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Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not. Mike Bergey AWEA Small Wind Committee Bergey Windpower Co. mbergey@bergey.com. People Want Energy Alternatives.

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Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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  1. Strategies for Gaining a Level Playing FieldWhere We Are; What’s Working & What’s Not Mike Bergey AWEA Small Wind CommitteeBergey Windpower Co.mbergey@bergey.com

  2. People Want Energy Alternatives Coal is too dirty, natural gas is too volatile, nuclear is too dangerous, and consumers feel trapped CA Residential Natural Gas

  3. People Want Energy Alternatives “Please give me something that will lower my electric bills, will help the environment and that I can afford” 87-90% of Americans support increased use of wind and solar energy Yale Center for Environmental Law And Policy, June 9, 2005

  4. Residential Wind Turbine Market • Utility bill reduction, no back-up capabilities • 1+ acre lot size (with few exceptions) • DOE Class 3 wind resource or better(over 30% ofinhabited U.S.) • State or utility subsidy program • ~ $ 10 millionmarket in 2005

  5. Broader Market Possible • Smaller lot sizes • DOE Class 2 wind resource or better(over 50% of the “inhabited” U.S.) • No or minimal subsidy • Holy Grail:Monthly payment for wind system ~ equal to utility bill savings

  6. U.S. Market Potential: It’s Big! • Residential Electricity Consumption Exceeds Either Commercial or Industrial (35% of U.S. Sales in 1998) • 20.6 Million Homes have 1 Acre or More • 30.4 Million Homes have ½ Acre or More • 4.6 Million Commercial Buildings • Estimated 50%+ are in Class 2 Winds or better Arthur D. Little, 1981:3.8 Million Units 4 - 8 Million Market Potential: Units (~ $120 B)

  7. U.S. Market Today: It’s Small! • Residential Wind: ~ $10 M • Residential Solar: ~ $ 300 M • Commercial Wind: ~ $3,000 M Why so Small ?

  8. Why so Small ? Is it: • Products: Need more and better • Lack of Capital / Investment • Product Certification • Lack of Subsidies • Zoning / Permitting Obstacles

  9. Why Aren’t There More Small Turbines • Equipment Costs too Much! (Low Production Volumes & Shortage of Subsidies) • Zoning / Permits: 35’ Height Restrictions in Residential Zones

  10. New Technology is Lowering Costs US-DOE Advanced Small Wind Turbine Program + Industry Funded R&D 3D Solid Modeling • Advanced Airfoils • “Super-Magnet” Generators • Low Cost Manufacturing • Smart Power Electronics • Stealth: Very Low Noise Bergey 50 kW Southwest 1.8 kW

  11. Volume Production will Drive Costs Down Significantly Small Wind as a New-Age Home Appliance …“ a ceiling fan on steroids”

  12. The Chicken and Egg Dilemma: More people would buy small wind turbines if they cost less, but they won’t cost less until more people buy them Rebates and Tax Credits ! 91% of Americans support tax incentives for renewable energy CNN/USA Today Poll, May 9, 2001 Gallup Poll, Nov. 27, 2001

  13. AWEA Federal Policy Priorities • Tax Credit of 30% • Small Projects Set-aside for USDA 9006 Rural Grants Program • Dept. of Energy Small Wind R&D Funding • National Annualized Net Metering • Tower Height Deregulation

  14. Proposed Federal Tax Credit • No federal credit for small wind since 1985 • Production Tax Credit (Section 45) doesn’t apply to, or help, small wind customers • Solar had permanent 10% Investment Tax Credit • New Credit Proposed in 108th Congress: HR 790, Cole and S 759, Durbin – Now Expired • 30% tax credit for residential and business installations of wind turbines up to 75 kW, no spending limits (790) or $1,000/kW (759) • Not included in HR 6, House Energy Bill • In 2003 and 2004 Senate Bills

  15. 2005 Energy Bill • 2005 Senate Energy Tax Incentive Bill: • PTC extended, no reduction in terms • 30% Residential Solar Credit, Capped at $2,000 • 30% Residential Fuel Cell Credit, Capped at $500/0.5 kW • 30% Business Solar and Fuel Cell Credit, No Caps • Nothing for Small Wind! • $2,000 residential tax credit cap is severe limitation … won’t leverage a $40,000 home / farm system

  16. 2006 Federal Tax Credit Effort • H.R. 4716 (Cole): 30%, Residential & Business, up to 100 kW, No Caps, 5 Years • S. 2571 (Conrad): Multi-Faceted Bill, 30%, $1,000/kW Cap, 5 Years • Solar has bills (eg., HR 5206) to extend 30% credit to 2015 and raise cap on residential to $2,000/kW – wide support

  17. 2006 Federal Tax Credit Effort • Focused AWEA Legislative Effort Underwritten by 3 Firms: Bergey Windpower, Earth Turbines, & Southwest Windpower • AWEA hiring dedicated, full-time Small Wind Legislative Assistant • Senate Finance Cmte Ag Energy Bill Expected ~ August 2006 Federal Tax Credits for Japanese Solar Modules, But Not for American Small Wind Turbines - That’s Wrong !!!

  18. AWEA State Policy Priorities • Rebate (Preferred) or Tax Credit of ~ 50% • Sales Tax Exemption • Property Tax Exemption • Annualized Net Metering • Tower Height Deregulation

  19. State Leadership • California: $2.50/W to 7,500 W – then $1.50/W; Rebate decline reversed in 2006 after heavy lobbying • Massachusetts: New rebates at $2.25 - $3.75/W; fast growth • Vermont: Grants of ~ $2.00/W; Limited funding • New York: Rebates of 50% (higher for farms and schools); Heavily bureaucratic

  20. State Leadership • Pennsylvania: DEP and Energy Harvest Program • New Jersey: 60% rebate; Suitable sites are rare & solar subsidies much higher • Pending: • Arizona: EPS Distributed Power • Oklahoma: 40% tax credit • NY, Long Island: Grant program

  21. Market Clusters – Sales Lead to Sales Oak Hills, CA

  22. Playing Field is NOT Level • Large Wind: Federal PTC equivalent to ~ 40% tax credit, for 12 of last 13 years • Solar: Federal tax credit, plus ~ 25 state, city, and utility programs that are “solar only” (eg., CO, ME, NM, NY, OR, IL, CT, CA (CSI))

  23. Working with the Solar Industry Hasn’t Worked • The solar industry cares primarily about the solar industry • Politically, they don’t need us • Adding small wind raises the costs of their initiatives • Solar looks at large wind and says “wind has gotten enough” • The wind industry proponents of this “synergy” haven’t spent time in the political trenches

  24. What Does Work ? • Piggybacking on solar initiatives – with separate lobbying • Duplicating solar incentives – “we should subsidize both technologies and let the market decide” • Energizing farm lobbying base • Finding legislative champions

  25. What’s Needed • A Robust AWEA Small Wind Committee • A Windustry organized farmer / rural grassroots advocacy program • Small wind support from wind’s regional advocacy programs (eg, Western Resource Advocates) • State Legislative Monitoring Program

  26. Small Wind Could be a Major New American Industry • American companies lead in small wind technology and market share • Danes lead in large wind, Japanese lead in solar – because those governments created robust domestic markets

  27. It’s up to Us !

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