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The wind power industry is more developed than most types of renewable energy, but one segment — small wind power systems with turbines of 100 kilowatts or less — is just beginning to pick up steam. These systems, buoyed by government incentives and increased interest in […]

The wind power industry is more developed than most types of renewable energy, but one segment — small wind power systems with turbines of 100 kilowatts or less — is just beginning to pick up steam. These systems, buoyed by government incentives and increased interest in clean sources of electricity, are gaining traction in a number of niche applications in residential and commercial markets, according to a new report by Pike Research released today. The market research firm forecasts that the global small wind market will expand to $412 million in revenue by 2013 from $203 million this year, a compound annual growth rate of nearly 20 percent. During that same period, worldwide installed capacity of small wind turbines will reach 115 MW from about 49 MW today, the study predicts.

“Small wind energy is less expensive than solar on a cost per watt basis which is driving more and more businesses and rural consumers to give it a second look,” David Link, a Pike Research senior analyst, said in a statement. Link said small wind has been most successful in residential off-grid, agricultural, community microgrid and remote telecom network power applications, as well as at schools and government buildings.

But the market has important barriers that it will have to deal with if it is to become a larger player in the renewable energy space. Those barriers include intermittent power availability (wind doesn’t always blow when you need electricity), permitting and siting challenges (even small wind towers can have a visual impact), and a “general lack of suitability of off-grid applications,” the study found. Because of the intermittency issue, small wind systems are often used in conjunction with other energy sources such as solar PV or diesel generation, and energy storage systems for backup power, all of which increase the cost of electricity for the consumer compared with relying on just one system.

The American Wind Energy Association, a trade group, published a report earlier this year that found that U.S. sales of small wind turbines grew 78 percent in 2008, although the additional installed capacity last year — about 17.3 MW — is still quite small.

With the potential for profits in small wind, it’s not surprising that venture capitalists are beginning to take the sector more seriously, according to this Wall Street Journal report. The American Wind Energy Association lists 20 small wind turbine vendors on its web site, all of which the trade group says sell products that are commercially available. (Note also that the list only includes association members.) Newberg, Ore.-based Abundant Renewable Energy, for example, designs and manufactures 2.5 kw and 10 kw turbines, the former having close to a 12-foot rotor diameter. Barre, Vt.-based Northern Power Systems develops and builds 100 kw turbines. Northern’s parent company, Wind Power Holdings, raised a $37 million first round of funding last year led by RockPort Capital Partners and Allen & Co.

Image courtesy Northern Power Systems

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