Small-to-medium sized firms in the United States typically manufacture small-to-medium sized wind turbines, most commonly used for distributed wind generation. Although the domestic market for small, distributed wind systems has stagnated in recent years, the growing international market is an opportunity for U.S. manufacturers. Small to medium-sized wind turbine manufacturers in the United States have exported products to more than 130 countries, with exports accounting for up to 80 percent of total U.S. sales in recent years. Worldwide installations of small wind turbines are predicted to reach almost 3 GW by 2020. The technical potential for U.S. distributed wind capacity is 1,100 GW by 2030, representing an untapped domestic resource.
States could increase production of small wind turbines to help meet increasing national and global demand. A state could bolster existing policies, such as a distributed generation carve-out, or establish new ones to stimulate the in-state market for small, distributed wind. States could also meet international demand for smaller turbines by encouraging exports.
Distributed Generation Carve-out
Distributed renewable electricity generation has several benefits: it can increase in-state renewable energy demand, improve grid reliability, and diversify the local energy supply. Distributed generation sources can include solar, small-scale wind turbines, and biomass. Schools, farms, data centers, and manufacturing facilities can all benefit from locally-produced energy and distributed generation systems. To increase in-state demand for distributed wind, states could institute a distributed generation carve-out. Policy leaders could look to successful policy examples in New Mexico or Colorado.
New Mexico and Colorado are leaders in promoting in-state generation of wind energy. New Mexico has implemented a distributed generation carve-out that requires 3 percent of the state’s electricity to be produced at the point of consumption by 2020. The electricity can be used on-site or transmitted to a local investor-owned utility (IOU) or rural cooperative to be used by customers in the surrounding service area. Similarly, Colorado has established a distributed generation carve-out of 3 percent of IOU sales by 2020, ramping up from a 1 percent requirement in 2011.
Increasing demand for locally generated electricity could send a clear, consistent market signal to business leaders, encouraging small wind installers and manufacturers to expand in-state operations. By establishing a distributed generation carve-out, a state could bolster the in-state demand for locally generated energy and create good-paying jobs.
Expand Solar Gardens to Include Small Wind Turbines
Some states have legislation that encourages community solar. For example, Colorado’s Community Solar Garden Act requires investor-owned utilities to purchase a minimum quantity of electricity from community solar gardens. However, this language excludes other forms of shared, locally produced energy that can facilitate access to energy independence. Community wind provides many benefits including: more employment opportunities than conventional wind projects, increased local control, and community wind does not require transmission lines and can be connected to the grid. Rural landowners and farmers can especially benefit from community wind projects, and states such as Iowa, Illinois, and Oregon have had success with community wind projects. States that require investor-owned utilities to purchase electricity from solar gardens should consider expanding their legislation to include small wind projects to encourage adoption of community wind, thus providing economic benefits and energy independence to rural Americans.
Institute a Small Wind Tax Credit
To encourage residents to install distributed wind systems, states could implement a small wind tax credit, modeled after North Carolina’s solar and wind tax credit. North Carolina provides a personal and corporate tax credit of up to $10,500 per installation to eligible taxpayers. Installations must not be used for the purpose of selling electricity and allowable credit must not exceed 50 percent of an individual’s tax liability. A similar tax credit in other states would reduce upfront costs of installation and encourage widespread adoption of distributed wind systems.
Create an Anemometer Loan Program
The first step to installing a small wind turbine on residential, farm, school, or business property is a wind resource assessment. Lack of access to assessment tools, like an anemometer that measures wind speed, can prevent residents and businesses from installing a small wind system. To empower residents with the knowledge and tools needed to install a small wind turbine, state leaders could create an anemometer loan program. The State of Maryland’s Community Wind Competitive Grant Program encourages distributed wind adoption through competitive grant funds and an anemometer loan program. Other states could create a similar anemometer education and loan program that provides interested parties with the tools and information needed to assess wind resources. The project could be implemented on a county level.
Create an Export Tax Credit for Small- and Medium-Sized Qualified Industries
With increased demand for wind-generated energy in the United States and abroad, states could encourage production of small-scale wind turbines by small and medium-sized businesses. Indeed, small wind turbine production is dominated by small businesses: 95 percent of U.S. small-scale wind turbines were manufactured by small businesses in 2009. As the international market continues to grow, state policymakers could encourage the production and export of small wind turbines by establishing an export tax credit for small and medium-sized businesses in that state’s wind industry. Coastal states, including Mississippi, have traditionally subsidized export costs to encourage economic development. State tax credits could be similarly used to offset the costs of exporting to foreign markets. By encouraging small and medium-sized businesses in key industries, states could increase local manufacturing and create good-paying jobs for residents.