Small wind goes big

KANSAS - The industry that supplies small wind turbines to businesses and farms foresees rapid growth for years to come.

At least three Kansas companies that market small wind turbines are seeing growth in a down year and expect that only to accelerate in coming years because of generous federal and state tax incentives.

Wind turbines ranging from 1 kilowatt to 100 kilowatts are considered small wind. They are suitable for farms, factories, schools — even homes — in rural and suburban areas.

As a comparison, the turbines at the new wind farm near Harper that is generating power for Westar are 2.5 megawatts, 25 times larger than a 100 kilowatt turbine.

Sales of small turbines rose 78 percent in 2008 and are expected to continue rapid growth in coming years, said Ron Stimmel, small systems manager for the American Wind Energy Association.

Although windmills have been around for centuries, and small electricity-generating wind turbines for decades, several factors are driving small wind's current growth, Stimmel said.

The increase in public interest in going green is a big reason, he said. But so is the higher cost of energy.

"The early adopters were about going green," Stimmel said. "Now it's as much about money."

Initially, it's hard to see how because wind turbines are expensive. Enertech in Newton sells a reconditioned 40kw model — enough for a school or large office — for about $105,000 installed.

BTI Wind Energy of Greensburg, the U.S. and Canadian distributor for Canadian manufacturer Endurance, sells a brand-new, high-tech 50kw model for $280,000 to $310,000 installed.

The key metrics on how long it takes for a wind turbine to pay off is the amount of wind and the cost of the main source of energy in that location. The calculations are different for each project.

The erratic nature of wind means it can reduce bills only 20 to 35 percent. But recently some incentives have reduced that up-front cost, shortening the pay back time.

New this year under the Stimulus Act, purchasers of turbines under 100kw can get 30 percent of the installed cost knocked off their taxes. Or, in some cases, they can get it as a cash grant.

Many states — although not Kansas — have additional state tax credits. Ohio, for instance, provides another 50 percent of the cost in tax credits up to $25,000.

Many states also provide a further source of income, called net metering, which requires the utilities to buy back excess power produced by the turbine.

Kansas will start net metering in May, but only for users hooked into Westar, KCP&L and Empire Electric. Rural electrical cooperatives, which serve many of small wind's potential customers, aren't required to participate.

The up-front cost may be high, but once the turbine is up, the blades turn month after month, year after year,

"You've got this thing churning out free energy for 25 or 30 years," said Mike Estes, co-owner of BTI Wind Energy.

Dale Jones of Newton built and sold turbines in the 1980s in western Kansas, but quit after tax credits stopped and the business dried up.

He got back into the business in 2005, opening Enertech after getting calls about where to find turbines. He started a new business refurbishing old wind turbines.

That business has grown to $2 million to $3 million this year without much help from federal tax credits.

"In the '80s, you had to have tax credits to make it pencil out," he said. "Energy prices have risen since then."

He sees double-digit growth for his small company without the tax credit. With it, he said, he's wondering where to find more space and more qualified workers.

Business is about ready to explode, he said. He's getting calls from people as far away as Alaska and Chile interested in his turbines, although he sees the agriculture market as the biggest potential customer.

Now he has started building his own turbines, using an old design with new electronic components and newly designed blades. He has hired aircraft engineers out of Wichita to design turbine blades and will start having them manufactured in the spring.

He expects business to be in the $3 million to $4 million range next year. The tax credit certainly helps, he said.

"I can't think of a sale that we've had that depended on a tax credit," Jones said. "Now, ask me a year from now and I'll probably have a different answer."

When a tornado leveled Greensburg in 2007, the Estes family decided to rebuild its BTI Greensburg John Deere dealership with a lot of environmental features.

Vancouver, Canada, turbine maker Endurance Wind Power donated a 5kw turbine to power the dealership.

The family liked the turbine so much that they reached an agreement with Endurance to represent the company in United States and Canada.

BTI has set up a series of Endurance dealers, mostly agriculture equipment dealers, across the country. It trains the technicians and salesmen, and handles some of the distribution.

This year, Endurance introduced 35kw and 50kw turbines.

BTI has helped Endurance sell more than 250 turbines in the past 18 months. Estes said the rate will likely accelerate with the tax credit, but they haven't established sales projections yet.

BTI and Endurance are introducing something new and better in the world of small wind, he said.

"Small wind hasn't had the best reputation in the world," Estes said.

There were no large companies with networks of dealers and certified technicians to keep the turbines running. And because the technology wasn't always the best, he said, the industry sometimes got a black eye.

This time around, he said, the technology is better and the political and social support appears to be stronger. Now, he said, companies just need to build strong, reliable sales and support networks.

Sunflower Wind in Hutchinson has had its financial problems this year, but its situation has improved lately, said company spokeswoman Jill Strnad.

The start-up manufactures a 100kw turbine. It installed four turbines, but sales virtually stopped earlier this year as customers waited on the federal government to start issuing the cash grants, she said.

But three weeks ago the company landed a contract for at least 10 turbines that will be placed in Kansas, she said.

"This last year has been a challenge, so this order is very encouraging," Strnad said.