Evaluating State Markets for Residential Wind Systems: Results from an Economic and Policy Analysis Tool

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This paper presents results from a Berkeley Lab analysis of the impact of existing and proposed state and federal incentives on the economics of grid-connected, residential small wind systems. Berkeley Lab has designed the Small Wind Analysis Tool (SWAT) to compare system economics under current incentive structures across all 50 states. SWAT reports three metrics to characterize residential wind economics in each state and wind resource class:

  • Break-Even Turnkey Cost (BTC): The BTC is defined as the aggregate installed system cost that would balance total customer payments and revenue over the life of the system, allowing the customer to "break-even" while earning a specified rate of return on the small wind "investment."
  • Simple Payback (SP): The SP is the number of years it takes a customer to recoup a cash payment for a wind system and all associated costs, assuming zero discount on future revenue and payments (i.e., ignoring the time value of money).
  • Levelized Cost of Energy (LCOE): The LCOE is the levelized cost of generating a kWh of electricity over the lifetime of the system, and is calculated assuming a cash purchase for the small wind system and a 5.5 percent real discount rate.

This paper presents SWAT results for a 10 kW wind turbine and turbine power production is based on a Bergey Excel system. These results are not directly applicable to turbines with different power curves and rated outputs, especially given the fact that many state incentives are set as a fixed dollar amount, and the dollar per Watt amount will vary based on the total rated turbine capacity. This analysis covers state incentives that directly affect the cash flow of residential customers that purchase and install a small wind system. The SWAT analysis includes all state incentives that were in place in January of 2004. However, limited funds mean that incentives will not be continuously available to all customers.

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