As financing options appear, wind power for homeowners takes off
Then in August, Southwest made it even easier for the public to afford to give wind a try. The company secured for Tabor and other dealers a loan facility they could extend to residential customers to allow them to finance installation costs and avoid paying the whole tab out of pocket. Tabor now has more than 100 customers who are contemplating buying wind turbines.Most of the ones she has spoken to about financing have said they are interested. "I think it will make a huge difference," says Tabor. "Out-of-pocket costs would be about $8,000 for a unit. Most people have only $5,000 in savings, if that, and they don't have any home equity they can borrow on."
The arrival of new financing options for homeowners who want to cut their electric bills is driving up demand for residential wind turbines. Double-digit unemployment and rapidly declining home values that left tens of millions of mortgage holders underwater wiped out the traditional financing vehicle for wind turbines, the home equity line of credit.
These newer options will allow homeowners, who otherwise could not to pay for wind systems, to get into clean energy. Tabor says customers can't get enough of a product that can pay for itself in as few as five years by slicing $40 off the monthly electric bills.
What's more, the system costs little up front. Eric Howarth, residential energy financing program director for the Electric & Gas Industries Association, says that in the program's first month with Southwest dealers, he, like Tabor, has seen very strong interest. "The market goes where there's money to be made," says Howarth. "Financing is heading to a place where more people are interested."
That jibes with predictions of the American Wind Energy Association. The industry trade group polled the 15 largest manufacturers of residential wind turbines on upcoming growth figures. The companies collectively forecast a 30-fold increase in residential wind turbine sales over the next five years, according to Ron Stimmel, the small wind program manager for the trade group.
If this growth occurs, power generated from small wind turbines would soar from the current 80 megawatts to 1,700 megawatts by 2014. That's enough electricity to power 1.7 million U.S. homes. Stimmel says the manufacturers attribute the expected growth largely to the attractive cocktail of federal stimulus dollars and state and utility subsidies, which consumers can tap to slice as much as 70 percent off the out-of-pocket costs of a standard turbine installation.
The addition of new financing options in a credit market that has recently come unstuck could add an extra updraft to the nascent sector. "While it is immature, there are a number of attractive factors from the stimulus package and a number of guarantees for investors that make this interesting," says J.J. Carrasco, a principal at Atoll Financial.
His company announced on September 1, according to WorldLeasingNews, a new financing arrangement with another small wind turbine maker, Helix Wind Corp. That deal will provide a financing option that Helix's dealer network can offer to customers both in the U.S. and in the developing world, where the economics of wind power can be even more compelling due to the difficulties with regular power delivery and spotty grid coverage. "There is a big push from entities such as the World Bank and various regional development banks to promote clean investments and financing mechanisms," says Carrasco.
The rapidly declining price of solar panels, as well as expanding residential financing options for these products, will likely provide some stiff competition to the wind turbine sellers. Solar panel prices have fallen by nearly 50 percent this year as China's subsidized panel makers have flooded the global markets with cheaper photovoltaic arrays. Supply of residential wind turbines remains constrained as Southwest, Helix and others rapidly boost production to catch up with demand.
But with the financing floodgates opened, the turbine makers feel more comfortable scaling production, a move that should eventually result in price drops that will make turbines even cheaper. To make wind power even more accessible, many states and municipalities are streamlining permitting processes and eliminating variance requirements to allow contractors to install units without going through onerous approval processes.
In Las Vegas, the county is poised to pass a new ordinance that should make it much easier for Tabor to do business by making a wind turbine install a simple permitting process not unlike common home improvements. Says Tabor, "Everyone I talked to about the financing said to call them back when I'm ready to go. I'm calling them all back now and everyone's still really interested."