Value proposition can be defined as the qualified and quantified characteristics that a product brings to its users in meeting their particular interests. Relative to renewable energy in general, it is the cause and effect of technology integration and innovation that provide for reductions in costs and increases in efficiency and output that make it competitive with conventional energy sources. This includes reductions in environmental impacts such as reductions in carbon emissions and related costs. Subsidies reduce the price but not the cost. Small wind energy must continue to progress through technology integration and innovation in order to reduce costs and increase efficiency and output to effectively compete with other forms of renewable energy e.g. solar and with conventional energy sources. Turbine technology is on the verge of advances, however, electrical generation remains the “heart of small wind” and an opportunity for progress now. The most significant advancement in generator technology since the utilization of permanent magnets is the Radial Flux Generator (RFG). It is unique primarily due to dual stator design with dual air-gaps, essentially a generator within a generator. The Small Wind Turbine (SWT) RFG utilizes 40% fewer active components, weighs 40% less, is projected to have a market price 35%-50% less than competing small wind generators. Compared to five competing 20kW wind generators, the SWT RFG at 506 lbs weighs 200lbs -1606 lbs less. At a projected $4900 price it will be priced from $2600 to $4425 less than the five major competing generators. Initial tests (February 2010) show that the 20kW SWT RFG utilizing a 10M diameter rotor would have an effective power rating of approximately 50kW at 26.4mph (250% greater than competing generators) with an industry leading 95% efficiency. In addition, the value proposition of the RFG includes significantly lower maintenance costs due to simplicity of design and direct drive utilization. Annual O&M costs are projected to be $500 less per year; a savings of approximately $10,000 over the generator’s 20 year life. CapEx for unit replacement at 10 years for competing generators will save an additional $5,000.
An initial saving of $3,000 in the price of a 20kW generator has significant impact on profitability of 20kW wind turbine system. Under a scenario where the retail price is $85,000 a savings of $3,000 improves the retailer’s gross margin by 9% assuming a gross margin of $34,000, 40%. Under a scenario where the retailer’s net operating profit is 10%, $8,500, the net improves to $11,500 , a 35% improvement.
The wind energy produced by a 20kw turbine utilizing a RFG displaces approximately 60 tons of CO2 per year. Cap & Trade markets in the US have a current value of $5 per ton for reductions in carbon emissions, approximately $300 per year for this scenario. Based on Cap & Trade markets in the European Union where Cap & Trade legislation is mature and strictly enforced, there is a value of $25 per ton of reductions in carbon emissions. At $25 per ton the carbon displacement value equals $1500/year.
The initial progressive step of utilizing the SWT RFG begins the critical process of further integrating technological solutions in order to ensure small wind as part of the solution to renewable energy development. In the long term, the broad-based solution is to combine the spectrum of renewable energy sectors including solar, biomass, geothermal small wind and energy storage. The effective combination of these renewable energy solutions provides for a significant increase in reliability reducing overall intermittency. The benefits of each leverage the weaknesses of the other solutions placing a much higher value on the combined solution. In essence, the whole of the parts is worth more than the sum of the individual parts. This is especially critical if the user base is a community focused on energy independence. When the wind is not blowing it is typically sunny (during daylight hours). Biomass availability is typically seasonal. The value/demand of geothermal energy (groundwater heat pumps) is highest in cold months for heating and in summer months for cooling. Energy storage becomes a critical component to smooth out the energy availability verses demand curves.