U.S. Department of Energy


Date of this Version



NREL Technical Monitor: T. Forsyth
Prepared under Subcontract No. AAM-8-89001-01


This report examines the status, restrainers, drivers, and estimated development potential of mid-scale (10 kW to 5000 kW) distributed wind projects. This segment of the wind market has not enjoyed the same growth that central-station wind has experienced. The purpose of this report is to analyze why, and to assess the market potential for this technology under current market and policy conditions.

As discussed in section 2, one of the most significant barriers to the development of distributed wind is a general scarcity of turbine choices and turbine inventory available for purchase. Most turbine manufacturers have scaled back their involvement in the mid-scale market segments in favor of larger turbines suitable for large, central-station wind farms. Those distributed-scale turbines that are available are often relatively expensive (on a $/kW basis), hard to order in single units or small lots, and suffer from long delivery delays.

Section 3 discusses various other factors—both positive and negative—that affect the viability of distributed wind. In addition to the product scarcity described in section 2, distributed wind is challenged by relatively poor productivity (compared with more modern large turbines), siting issues, burdensome interconnection rules, aesthetic concerns, and fragmented state rules regarding net metering. Several other factors favor distributed wind: areas of high and rising retail electricity prices, increasingly favorable public policies, and greater community interest in the environmental and economic benefits of renewable energy.

As examined in section 4, the study evaluated the economic potential for distributed wind in the contiguous United States, excluding Alaska and Hawaii. The analysis began with a GIS screening process to eliminate areas that are technically impractical for distributed wind. Sites were eliminated in areas where:

• Elevation was too high;
• Slope was too steep;
• Population density was too great;
• Wind Power Class was less than 2; and
• Areas legally excluded from wind-power development, such as national parks.

After screening out ineligible sites, more than 3.6 million surviving sites were evaluated to determine whether distributed wind would be financially feasible. Certain customer types were excluded from the study, such as agricultural, construction companies, and military facilities, because they lacked data necessary for the analysis. The financial model considered:

• Wind resources;
• Wholesale and retail power prices;
• Renewable Energy Credit (REC) prices;
• Customer type (community wind, commercial, industrial, or public facility);
• Project size;
• Turbine technical and financial characteristics;
• Onsite and offsite energy use; and
• Incentives.

The results varied significantly by customer class. Overall, the study showed that 67,100 out of the 3,611,655 sites/areas that were analyzed for economic viability yielded a positive net present value under current market conditions and policies and including all applicable state and federal incentives.

To assess the potential of new technology, two virtual wind turbines—the NREL 250 and NREL 500—were included in the analysis. These virtual turbines were compared to existing 250 kW and 500 kW turbines. Overall, the study showed that 204,677 sites analyzed had positive net present values with the virtual turbines compared with 10,407 economically successful projects with existing 250 kW and 500 kW turbines. These numbers do not include the application of capped state and federal incentives.

The following crucial changes could expand distributed wind development into the future.

• Improvements in technology;
• Reductions in cost;
• Greater productivity at lower wind speeds; and
• Greater policy support.