blames "an unstable policy environment and continued competition from low-cost solar photovoltaic (PV) systems." What growth there was came from the smallest of the small (units generating less than 1 kW), hence the increase in the count of units even as overall installed capacity has been dropping each year.

Small wind has developed into a niche for domestic and foreign manufacturers (among them Xzeres Wind Corp. of Wilsonville, Ore.) but the global market too has been roiled by uncertainty over feed-in energy pricing policies and other incentive programs in nations such as Italy and the United Kingdom. The report notes that the Chinese domestic market had only 15 small turbine manufacturers reporting sales in 2017, down from 28 in 2014. Small-wind exports from U.S.-based manufacturers dropped to 5.5 MW, the report says, down from 21.5 MW in 2015.

While the report offers a wealth of data on where the small-wind market is today and how it got there, it's somewhat circumspect on where the industry is going.

"After a steady decline in small wind capacity deployment since a peak in 2012, the reinstatement of the Residential Renewable Energy Tax Credit could bolster the small wind market in the near term," the report said. "On the other hand, this policy may have less impact on 1-kW and smaller wind turbines that typically provide electricity for remote, off-grid applications, as sales of these units have steadily increased since 2012."

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There are signals the market might be improving. "Even though they had few sales, an increased number of foreign-based small wind manufacturers have re-entered the U.S. market," the report says. "Others have indicated interest in pursuing certification for their turbine models, which signals interest in expanded participation in the U.S. and global markets."

There's lots of room for growth, the report says, in behind-the meter applications for "agricultural, commercial, and industrial end-use customers in low-density urban centers (e.g., industrial areas), suburban, and rural areas."

How small-scale wind fits into the future of distributed generation depends on two factors, one that the report's outlook section doesn't mention, and the other it tangentially brushes against.

The first is solar. The combination of a proven technology that requires little maintenance once installed and attractive pricing (for the equipment and for the cost of energy not purchased off the grid) will make solar the easier choice for anyone with a roof to deploy it on.

The second factor affecting small-wind's deployment is one that can't be measured on a graph or in a table. Wind-turbine farms are an interesting visual when seen on a mountain ridge 20 miles away, but the flickering sweep of the blades and the noise can prove to be an annoyance even in sparsely populated rural areas.

How happy are city folks going to be when seeing (and possibly hearing) dozens of small wind generators close by, even if they're parked in warehouse districts? At that point distributed wind may be invited to distribute itself somewhere else. [Bill Virgin]

Bearing Down is excerpted from NewsData's Clearing Up publication. If you aren't a current subscriber, see for yourself how NewsData reporters put events in an accurate and meaningful context -- request a sample of Clearing Up.

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