Farmers and ranchers have not been a big part of the small-scale wind turbine market in the last five years. But thanks to a 30% tax credit, accelerated depreciation, and a USDA grant and guaranteed loan program, they could very well play a big part in the next five years.
That is the observation of Mike Bergey, president of Bergey WindPower Company, Norman, OK, a veteran of the small-scale wind turbine industry. Bergey established his company in 1977 during the energy crisis, at a time when both federal and state governments were offering tax credits on small wind-energy systems.
President Reagan ended those federal tax credits in the mid 1980s. At that time, there were about 40 companies manufacturing small wind-energy systems. Bergey says his was the only one of those companies that survived.
In the last six years, however, small wind-energy systems have made a comeback, primarily with residential customers who, for various reasons, want to install a small wind turbine.
Andrew Kruse, senior vice president, business development, Southwest Windpower, Flagstaff, AZ (which was established in 1987), says these customers vary from people who want to contribute to energy security to those interested in cutting their electric bills to technology geeks who just like owning a wind turbine. Kruse recently has seen significant sales in states like North Dakota and Nebraska where there are virtually no state incentives for installing wind systems.
Bergey says one of the reasons residential customers have shown more interest in small wind-energy systems than farmers have shown is that incentives have been more attractive in states on both coasts rather than in farm country. For a state-by-state listing of tax incentives, visit the Database of State Incentives for Renewables & Efficiency at www.dsireusa.org.
However, a recent convergence of federal tax credits, accelerated depreciation and energy provisions in the farm bill could bring more farmers back to small wind-energy systems.
The small-scale wind turbine industry received a shot in the arm last October when President Bush signed an economic stimulus bill that included federal tax credits for residential and commercial small wind-energy systems. The tax credit was for 30% of the total installed cost of a small wind-energy system, but was capped at $4,000.
As of February 17, 2009, The American Recovery and Reinvestment Act of 2009 removes the cost caps. This means consumers can receive a true 30% investment tax credit for the purchase and installation of wind-energy systems that are 100 kilowatts (kW) or less in capacity.
In addition, farmers and other consumers can take advantage of bonus depreciation, which allows them to depreciate equipment, like a wind-energy system, over an accelerated schedule.
Also boding well for farmers is Farm Bill Section 9007, the Rural Energy for America Program, which offers grants, guaranteed loans and a combination of both to help agricultural producers and rural small businesses purchase and install renewable energy systems. For details, visit www.rurdev.usda.gov/tx/BP/Energy%20Programs/9007%20factsheet.pdf.
Residential and farm wind-energy systems vary in price, depending on their capacity. A 10-kW system, which could cost around $50,000, would provide about 80% of the energy for an average home, Bergey says. Typical residential wind-energy systems have capacities of 5 to 15 kW.
Kruse, whose company manufactures the Skystream wind generator (a 2.6-kW system), says costs could run $12,000 to $14,000 for a system with a 33-ft. tower and $16,000 for a system with a taller tower. The company claims the Skystream is capable of producing 20 to 70% of the energy for a home.
Costs and requirements
The payback period for a small wind-energy system depends on local wind patterns, the cost of electricity in the area, and the installed costs minus any tax incentives. Again, state incentives vary. The payback time could be anywhere from five to 40 years, Bergey says.
Up-front costs can be painful, but a small wind-energy system can lower the overall cost of a farm operation, Bergey says. It can put $100 to $300/month in a farmer's pocket.
When deciding if a wind turbine is right for you, there are several factors to consider. An average annual wind speed of 11 mph or better is required, Kruse says. Small wind-energy systems also require at least one-half acre of land in an area that is clear of obstructions for good wind flow.
You should talk with your energy utility to determine whether it is amenable to small wind-energy systems and if it has interconnection agreements or other requirements. You also need to find out if your local county has zoning issues with small wind-energy systems. Most equipment manufacturers have dealers across the country that can answer questions about local requirements and incentives.
The Web site of the American Wind Energy Association (AWEA), www.awea.org/smallwind/faq.html, also includes answers to frequently asked questions.
Cutting electric bills
Steve Rigoni, Pavilion, NY, received a grant from the New York State Energy Research and Development Authority to install a 10-kW Bergey Windpower system. The grant helped fund 60% of the $55,000 system.
Rigoni's system is connected to the local utility's grid and includes a meter. If his system makes more electricity than he uses, the utility gives him credit. If he uses more electricity than the small wind-energy system makes, he pays the utility. Rigoni estimates that the system saves him $120 to $140/month on his electric bills.
Glen Wooley, Brownfield, TX, installed a Southwest Windpower Skystream in July 2008 to provide electricity to his home. His wind-energy system cost between $10,000 and $11,000, and last fall he received the $4,000 tax credit from the federal economic stimulus program.
THE SMALL-SCALE wind turbine industry in the U.S. has done something many other industries have not over the last few years. It has grown. In fact, it grew 14% from 2006 to 2007, according to a study by the American Wind Energy Association (AWEA).
Small-scale wind turbine manufacturers estimate that the annual growth increased about 25% between 2007 and 2008. And preliminary estimates indicate that the industry in the U.S. grew about 95% in 2008.
Although small wind-energy systems continue to be sold in all 50 states, AWEA reports that the bigger markets tend to be in states that offer tax incentives or rebates. For a state-by-state listing of tax incentives, visit www.dsireusa.org.