Page 24 - North American Clean Energy January February 2015

wind power

Images of a leased Endurance turbine at Double A
Vineyards, in Fredonia, New York

New Financing Options Offered for

Distributed Wind Power

Replicating the success of solar energy
By Russell Tencer

LAST FALL, THE US DEPARTMENT OF ENERGY (DOE) released their 2013 Distributed Wind • A high wind resource
Market report to recap the year’s highlights and to provide an industry state of the union for It goes without saying, perhaps, but for a customer to beneit from a wind turbine, they must

distributed wind energy. Distributed generation (DG) refers to electrical power generation be sited in an ideal location. Due to the nature of turbine technology and wind turbine cut-in
that occurs close to where the power is consumed. Distributed wind energy systems are com- speeds, certain wind thresholds must be met. Typically, the minimum average wind speeds
monly installed on, but are not limited to, residential, agricultural, commercial, industrial, required are ive meters-per-second (m/s).
and community sites—ranging from a ive-kilowatt (kW) turbine at a home to a multi-mega- Unlike solar power technology, which can harness some amount of the sun’s energy at near-

watt turbine at a manufacturing facility.
ly any location, turbines are only efective after the wind speed surpasses the turbine’s cut-in
According to the Distributed Wind Energy Association (DWEA), DG systems are typically speed threshold. For example, Bergey WindPower’s Excel 10 kW turbine cuts-in at 2.5 m/s
small by comparison to centralized power plants, “But they provide signiicant beneits in- (5mph), while the somewhat more powerful Endurance Wind Power’s E-3120 50 kW turbine
cluding reduced energy loss during transmission and reduced load on utility transmission and cuts-in at 3.5 m/s (7.8mph).

distribution lines.” (Learn more at http://distributedwind.org)
Although turbine sales trends have been lackluster over the last year, the DOE found a • Access to land
bright spot in the advent of the third-party inancing models for the wind power industry.
Although signiicantly smaller than their utility-scale wind counterparts, small wind turbine
“he most promising 2013 development was the initial emergence of third-party inancing of- hub heights are still between 80 and 160 feet tall. For proper siting, installation, and an unob-

ferings for distributed wind,” read the report. “Most industry leaders consider leasing and related structed wind low, it’s recommended that property owners have at least three acres of land to
business models as a primary opportunity for reducing the resource, inancial, and operational accommodate this power source.
risks to customers and supporting a more level playing ield, building on the success of solar PV.”
Having seen success in the distributed solar industry, after the introduction of third-party
• A sizeable electric demand
inancing, investors are eager to get involved in the distributed wind market, with tax equity Unlike solar arrays, wind turbines are not custom designed to meet a customer’s needs. In
funds to support the building of new small wind projects (under 100 kW turbines).
order for a 10 kW turbine wind lease to make inancial sense, the potential customer should
be using over 10,000 kWh of electricity per year (to ensure their lease payments can be lower
What does a wind lease look like?
than their former utility bills).

he new wind leasing options work quite similarly to the third-party ownership model that According to the US Energy Information Administration, in 2012 the average US residential
have been developed and implemented by the solar power industry over the past 10 years. utility customer used 10,837 kWh a year. Louisiana had the highest annual consumption at
Lessees remain connected to their utility and are billed a separate lease payment, payable 15,046 kWh, and Maine had the lowest at 6,367 kWh.
monthly to the lessor. he system owner is able to monetize the federal investment tax credit

(ITC), depreciation, and other state incentives, which in turns allows them to pass on these Finding success
savings to the customer.
Distributed solar energy has seen signiicant growth in the last decade due, in large part, to
Most wind leases have a 20-year term, which includes the costs of permitting, installation, the ofering of third-party inancing. his growth has been exponential, primarily because the
maintenance, warranty, and insurance. Customers usually have three diferent leasing op- levelized cost of energy (LCOE) for solar power has been rapidly declining. As the market has

tions:
scaled and related technologies have advanced, solar power has become more afordable.
In the last year or so, as third-party inancing became an option in the distributed wind
1. No money down for immediate savings, but higher monthly payments;
industry, the wind market has been seeing a similar spike in demand. Property owners can

2. Partially pre-paying the lease for greater savings over time and lower monthly payments; or now aford to choose wind as a renewable energy option. In New York State, for example, only
3. Fully pre-paying the lease, so as to maximize the return on the investment and to avoid
13 small wind turbines were installed in the entire year of 2013. However, that number has
monthly payments for the lease term.
spiked and over 100 wind leases were signed in 2014. Developer projections are calling for ive
times that amount in terms of expectations for 2015.

Leasing a turbine removes potential ownership risks for the property owner. In addition to Clearly, the demand for leasing small and distributed wind turbines is there. To replicate
not having the added responsibility of maintaining a turbine, today’s leasing options come the success of solar, however, questions for the wind industry remain. For instance: Can the
with an annual, kilowatt-hour (kWh) production guarantee.
investments in small wind keep up? And, can technology and processes keep improving and
become more eicient to further drive down costs?

A good candidate for small wind
It will be interesting to see what the future brings in inancing and in success for distrib-
Customer-sited wind energy has historically been an expensive option for customers seeking uted wind power as the year progresses.
to harvest their own wind resources because of the large upfront costs. With the advent of the
wind lease, home and business owners can now consider small wind as an afordable option Russell Tencer is CEO of United Wind, a provider of wind energy leasing. Founded on the belief

for their primary source of electricity.
that wind energy must be afordable to compete with conventional energy sources, United Wind
Nevertheless, leasing a wind turbine isn’t the right renewable option for everyone. Promis- provides customers with practical wind energy options that make sense today and into the future.
ing small wind market segments typically have the following characteristics:

United Wind | www.unitedwind.com

24 JANUARY/FEBRUARY 2015 nacleanenergy.com