Small Wind Picks Up Even as Economy Turns Down
The number of Americans generating their own electricity with small-scale wind turbines (those with rated capacities of 100 kilowatts and under) increased by 10,000 last year despite an economic downturn that targeted the heart of the small-wind market: homeowners and small-business owners. Last year the U.S. small wind market grew 15 percent with 20 Megawatts (MW) of new installed capacity, pushing the industry past the milestone of 100 MW in total capacity. Remarkably, half of these sales came within the last three years for an industry that has been around for more than 80. More remarkable still, for much of these three years the world’s economy crippled the finances of the much of the industry’s primary consumers. How did this growth happen?
The reason seems to be a cocktail of new and improved federal and state policies, optimistic equity investors, and determined consumers.
The 2009 American Recovery and Reinvestment Act (the economic stimulus bill) expanded the federal investment tax credit for small wind turbines, allowing consumers to take fully 30 percent of the total cost of a small wind system as a tax credit. These few short lines of text breathed new life into a U.S.-born industry, and just in time.
A growing number of states also offer incentives to help consumers overcome the yet-steep cost hurdle of owning a turbine, which for a homeowner can range $10,000 to $60,000. Governments at all levels are recognizing small wind’s economic potential and are paying closer attention.
But government is not the only investor. Over the past five years an infusion of private equity investment of $170 million into 18 manufacturers worldwide (most of them U.S.-based) provided companies with the capital to ramp up production to meet a strong demand. In particular, an additional $80 million was pumped into manufacturers during the peak economic gloom of 2009.
According to a 2010 survey by the American Wind Energy Association (AWEA), these manufacturers were able to parlay this investment into sales, and even many companies without equity funding were able to sell more turbines than in 2008.
Of course, the ultimate investor is the consumer, who has been relentless in seeking ways to cut electricity bills, become “personally energy-independent,” and fight global warming in a tangible way. To 30,000 of these pioneers over the past three years, the answer has been to own a small wind turbine. Consumers have evolved from green-hearted environmentalists and farmers to Home Depots and suburbanites. One consumer trait, however, has remained constant over the past 80 years: Americans buy from American companies, which dominate the global market.
Just 10 years ago no more than 50 companies in the world manufactured small wind systems. Today, 26 countries are home to more than 250 manufacturers, of which 90 are based in the U.S., and foreign companies are looking to position their operations on economically fertile American soil. In fact, 95 percent of all small wind turbines sold in the U.S. last year were made by U.S. manufacturers. The vast majority of these 90 U.S. companies are in start-up phase, but the leaders command roughly half the world’s market share.
Can this growth be sustained? Can small wind keep up with price-plummeting solar photovoltaic technology? The annual 2010 AWEA Small Wind Turbine Global Market Study aims to address these and other questions about the market. It will be available soon at www.awea.org/smallwind.
Ron Stimmel is Manager for Legislative Affairs and Small Systems for the American Wind Energy Association
Industry movement with heat decarbonisation
It is estimated that the heat network market requires approximately £30 billion of investment by 2050 to meet the UK Government’s net zero targets, and the decarbonisation of heat has been highlighted as a particular challenge.
The Climate Change Committee’s Sixth Carbon Budget states the UK should target 20% of UK heat demand through low-carbon heat networks by 2050 - but as with most discussions surrounding mass decarbonisation, even reaching that target won't be an easy task. In the UK approximately 40% of energy consumption and 20% of GHG emissions are due to the heating and hot water supply for buildings.
The International Energy Agency (IEA) estimate that globally, around half of all energy consumption is used for providing heat, mainly for homes and industry.
Source: Heat Trust
This week saw some positive movement, however, with gas distribution company SGN and UK renewable energy solutions provider Vital Energi announcing a 50:50 joint venture, which will create an Energy Services Company (ESCO) representing utility infrastructure and heat network providers.
This includes delivery of heat to developments planned by SGN’s property arm, SGN Place, and the local vicinities where there is a demand for low-carbon heat.
The objective is to supply new and existing residential, industrial and commercial facilities and development activity is already underway for two projects in Scotland and the South East, with another 20 in the pipeline. SGN is looking to develop alternative heat solutions alongside its core gas distribution business and expand into the growing district heating market, recognising the future of heat is likely to include a mix of technological solutions and energy sources.
Vital Energi is seeking to expand into asset ownership opportunities to complement its core design, build and operations businesses. The complementary skillsets of both organisations will offer a compelling proposition for developers, commercial and industrial users and public sector bodies seeking low-carbon heat solutions.
SGN’s Director of Commercial Services and Investments Marcus Hunt said: “Heat networks are likely to play an increasing role in the delivery of UK heat in the context of net zero. The creation of this joint venture with market-leading Vital Energi enables us to build a presence in this emerging market, delivering new heat infrastructure and supporting decarbonisation.”
