Small Wind Expects Big Growth in U.S. — Thanks, Investors!

Those small wind turbines you see in rural backyards and on urban rooftops — defined as 100 kilowatts or less by wind trade group the American Wind Energy Association — will be getting a mighty big boost over the next five years. (Well, the biz couldn’t really go anywhere but up, with far less than 1 percent of the overall wind market.) According to the AWEA, the small wind industry in the U.S. grew 78 percent in 2008 to 80 MW, adding 17.3 MW of installed capacity. That’s up from a growth of just 14 percent in 2007.

And the AWEA predicts that wee wind in the U.S. will show 30-fold growth over the next five years, with a cumulative U.S. installed capacity of 1,700 MW by the end of 2013. That will still be a tiny slice of the U.S. wind turbine market, which has over 16.8 gigawatts of total installed capacity and is dominated by massive megawatt utility wind farms planted across stretches of wind-blessed land. But it’s a real opportunity for entrepreneur engineers with wind design ideas and investors looking to bet on early movers.

What’s the reason for the sudden gust in the small wind market? A major reason: private equity investors. $160 million in private investment has been blown into 18 small wind makers over the past three years, helping boost production and installations.

Some of those investment-worthy startups included Mariah Power, a company with a small vertical-axis turbine that can turn low-speed gusts of wind into electricity. Mariah raised a second round of funding from Noventi Ventures, Greenhouse Capital, BigSky Partners and the Sierra Angels. Another is Quiet Revolution, a London-based small wind turbine maker, which raised £7 million ($12.5 million) from RWE Innogy and other private investors. There are 219 companies worldwide that make wee wind systems, with 35 percent of those in the U.S.

Small wind design is a sector that seems to see more innovation and entrepreneurs than its utility-grade bigger brother. Whether that’s because the market is newer — easier to get in — or the scale is more manageable (try testing out a design of a 3MW turbine in your backyard), we’re not sure. But small wind startups have sprouted up all over the place over the past couple of years and include: Renewable Devices, Marquiss Wind Power, Emergya Wind Technologies, France Eoliennes, and Cascade Engineering. Older firms like Southwest Wind Power have been established for years, but design innovation is appearing to deliver vertical axis turbines, and to make more urban-friendly rooftop products, which makes up only a fraction of a percent of the small wind market.

The other big reason that small wind is set to see big growth is policy. The U.S. Congress passed federal tax credits of up to $4,000 for small-wind systems, a major win after a 23-year hiatus in small-wind incentives, and the technology has received local support from cities like San Francisco and New York.

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