Distributed wind is often forgotten in discussions about clean energy sources. So much so that when Congress passed a clean energy tax extenders package in December 2015, distributed wind — such as the turbines installed at schools, industrial parks and ranches — was one of the “orphaned” technologies left out of the deal.

Although lawmakers eventually passed an extension of the federal Investment Tax Credit (ITC) for small wind turbines, recent years have not been kind to the distributed wind industry, even as growing attention has been paid to behind-the-meter solar and storage.

Brutal competition from distributed solar contributed to the recent closures of two U.S. makers of small wind turbines: Northern Power Systems and Xzeres. Because the distributed wind market never really scaled up, the world’s largest and most sophisticated wind turbine makers are focused on the biggest of machines, now rated at 5 megawatts or more.

Still, the small-wind sector's remaining core sees reason for hope.

Cheaper turbine models, possible demand from the growing microgrid market, and an intensifying focus on distributed energy resources in general may all contribute to putting some wind back in the sails of distributed wind companies — despite the obvious challenges ahead.

The small-wind market ran out of steam

According to the Department of Energy, there's around 1.1 gigawatts of installed U.S. distributed wind capacity, a category that includes turbines ranging from 1 kilowatt up to approximately 1 megawatt in size.

Years ago, the sector had some momentum, but in the absence of consistent federal support and set against the rise of distributed PV, the market has lost steam. In 2018, the last full year for which data is available, just 50.5 megawatts of distributed wind capacity came online in the U.S., nearly half of it installed by a single developer — Green Development, LLC, based in Rhode Island.

Preliminary data for 2019 shows similar installed capacity numbers for small wind turbines, said Alice Orrell, an energy analyst at Pacific Northwest National Laboratory and co-author of DOE’s annual Distributed Wind Market Report . By comparison, the U.S. installed 2.8 gigawatts of residential solar in 2019 alone.

Distributed wind faces a range of steep challenges, from unstable policy and local red tape to perceived noise and aesthetic impacts, Orrell told GTM. “If there’s not a stable policy environment, you can never get your footing and ramp up and scale. If you have economies of scale, and you have higher production, you can lower your costs,” she said.

“There are a lot of issues with just getting the permission to install small wind in your community," Orrell added. "You have to educate the authorities on what you want to do and then they have to agree, and then you have to educate all your neighbors.”

"We're seeing growth again"

Despite its challenges, industry players are hopeful about the market's next chapter.

The small-wind ITC extension of 2018 and a recent increase in research and development funding from the U.S. Department of Energy have given the sector a lifeline, said Mike Bergey, president of the Distributed Wind Energy Association and CEO of turbine maker Bergey Windpower.

Small-wind turbine makers including Bergey, Windward Engineering and XFlow Energy are using cost-shared funding awarded under the DOE’s Competitiveness Improvement Project (CIP) to develop next-generation turbines and design turbines for microgrid applications.

“The pendulum has swung back the other way,” Bergey told GTM. “We’re seeing growth again.”

Bergey Windpower’s new Excel 15 is one model that the company hopes will find a bigger audience. The new turbine was developed with the support of multiple Department of Energy CIP awards.

According to the company, the levelized cost of energy (LCOE) for the 15.6-kilowatt turbine is up to 64 percent cheaper (7.8 cents/kilowatt-hour) than its legacy Excel 10 turbine (21.4/kWh), not including tax credits or other incentives. By replacing a labor-intensive, swimming-pool-sized concrete slab foundation with helical steel anchors, Bergey lowered the capex for the new machine, which is now in the final stages of its certification process.

Credit: Bergey Windpower

Bergey Windpower hopes to take advantage of underperforming turbines already installed by other suppliers, the CEO said. “We're finding that it's got a very robust market in the retrofit market for orphaned and nonfunctional wind turbines from other manufacturers where the customer has a perfectly good tower and foundation.”

Promise in the microgrids market

Another possible avenue for growth for distributed wind turbine makers is the proliferation of microgrid systems for military and disaster relief applications as well as for homes.

XFlow Energy, a Seattle-based startup, will use CIP funding to develop a prototype of a 20-kilowatt vertical axis wind turbine designed for remote microgrid applications. Bergey Windpower will use funding from the same DOE program to develop a microgrid system based on the Excel 15 turbine that will incorporate battery storage and diesel generation and can be packaged into a 40-foot shipping container for use in military bases and disaster relief applications.

Such a system could be taken to a site and set up within a day, and then used either as an onsite power source or as a fuel-saver.

Analysts remain skeptical, however, about the future of distributed wind in microgrids. Isaac Maze-Rothstein, a microgrid analyst at Wood Mackenzie, said that of the nearly 3,000 U.S. microgrids tracked by the research firm, just 57 in operation have wind power, and more than half of those are in Alaska. Wind accounted for just 2 percent of microgrid capacity installed from 2010 to 2019, WoodMac's data shows.

Outside of remote locations like Alaska, expanding the role of wind in microgrids will be challenging, Maze-Rothstein said, in part because of the additional "NIMBYism" that wind turbines draw compared to solar.

“For disaster relief and military applications, my initial concerns for wind systems are around wind resources limiting the geographic use case where this solution is feasible," he said. "Wind resources are much more variable than a diesel generator’s access to fuel."

R&D funding will help

The wind may not blow as predictably as the sun shines, but it does often blow strongly at night in many places.

A new multi-lab research initiative led by the National Renewable Energy Laboratory, called MIRACL (Microgrids, Infrastructure Resilience, and Advanced Controls Launchpad), aims to make wind a plug-and-play component in microgrids and hybrid power systems, alongside solar, storage and other distributed energy resources.

According to PNNL’s Orrell, the project will focus on research into advanced controls, cybersecurity and wind-modeling and simulation tools. Researchers will also investigate how to quantify the benefits of combining the complementary generation profiles of wind and solar to yield more consistent renewable energy production throughout the year.

“If you can pair those up, what’s the value? Is there more value in including wind in the microgrid because of that complementary nature?” Orrell said.

Bergey Windpower will use another DOE R&D award to advance the development of a standardized distributed microgrid system for rural homes and businesses based on the Excel 15 turbine. The microgrid system will include a 25-kilowatt inverter with grid-forming capability being developed by Intergrid, the Powersync IV, battery packs sourced from second-life EV batteries supplied by Nissan North America and Spiers New Technologies Inc., and a backup generator.

“In addition to providing whole-home backup, we’d be able to provide peak-shaving to the utility and perhaps deferral of line and substation upgrades,” said Bergey. “We see that as a potential breakthrough that would flip the script for rural co-ops by giving them a reason to encourage customer-owned generation.”