Building a Market for Small Wind: The Break-Even Turnkey Cost of Residential Wind Systems in the United States
Although small wind turbine technology and economics have improved in recent years, the small wind market in the United States continues to be driven in large part by state incentives, such as cash rebates, favorable loan programs, and tax credits. This paper examines the state-by-state economic attractiveness of small residential wind systems. Economic attractiveness is evaluated primarily using the break-even turnkey cost (BTC) of a residential wind system as the figure of merit. The BTC is defined here as the aggregate installed cost of a small wind system that could be supported such that the system owner would break even (and receive a specified return on investment) over the life of the turbine, taking into account current available incentives, the wind resource, and the retail electricity rate offset by on-site generation. Based on the analysis presented in this paper, we conclude that:
- the economics of residential, grid-connected small wind systems is highly variable by state and wind resource class,
- significant cost reductions will be necessary to stimulate widespread market acceptance absent significant changes in the level of policy support, and
- a number of policies could help stimulate the market, but state cash incentives currently have the most significant impact, and will be a critical element of continued growth in this market.