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Q: Dear Wiz:

We own a Bed and Breakfast and would like to purchase a small residential size wind turbine. Are Dollar and Energy Saving Loans available for wind energy projects

A: Dear Reader:

The Energy Office published an article in the Nebraska Energy Quarterly on this subject. The last paragraph of the article should have the answer to your question.

The article also gives you contact information with regard to permitting, and other possible funding sources.

For a quick answer to your question, get a quote for a completely installed system, including any electrical equipment, meters, transducers, battery backup, etc. that might be needed, and installation costs, crane rental, concrete footings, etc. Divide that by the amount of savings you might see in a year. The total installed cost of the system, divided by the total annual savings per year, gives you the simple payback of the system in years. To qualify for a Dollar and Energy Saving Loan, you will need to show a simply payback of 10 years or less.

To calculate the savings you might see in a year, simply take the rated capacity of the system, and divide by 5 to get the amount of energy you will see on an average basis. As an example, a system with a 10 kW rating will, on average, put out about 2 kW continuously. There are 8,760 hours in a year, so this would produce about 8,760 hours per year, times 2 kW, or 17,520 kWh per year. If you have a battery backup system (which must be included in your installed cost), and if that system can store all the energy you produce when you are not home and able to use the energy yourself, and if you pay $0.06 per kWh to your electric provider, then this system would save you $0.06, times 17,520 kWh, or $1,051 per year.

If your total installed cost is $10,000, then the $10,000 installed cost, divided by $1,051 per year savings, equals 9.5 years and the system would qualify for a Dollar and Energy Saving Loan. If your total installed cost is $12,000, then $12,000 installed cost, divided by $1,051 per year savings, equals 11.4 years and the system would not qualify for a loan. If your battery backup system cannot hold all of the electricity you produce, or if you do not intend to utilize a battery backup system, then you will need to calculate some average amount of the total kWh you will utilize directly each year, and the remainder of the 17,520 kWh will be sold back to your utility, and the price the utility will pay you will need to be used to calculate the savings for the kWh you do not use directly.

Suppose you install the unit at your business, and do not use a battery backup system. Your business is open 8 hours per day, and the utility will pay you $0.01 per kWh for electricity you put back on the grid when your business is closed and you are not using any electricity. Then you would calculate your savings using 1/3 rd (the time your business is open) of the 17,520 kWh at the $0.06, the amount you normally pay for electricity, and the remaining two-thirds (the time your business is closed) at $0.01, the amount your utility will pay you for electricity you put back on the grid.

These are some easy examples of how to calculate your savings from a wind generating system. You will have to do a more detailed calculation to apply for a Dollar and Energy Saving Loan, and should do this before making such a purchase, whether you apply to the loan program or not. Most homes and businesses will never have a time when they are not using some electricity, but when a business closes the lights are usually shut off and the thermostat set back, etc., and the amount of electricity being used is greatly reduced, but by how much? Maybe your first system will be a small system that will only provide that small amount of electricity that is used when the business is closed or no one is home, and no battery backup will be needed to maximize payback.

We have a consumer’s guide, Small Wind Electric Systems a Nebraska Consumer's Guide. On page 18, there is an example of a 10kW rated wind generating system. The example states that they system generates about 1,700 to 1,800 kWh per month, and cost $20,000 when it was installed in 1983. 1,700 to 1,800 kWh per month, divided by 30 days per month, divided by 24 hours per day, equals 2.4 kWh per hour, or just under 1/4th the system rating. Assuming this system uses all of the electricity produced, at $0.06 per kWh, it would produce an annual savings of $1,278 and have a simple payback of 15.6 years. With 5% interest, the payback would be 32.5 years.
The Energy Wiz!
The Energy Wiz!

Another example, showed a unit stating “1.8 kW rated; 2.4 kW peak power at 20 MPH wind speed. Provides 400 kW per month in a 12 MPH average wind.” This system was listed for $5,500, which did not include installation, but did include electrical accessories. The 400 kW per month comes out to 0.56 kW per hour, which is just over the 1/4th or 30% of rated (1.8 kW), and just under 1/4th the peak rated (2.4 kW). Assuming $7,500 total installed cost, $0.06 per kWh, and 100% utilization at the source, this unit would have an annual savings of $294, and a simple payback of 25.5 years. With 5% interest, this system will not show a payback.

A page in the agency’s Energy Statistics section shows average electric costs per state. Nebraska is fortunate to have some of the lowest electric rates in the country, 30% below the national average, and enjoys electric rates just half the average of New York, New Jersey, Washington DC, Vermont, New Hampshire, Maine, Alaska, Massachusetts, Connecticut, Rhode Island, and Hawaii, with Texas, California, Florida, Nevada, Maryland, and Delaware having electric costs more than 50% higher than ours. At those higher rates, wind energy becomes very economical, reducing payback periods when a person can utilize a majority of the energy produced and avoiding paying those higher rates.

The Energy Wiz
Editor's Note:
The staff at the Energy Office respond to many inquiries on a variety of topics from Nebraskans. From time to time, the Quarterly will share some questions — and the answers — with readers.
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