Small wind systems picking up speed in Iowa

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Dave Jansen never could persuade his father to buy a wind-powered generator for the family farm back in the 1970s. But Jansen was always intrigued by the idea of harnessing Iowa’s abundant wind for energy.

After experiencing a couple of power outages from ice storms three years ago, Jansen began seriously considering a small wind turbine to power that same farmhouse where he lives about eight miles east of Marshalltown. He contracted with Southwest Windpower, a Flagstaff, Ariz.-based company, that arranged a wind analysis and installed a 2.3-kilowatt (kW) system mounted on a 70-foot tower near his house.

“Actually, there are several units around in my immediate area that I talked to their owners about and got feelings to help me make a decision on what I wanted to get,” he said.

Jansen is among a growing number of Iowans who have installed small wind energy systems. And if choosing a reputable company to work with and deciding which system makes the most sense aren’t enough to consider, it often takes six months or more to process utility interconnection agreements.

However, new rules enacted earlier this month by the Iowa Utilities Board, coupled with a model wind energy ordinance that has already been adopted by some Greater Des Moines cities, could make it easier for more Iowa residents to install such systems.

Growing niche

Sales of small wind energy systems – defined as those with generating capacities of 100 kW or less – are growing as the systems become more cost-efficient and energy-conscious consumers learn about federal and state incentives that help lower the cost of installing them.

A 10 kW system, sufficient to power most larger homes, sells for $40,000 to $50,000; a 100 kW system that might power a hog operation or a large commercial building can cost $400,000 or more.

Last year nearly 10,000 small wind turbines were erected in the United States, pushing the total installed capacity of small wind turbines past 100 megawatts (MW), according to a recent report by the American Wind Energy Association.

The new state rules enacted by the Iowa Utilities Board will play an important role in enabling the small wind energy market to develop more quickly in Iowa, said Jeff Royal, an owner of Earth Linked Wind Solutions, a Story City-based company that specializes in selling small turbines to the agricultural market. “It’s streamlined the process,” he said.

Under those rules, cities, counties, school districts and other political subdivisions can become designated as small wind innovation zones, provided they are located within the boundaries of a local government that has adopted a model small wind energy ordinance and are served by an electric utility that uses a model interconnection agreement.

The new rules also qualify owners of small wind energy systems to apply for a state production tax credit of 1.5 cents per kilowatt-hour of energy that is sold to a utility.

About 50 MidAmerican Energy Co. customers in Iowa with small wind systems have entered into interconnection agreements with the utility, said Mark Reinders, a MidAmerican spokesman. Those users have collectively added 18.7 megawatts of capacity to the grid, he said.

Most of Earth Linked’s customers use their systems to power livestock operations, and through net metering arrangements with their utility companies can cover nearly all of their electricity usage in most cases.

“The inputs they can’t control are the hog prices or feed costs, but with this all of a sudden they can lower their electricity costs,” Royal said.

Earth Linked has also partnered with Heartland Energy Solutions LLC in Mount Ayr, which is in the process of establishing a manufacturing operation for new 100 kW turbines. Earth Linked plans to sell used turbines that have been remanufactured by Heartland. Earth Linked is working with Iowa Lakes Community College to develop an improved controller unit for the rebuilt systems, which Royal said should increase the systems’ efficiency enough to pay for themselves without having to rely on energy incentive programs.

Royal said Earth Linked, which also operates two sales offices in Ohio, has completed 71 turbine installations in Iowa, with 17 more in progress. In Ohio, it has secured 22 USDA grants for customers but has not yet installed any systems. The company has partnered with The Rasmussen Group, a Des Moines-based construction company that has experience in utility-scale wind projects, to handle all of its installations.

Heartland, which expects to turn out its first new turbine later this year, said the remanufactured market it will pursue with Earth Linked should be equally lucrative.

“We found the remanufacturing process could be very high-quality for us, because we have the vendors in place already,” said Todd Blanton, Heartland’s vice president of research and development. “We just saw it as a perfect fit for us, because we already had most of this in place.”

Through a “trade-in, trade-up” program, Heartland will accept old turbines from customers, which it will remanufacture for Earth Linked to sell and install to customers seeking less costly remanufactured systems.

“I think Iowa is the sweet spot for the (remanufactured turbines),” said Charles Sharp, Heartland’s president and CEO. “There are a lot of great agricultural applications to a ‘re-man’ turbine.” The United States has an estimated 6,900 small wind systems that are an average of 20 years old, he said.

A remanufactured 100 kW turbine will sell for approximately for $165,000 to $170,000, compared with about $425,000 to $450,000 for a new one of that size, he said.

The Iowa Utility Board’s rules are a “very positive benefit” to the small wind energy industry in the state, he said. “I’m already hearing from more potential users looking into systems,” he said.

“Tremendous response”

Rising electricity rates are one of the key drivers of growth in demand for small wind energy systems, said Rob Hach, owner of Anemometry Specialists Inc. in Alta. His company, which specializes in providing wind metering services for utility companies developing wind farms, last year formed a subsidiary, Wind and Solar Specialists, to site and install small systems.

“We’ve talked to one acreage owner who has seen his electric rates double over the past five years,” he said. “So we have had a tremendous response from the rural community.”

Wind and Solar Specialists has installed 12 systems in the past year across the Midwest, and Hach said the prospects appear good for increased sales.

Hach, who has been involved with the wind energy industry since the early 1990s, said he also recognized the need to fill a knowledge gap in the small wind market.

“One of the reasons we’ve gotten into this market is because of the proliferation of the start-up companies into the small wind market and not being able to supply what they’ve promised,” he said. Though his company sells several sizes of turbines, “we’ve focused on the smaller turbines, because the larger turbines don’t have the same degree of reliability as these smaller turbines,” he said. Hach said he sees a lot of potential in the residential market in Greater Des Moines as municipalities enact ordinances allowing turbines on acreages.

Keith Kutz, research administrator for the Iowa Energy Center, said despite advances that have been made, small wind energy systems still face hurdles on several fronts.

“The cost per kilowatt of a small residential system is much higher than that of the large-scale units,” Kutz said. “So the payback (period) as a result of the cost is considerably longer. Some of these residential units can pay back, in a really ideal situation, in 10 to 15 years, but realistically, it’s 25 years.”

However, a number of energy incentive programs are available that can help reduce the cost of a system, he said, among them the state’s Alternative Energy Revolving Loan Program. Kutz estimated that approximately 45 Iowans have obtained loans through the program to install systems.

It’s important that people considering a system carefully consider the complexities involved, Kutz said.

“When we see those applications coming to us through the loan program, we try to work with the borrower so they understand what the systems are truly doing, so they can decide whether they want to move forward with it or not. There is a need for companies to be upfront with customers.”

Jansen, who is considering upgrading his small wind turbine to a unit with twice as much capacity, said his current system has lowered his monthly electric bills for his 2,000-square-foot house to between $10 and $35.

“So it does a real nice job, actually,” he said. “All things considered, I’m really happy with it.”