California has suspended an emerging renewables program (ERP) designed for small wind because it appears some companies are exploiting loopholes and trying to get rebates without producing a lot of power. 

Initiated in 1998 to drive growth of under-30-kilowattsolar wind and fuel cell systems, ERP was the first such U.S. incentive. Though the Schwarzenegger administration developed bigger programs for solar, ERP’s $8.7 million in rebates has helped build 577 small wind systems in California, with a cumulative installed capacity of 3.6 megawatts.

Beginning in April 2010, the California Energy Commission (CEC) ERP rebate went up for one year to $3.00 per watt. The rebate increase might have been thought a success, but represented for some a case of questionable economics.

“I have 314 approved applications,” Amy Morgan, a CEC Spokesperson/Information Officer, or about six times the annual rate of small wind system installations. "Out of the 314, it looks like approximately 268 are systems where it was almost no cost to the consumer. That raised a red flag.”

In all, the 268 systems that collectively raised the red flag qualified for $6.7 million in rebates. “A lot of these systems are not in prime wind resource areas," Morgan added.

Jennifer Jenkins, Executive Director of the Distributed Wind Energy Association (DWEA), the leading U.S. small wind advocacy group, observed that the increased rebates “served to reverse the downward trend of small wind installations, and we are seeing growth once again" -- but not in a way the DWEA would like. 

DWEA called on the CEC to close “a product eligibility loophole that is giving the program a black eye.”

The poster child of the issue is “a company called DyoCore,” said Mike Bergey, President of DWEA and of Bergey Windpower, an internationally respected small wind company. “They have a five-foot diameter turbine that they mount on a roof,” he explained. “They have paperwork that shows it produces 1.6 kilowatts at a wind speed of eight meters per second.” That, Bergey went on, is “over four times the total kinetic energy at that wind speed with that rotor diameter and about nine times the efficiency of the best-performing small wind turbine on the market.”

By making such claims, DyoCore turbines qualified for a $4,800 CEC rebate on a $1,800 product, Bergey said, adding that he is surprised that the CEC let DyoCore’s claims stand.

David Raine, CTO of DyoCore, said DyoCore’s performance claims were backed up by laboratory and field performance tests, referencing the work of Chuck Skinner, a field evaluation engineer with TUV America (who Raine said was with the National Renewable Energy Laboratory).

“I don’t even think there’s a desire [on the part of competitors] to understand,” Raine said of charges against his company’s performance claims. Referencing Betz' Law, Raine said, “It’s basically engineers trying to substitute their own numbers.”

For his part, Skinner said TUV America had done no testing that would confirm anything but the electrical safety of the DyoCore turbine.

Andy Kruse, co-founder and senior vice president at small wind industry leader Southwest Windpower, expressed serious doubts about DyoCore’s claim of generating 2,200 watts. “The theoretical maximum efficiency of converting wind into energy is known as the Betz limit. This number is 59.3 percent. When I do the math,” Kruse wrote in an email, “I get a maximum theoretical efficiency of 1316 watts. Now this is assuming 100 percent efficiency, and that is completely impossible.”

Kruse found DyoCore’s numbers compelling, but not in a good way. “The more I look at this, the more it appears to be fraudulent,” he concluded. “Certainly the State of California should look into this.”

“These are real numbers from real test sites that are repeated over and over again,” DyoCore's Raine said. “Production of anything under ten miles per hour is always going to be difficult, if not -- in some cases -- impossible. We don’t make any claim whatsoever that you can produce any useable energy under ten miles per hour.”

The DyoCore homepage states their turbine’s “operational wind speed” is “4 to 25 mph.” Elaborating, Raine added that “the downside of six miles per hour is that the energy being created isn’t sufficient to be converted into the grid. That doesn’t mean its not sufficient to be converted to useable energy” for off-grid tasks like charging a laptop or a heating element.

That same website page promises a “100% rebate within 4 to 6 weeks.” Asked about the suspension of the rebate, Raine simply said, “I didn’t write the rebate rules,” though he asserts that the company's product "fit very well” with the program, adding: “Like any opportunity, we jumped into it. We looked at it as a gift.”

Other manufacturers have engaged in similar tactics.

“We have heard many stories,” small wind distributor Talco Electronics wrote in its newsletter, “of dealers in California purchasing 20kW-rated turbines from China that have never been tested for about $20,000 and then collecting $60,000 in CEC funds. These instances made it almost impossible for REAL turbines to compete, especially since the public is relatively uneducated in terms of wind turbines.” Because of the controversies, the CEC is now policing itself. It has temporarily suspended the rebate program and is reviewing its guidelines. “As far as we can see, the guidelines were followed,” Morgan said, “but if this technology was put in areas where there is no to little wind, it’s not beneficial to the consumer or to the industry.”

 “We need to review the guidelines,” Morgan said, “to make sure customers have an economic interest.” Since the red flag went up before the bulk of the rebates went through, many -- though not all -- of the state of California's losses were apparently averted.

CEC’s Morgan agreed the rebate math supports Talco’s point about abuses. “The first ten kilowatts of a wind system has a rebate potential of $3.00 per watt,” she explained, referring to the new one-year increased incentive. “After the first ten kilowatts, the rebate drops to $2.50 per watt.”

For a ten-kilowatt system, “You’re looking at a rebate potential of approximately $30,000,” Morgan said. For Talco’s twenty-kilowatt small wind system, the second ten kilowatts would earn another $25,000 rebate. “The average cost for these systems,” Morgan said, “ranges from $30,000 to $60,000,” though, she added, “they vary by region, retailer and model.”

As to turbine quality, “The Energy Commission certifies the equipment,” Morgan said. “We have a procedure and protocol to do that before it can receive a rebate.”

The problem, according to the DWEA’s Jenkins, is there is no procedure for CEC to de-certify bad equipment. One small turbine brand “out of China,” Jenkins recounted, “has a nearly 100% failure rate but cannot be removed from the eligible products list.” She called for the enactment in California of DWEA-approved standards.

The CEC review will last from 60 to 120 days and will culminate in the approval of new guidelines by the Commissioners, at which time the higher, $3.00-per-watt rebate will be available for an additional 30 days to make up for time lost. DWEA would like to see the higher rebate extended another year -- once acceptable certification procedures and guidelines are instituted.