Power through Policy: 'Best Practices' for Cost-Effective Distributed Wind is a U.S. Department of Energy (DOE)-funded project to identify distributed wind technology policy best practices and to help policymakers, utilities, advocates, and consumers examine their effectiveness using a pro forma model. Incorporating a customized feed from the Database of State Incentives for Renewables and Efficiency (DSIRE), the Web-based Distributed Wind Policy Comparison Tool (Policy Tool) is designed to assist state, local, and utility officials in understanding the financial impacts of different policy options to help reduce the cost of distributed wind technologies. The project's final products include the Distributed Wind Policy Comparison Tool, found at www.windpolicytool.org, and its accompanying documentation: Distributed Wind Policy Comparison Tool Guidebook: User Instructions, Assumptions, and Case Studies. With only two initial user inputs required, the Policy Tool allows users to adjust and test a wide range of policy-related variables through a user-friendly dashboard interface with slider bars. The Policy Tool is populated with a variety of financial variables, including turbine costs, electricity rates, policies, and financial incentives
economic variables including discount and escalation rates
as well as technical variables that impact electricity production, such as turbine power curves and wind speed. The Policy Tool allows users to change many of the variables, including the policies, to gauge the expected impacts that various policy combinations could have on the cost of energy (COE), net present value (NPV), internal rate of return (IRR), and the simple payback of distributed wind projects ranging in size from 2.4 kilowatts (kW) to 100 kW. The project conducted case studies to demonstrate how the Policy Tool can provide insights into 'what if' scenarios and also allow the current status of incentives to be examined or defended when necessary. The ranking of distributed wind state policy and economic environments summarized in the attached report, based on the Policy Tool's default COE results, highlights favorable market opportunities for distributed wind growth as well as market conditions ripe for improvement. Best practices for distributed wind state policies are identified through an evaluation of their effect on improving the bottom line of project investments. The case studies and state rankings were based on incentives, power curves, and turbine pricing as of 2010, and may not match the current results from the Policy Tool. The Policy Tool can be used to evaluate the ways that a variety of federal and state policies and incentives impact the economics of distributed wind (and subsequently its expected market growth). It also allows policymakers to determine the impact of policy options, addressing market challenges identified in the U.S. DOE's '20% Wind Energy by 2030' report and helping to meet COE targets. In providing a simple and easy-to-use policy comparison tool that estimates financial performance, the Policy Tool and guidebook are expected to enhance market expansion by the small wind industry by increasing and refining the understanding of distributed wind costs, policy best practices, and key market opportunities in all 50 states. This comprehensive overview and customized software to quickly calculate and compare policy scenarios represent a fundamental step in allowing policymakers to see how their decisions impact the bottom line for distributed wind consumers, while estimating the relative advantages of different options available in their policy toolboxes. Interested stakeholders have suggested numerous ways to enhance and expand the initial effort to develop an even more user-friendly Policy Tool and guidebook, including the enhancement and expansion of the current tool, and conducting further analysis. The report and the project's Guidebook include further details on possible next steps. NREL Report No. BK-5500-53127
DOE/GO-102011-3453.