Policy changes worry small-wind developers

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Proponents of small windmills question whether the industry will continue to thrive in Oregon if the incentives that fostered its growth continue to change.

Primarily at issue are revisions to Oregon's Business Energy Tax Credit, which helped small wind projects pencil out for business buyers such as farmers.

They are now no longer as available because revisions aimed at large wind farms — including the cap on the Business Energy Tax credit that limits the amount of incentives that can be paid out — have also affected small wind.

"We've seen a great ramp up to try to build this industry — which takes years and years to do — and now that it’s finally gotten to a level where we can start creating business and meeting supply and demand here, the policy that made it conducive was swept out from under us," said Greg Price, executive director of the Oregon Small Wind Energy Association.

Small wind projects are a league apart from the larger, better known wind farms clustered on ridges and in flat open areas of Oregon.

Unlike large wind farms, small wind projects can involve just a single windmill. They don’t sell power to the grid, instead distributing energy on site at rates of 100 kilowatts or less. Any excess power they generate is "net-metered," or banked by the utility for use at a later time.

Small wind projects are gaining momentum in Oregon as technology advances and incentives make them more affordable. They have been found to be productive for rural homes and farms, and businesses with open surroundings like churches, retail stores and car dealerships. Schools, municipalities and wastewater treatment facilities are also among rural users.

Price worries that Oregon’s budding community of wind turbine manufacturers, distributors, dealers and developers could pull up stakes in favor of other states, such as Nevada, where more favorable incentives are whipping up more opportunity.

Nevada, for instance, offers several business and residential rebate and incentive programs, including property tax rebates for green commercial buildings.

Market is growing

The small wind market grew 15 percent in the United States in 2009, according to a report by the American Wind Energy Association, with 23 megawatts of new generating capacity and $82.4 million in sales. Definitions vary, but one megawatt can power about 1,000 homes.

Oregon is one of seven states that offers incentives of $2 per watt or more. That has attracted some small wind development, though the fastest growing and largest markets are still elsewhere.

Average residential and small business wind projects are typically about 10 kilowatts in size. An average U.S. household uses about 10,000 kilowatt-hours of electricity each year.

Federal tax credits, combined with cash incentives from Energy Trust of Oregon and state residential or Oregon Business Energy Tax Credits, allow developers to recover the $60,000 to $75,000 cost of installation of small wind projects in just a few years.

There are also additional tax credits for small businesses and farms in rural areas.

"If everything were to stay exactly as it is today it would definitely keep growing," said Erin Johnston renewable energy project manager at Energy Trust of Oregon.

Supporters of small wind say the difficulty in permitting small wind projects, which exceed height limits typical of most county zoning rules in Oregon, are also combining with a lack of visibility for the industry and conservative spending on the part of consumers to slow progress.

A recent survey of companies found more than 100 businesses were connected to small wind projects, and many engineers and designers who typically work in other areas are recently experimenting with small wind.

"You put all that together and it's a little frustrating because the numbers would indicate — in the payback period that is possible in just a few years — that there ought to be a land rush. But there’s not," said Mike Bergey, co-owner and president of Oklahoma-based Bergey Windpower Co., one of the biggest suppliers of small wind turbines in the nation, which also does business in Oregon.

Galvanized by both concern and optimism, the Oregon Small Wind Energy Association has created several work groups to explore everything from zoning and incentive issues to installer certifications.

Pam Neal, the wind industry liaison at the Portland Development Commission, acknowledges the obstacles but also cites momentum.

"There are all these spinoffs happening, everyone wants to get involved," she said.

Lee van der Voo, lvdvoo*at*gmail.com, is a freelance writer for Sustainable Business Oregon.