Strategies for Strategies for Gaining a Gaining a

Level Playing Level Playing FieldField

Where We Are; What’s Working &

What’s Not

Mike BergeyAWEA Small Wind Committee

Bergey Windpower Co.mbergey@bergey.com

People Want Energy AlternativesPeople Want Energy Alternatives

Coal is too dirty, natural gas is too volatile, nuclear is too dangerous, and consumers feel trapped

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CA ResidentialNatural Gas

People Want Energy AlternativesPeople 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 LawAnd Policy, June 9, 2005

Residential Wind Turbine MarketResidential 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

Broader Market PossibleBroader 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

U.S. Market Potential: U.S. Market Potential: It’s Big!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

Market Potential: Units (~ $120

B)

4 - 8 Million

U.S. Market Today: U.S. Market Today: It’s Small!It’s Small!

Residential Wind: ~ $10 M

Residential Solar: ~ $ 300 M

Commercial Wind: ~ $3,000 M

Why so Small ?Why so Small ?

Why so Small ?Why so Small ? Is it: Is it:

1. Products: Need more and better

2. Lack of Capital / Investment

3. Product Certification

4. Lack of Subsidies

5. Zoning / Permitting Obstacles

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

New Technology is Lowering CostsNew Technology is Lowering Costs

Advanced Airfoils

“Super-Magnet” Generators

Low Cost Manufacturing

Smart Power Electronics

Stealth: Very Low Noise

US-DOE Advanced Small Wind US-DOE Advanced Small Wind Turbine Program + Industry Turbine Program + Industry Funded R&DFunded R&D

3D Solid Modeling

Southwest 1.8 kW Bergey 50 kW

Volume Production will Drive Volume Production will Drive Costs Down SignificantlyCosts Down Significantly

Production Economies

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Current Situation

Example: When production reaches 8,200 units (82 MW), the production cost willbe 35% lower than the current cost.

Small Wind as a New-Age Home Appliance …Small Wind as a New-Age Home Appliance … “ a ceiling fan on steroids”“ a ceiling fan on steroids”

The Chicken and Egg Dilemma: The Chicken and Egg Dilemma:

More people would buy small wind More people would buy small wind turbines if they cost less, but they turbines if they cost less, but they won’t cost less until more people won’t cost less until more people buy thembuy them

Rebates and Tax Credits !Rebates and Tax Credits !

91% of Americans support tax incentives for renewable energy

CNN/USA Today Poll, May 9, 2001Gallup Poll, Nov. 27, 2001

AWEA Federal Policy Priorities AWEA Federal Policy Priorities

1. Tax Credit of 30%2. Small Projects Set-aside for

USDA 9006 Rural Grants Program

3. Dept. of Energy Small Wind R&D Funding

4. National Annualized Net Metering

5. Tower Height Deregulation

Proposed Federal Tax CreditProposed 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

2005 Energy Bill2005 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

2006 Federal Tax Credit Effort2006 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

2006 Federal Tax Credit Effort2006 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 Federal Tax Credits for Japanese Solar Modules, But Not for American Small Modules, But Not for American Small Wind Turbines - That’s Wrong !!!Wind Turbines - That’s Wrong !!!

AWEA State Policy Priorities AWEA State Policy Priorities

1. Rebate (Preferred) or Tax Credit of ~ 50%

2. Sales Tax Exemption

3. Property Tax Exemption

4. Annualized Net Metering

5. Tower Height Deregulation

State LeadershipState 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

State LeadershipState Leadership

Pennsylvania: DEP and Energy Harvest Program

New Jersey: 60% rebate; Suitable sites are rare & solar subsidies much higher

Pending: Arizona: EPS Distributed PowerOklahoma: 40% tax creditNY, Long Island: Grant program

Market Clusters – Sales Lead to SalesMarket Clusters – Sales Lead to Sales

Oak Hills, CA

Playing Field is NOT LevelPlaying 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))

Working with the Solar Working with the Solar Industry Hasn’t WorkedIndustry 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

What Does Work ?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

What’s NeededWhat’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

Small Wind Could be a Major New Small Wind Could be a Major New American IndustryAmerican 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

It’s up to Us !It’s up to Us !