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

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Strategies Strategies for Gaining a for Gaining a Level Playing Level Playing Field Field Where We Are; What’s Working & What’s Not Mike Bergey AWEA Small Wind Committee Bergey Windpower Co. [email protected]

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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. [email protected]. People Want Energy Alternatives. - PowerPoint PPT Presentation

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

Page 1: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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 [email protected]

Page 2: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

People Want Energy AlternativesPeople Want Energy AlternativesCoal is too dirty, natural gas is too volatile, nuclear is too dangerous, and consumers feel trapped

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CA ResidentialNatural Gas

Page 3: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 4: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 5: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 6: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 7: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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 ?

Page 8: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

Why so Small ?Why so Small ? Is it: Is it: 1. Products: Need more and

better2. Lack of Capital / Investment3. Product Certification4. Lack of Subsidies5. Zoning / Permitting Obstacles

Page 9: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 10: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 11: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Production Economies

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urbi

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nly) -9%

-16% -23%-30% -35% -41%

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”

Page 12: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 13: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 14: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 15: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 16: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 17: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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 !!!

Page 18: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

AWEA State Policy Priorities AWEA State Policy Priorities 1. Rebate (Preferred) or Tax

Credit of ~ 50%2. Sales Tax Exemption3. Property Tax Exemption4. Annualized Net Metering5. Tower Height Deregulation

Page 19: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 20: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 21: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Oak Hills, CA

Page 22: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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))

Page 23: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 24: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 25: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 26: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

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

Page 27: Strategies for Gaining a Level Playing Field Where We Are; What’s Working & What’s Not

It’s up to Us !It’s up to Us !