Nick Gosling, Chief Strategy Officer at Vital Energi, said: “Combining the resources, expertise and know-how of both organisations will allow us to play a major role in delivering the UK’s transition to low and zero-carbon heat.”
In March, the European Marine Energy Centre (EMEC) starting collaborating with Highlands and Islands Airports Limited (HIAL) to decarbonise heat and power at Kirkwall Airport through green hydrogen technology. 2G Energy was selected to deliver a CHP plant which generates heat and electricity from 100% hydrogen.
Heat decarbonisation options
The Energy & Climate Intelligence Unit (ECIU) highlights the following options for decarbonising heating.
Use renewable electricity to generate heat in the home. As power sector emissions fall, emissions associated with electric heating are decreasing rapidly.
Low carbon gases
Replace natural gas that most homes use for heating with hydrogen, which releases energy but not carbon dioxide, the only waste product is water. Biomethane is also an option as it produces less carbon than natural gas over a full lifecycle.
For hydrogen to work, the pipes in the national gas grid would need to be replaced and home boilers would need to be adapted or changed. This is possible but could incur considerable cost.
Biomethane is chemically identical to methane from natural gas, so is suited to existing infrastructure and appliances. It is unlikely, however, that it can be produced in sufficient quantities to replace fossil gas entirely.
A hybrid system combining both electrification and hydrogen is a third option. Here, heat pumps could be used to meet the majority of heat demand, with a (low carbon) gas boiler taking over in extremely cold weather. Advantages of this approach include helping establish a market for heat pumps while hydrogen is developed to displace natural gas in the hybrid system eventually, and the ability to call on hydrogen when heat demand is at its very highest.
Heat networks connect a central heat source to a number of buildings via a series of underground hot water pipes, and are popular in countries such as Denmark, where heat networks supply 63% of households. The Government expects the heat networks market in the UK to grow quickly to supply up to 20% of heat demand over the next decade or so, investing £320 million into its flagship Heat Networks Investment Project to help get this underway.
Heat networks work particularly well in built-up urban areas or industrial clusters where there is a large and concentrated demand for heat. Over time, it is thought that if the central heat source can be low carbon, then there is the opportunity to ensure that multiple homes and buildings are decarbonised at once.
Biomass can be used to reduce emissions when used instead of more polluting fuels like oil in off gas grid properties. Support for biomass boilers has been available since 2011 via the Renewable Heat Incentive (RHI), but take-up has been low.
Supply constraints also restrict the role that biomass – burning solid material such as wood – can play. In any case, according to the Committee on Climate Change, this resource may be better used in other sectors of the economy such as construction, where it provides carbon storage without the need for CCS and reduces demand for carbon-intensive materials such as steel and cement.
The Energy Transitions Commission (ETC)'s latest report sets out how rapidly increasing demand for bioresources could outstrip sustainable supply, undermining climate mitigation efforts and harming biodiversity, unless alternative zero-carbon options are rapidly scaled-up and use of bioresources carefully prioritised.
"Alternative zero-carbon solutions, such as clean electrification or hydrogen, must be developed rapidly to lessen the need for bio-based solutions," it states.
The overall decarbonisation of industry is another major challenge, especially among four sectors that contribute 45 percent of CO2 emissions: cement, steel, ammonia, and ethylene, according to a McKinsey report.
The process demands reimagining production processes from scratch and redesigning existing sites with costly rebuilds or retrofits. Furthermore, companies that adopt low-carbon production processes will see a short- to mid-term increase in cost, ultimately placing them at an economic disadvantage in a competitive global commodities market.
Ken Hunnisett is Project Director for the Heat Network Investment Project (HNIP)’s delivery partner Triple Point, which is the delivery partner for the government's Heat Network Investment Project, which is responsible for investing up to £320million in strategic, low-carbon heat network projects across England and Wales.
He is calling for the urgent need to invest in the development of new heating infrastructure to support the nation’s decarbonisation effort. So far £165m of HNIP funds have prompted £421m CAPEX, providing more green jobs as the UK economy eases from the lows sustained from the pandemic.
Decarbonising the UK's heating infrastructure is critical if we are to reach our net-zero goals and it’s crucial that progress is made in this decisive decade, he added.
"Heat networks are a part of the lowest-cost pathway to decarbonising our homes and workplaces in the future but are also the bit of the jigsaw that we can be putting into place now," he said. "Penetration into the UK market is still low, despite heat representing 37% of UK greenhouse gas emissions, the largest single contributor by some way. Funding needs to be urgently directed towards reducing the environmental impact of the residential sector, particularly given the slow pace of the decline in residential emissions in comparison to those of business and transport."
Currently, just 3% of UK buildings are serviced by heat networks. "Further investment in this industry, using public and private funds, will not only drive wider sustainability targets but will boost the economy by providing more green jobs as the country emerges from the pandemic," he said.