Providing Incentives to Help Grow Small Wind: Wind Powering America Lessons Learned
February 25, 2013
Wind Powering America asked Mark Mayhew, small wind program manager for the New York State Energy Research and Development Authority (NYSERDA), to share lessons learned while managing the small wind incentive program in his state (with a $3 million per year budget).
You joined NYSERDA as the small wind program manager in 2008. Describe the program at this time and any lessons learned while taking it to the next level.
I actually joined NYSERDA in 1995; I was given the opportunity to oversee the small wind program in 2008. When I started, all aspects of the program were outsourced to consultants, and this did not fit with my hands-on style. I knew I had a lot to learn, and my education would come from a number of resources. Two of my favorite books are Power from the Wind by Dan Chiras and Wind Power for Dummies by Ian Woofenden. These books present information in a very readable format. I also hit the road and met with installers, visited installations, and attended the National Renewable Energy Laboratory's Small Wind Turbine Testing Workshop in Boulder, Colorado, and the Small Wind Conference in Stevens Point, Wisconsin. These events not only provided a wealth of information, but they also allowed me to personally meet small wind industry experts, from manufacturers to industry advocates. These relationships would prove to be invaluable as I tried to improve our program.
In 2008, NYSERDA was using a nameplate kilowatt multiplier with tower-height adders to determine a project's incentive amount. The incentive is now based on the estimated production at the site, determined by computer modeling. Why the change in how to determine incentives? What advice would you provide to state authorities trying to establish a small wind incentive program in terms of how to determine incentive totals?
The program also had an additional multiplier for each type of organization; in short, the incentive structure was way too complex. I asked the people I had met for help, and a common theme to their replies was that incentives should be based on performance to encourage installations in good locations and discourage installations in poor locations. At that time, NYSERDA had just completed a project with AWS Truewind (now AWS Truepower) to develop a Web-based tool that provides detailed wind data and allows the user to enter site-specific information to generate a report that provides the estimated annual output of a particular turbine and tower height. It was a natural fit to require the use of a tool we helped develop. We recently assisted Wind Analytics in developing another type of tool for site assessments.
Describe the incentive breakdowns in terms of dollar amounts per expected kilowatt-hour of production. Why the need for varying tiers? What lessons can you share from your experience in establishing this portion of the small wind incentive?
To be a good steward of public funds, a public-benefit program's goal is to provide the minimum amount of money required to encourage someone to contribute to the goals of the program. This program's funding comes from the electric ratepayers who pay into New York's Renewable Portfolio Standard, which was designed to encourage the generation of renewable energy (kilowatt-hours); thus, it seemed logical to base the incentives on the same metric: energy produced. Since larger systems are cheaper per kilowatt than smaller systems, we needed a way to ratchet back incentives as the system size increased. The declining block incentive provided a simple way to achieve this result. We also cap our incentive at 50% of the project cost to ensure that the customer has enough "skin in the game" to make the project successful.
NYSERDA's small wind program includes a wide range of turbine sizes with only certain models qualifying. Describe the importance in establishing guidelines for eligible turbines and any lessons you can share on this topic.
The goal of the program is to encourage the generation of clean, renewable energy. To achieve this, we provide funding for turbines with a proven track record to increase the certainty that the turbines will continue to function long after NYSERDA pays the incentive funds. NYSERDA is a founding member of the Interstate Turbine Advisory Council (ITAC), and ITAC publishes a Unified List of Wind Turbines. Multiple states, including New York, utilize this list. ITAC also provides a venue for state program personnel to communicate with each other. That opportunity has been extremely valuable.
The NYSERDA incentive is paid upfront in two portions: 65% when the equipment is delivered onsite and 35% upon interconnection. The payment is made to the installer, who then passes it on to the customer per the installer's contract. Describe the need for incentives to be upfront, in multiple stages, and paid to the installer instead of the customer. What lessons can you share from your experience in establishing this portion of the small wind incentive?
NYSERDA wants to see operating systems. Providing our funds at the start of a project provides the upfront cash that can make a project economically feasible. The split payment acknowledges the milestone of delivering equipment but saves a sufficient amount to insure the system is operational. A payments-over-time structure is typical of a feed-in-tariff and although this may provide a bankable source of funds for the customer, it also puts all the risk on the customer. By making upfront payments, NYSERDA assumes some of the risk. One of the goals of the program is to grow the network of eligible installers. Having a list of NYSERDA-eligible installers also gives the installers some credibility and a source where potential customers can find a vetted list of contractors. Also, it's easier to share important information with the installers when a list already exists. A customer will usually only purchase one wind turbine in his or her lifetime, but NYSERDA will have multiple projects with installers, and that long-term relationship helps facilitate timely attention when we request information or action.
Is there anything else about your program that you would like to share?
The program is small enough that each project can receive individualized attention. It's great to get to know each individual owner, installer, and manufacturer's representative. The personal contact makes the program so successful and a joy to participate in.
Visit NYSERDA's website and the following resources for small wind information: