The Cost and Benefits of Installing a Windmill

Chasing windmills like Don QuixoteAre you thinking of going seriously green? Are you willing to invest some serious money up front in order to reap the benefits in the long run? If so, a wind turbine might be the thing for you.

I’ve installed CFLs and programmable thermostats, but what I’d really love to do is to be almost exclusively reliant on my own energy production, with the ability to sell excess back to the grid on windy days and pull in a bit of electricity on very still days. I happen to live in an area where several school districts within an hour’s drive, as well as a dozen or so individual homeowners, have installed their own Skystream wind turbines for electricity generation.

A Look at the Cost and Benefits of Installing a Windmill

How big are they?

They stand about forty feet high, tall enough to be well over the roof of a three story home. In other words, it would roughly be twice as high as the roof on a two story suburban home, for example. These are tall enough that you have to check around for local zoning issues to see whether or not you can put such a structure in place (they’re perfectly fine over almost all of Iowa, for example – I checked).

How much power does one generate?

For a Skystream to be fully functional, you need to live in an area with wind that averages 10 miles per hour or more; on the Great Plains, this isn’t a problem, as you can see from this wind map of Cedar Rapids, Iowa. You can easily find wind maps for your own state as well.

Given that, a fully functional Skystream wind turbine produces 1.8 kW of power in a 20 mile per hour wind. To put that in context, that’s just under 1,300 kilowatt hours a month. For comparison’s sake, we used approximately 600 kilowatt hours of electricity last month – and this included a particularly vicious cold period where temperatures sunk below zero for a period.

What about power excess?

When you install a home wind turbine, it is hooked up to your power meter directly and power is drawn first from the turbine, then from your normal electricity provider (the electric company). When the wind is very low, almost all of your power comes from them and your power meter works as normal, recording the kilowatt hours you use from the electric company. As the wind picks up, more and more electricity comes from the turbine and less and less from the electric company, until a point is reached where all power comes from your turbine. If the wind blows faster than that (10 miles per hour or more), then the turbine will produce more energy than your home is consuming. The rest of it goes onto the electrical grid and helps to power your neighbor’s homes. Even better, the electric meter at your home will run in reverse, crediting you for the electricity you supply.

I have a friend who has an electricity credit every single month, more than enough to cover the basic fee of his electrical hookup. Annually, he receives a small check from the electric company for the credit he has accumulated with them. Yes, he has no electric bill at all and actually receives a check for it.

What’s the cost?

A Skystream 3.7 (the wind turbine that has been recommended to me and the one I have researched most thoroughly) costs about $8,500 to purchase, install, and set up in my area. Installation costs in other areas are higher, ranging up to $12,000.

How much can it save a month?

Let’s say, hypothetically, that your local rate for a kilowatt hour is $0.10 (the national average is actually $0.11). Let’s say the turbine works at half-capacity and generates 650 kilowatt hours a month. Thus, the turbine saves $65 per month on your energy bill. At that rate, you will pay for the turbine with the energy savings in 132 months, or roughly eleven years. This assumes, of course, no increase in energy rates over that time, it assumes energy costs that are already below the national average, and also assumes a relatively low windspeed compared to what is available to me in northern Iowa. According to my own math for my area, and also assuming an increase in energy costs that matches inflation, we would be able to pay it off in about seven years.

Are there other benefits (besides for the environment)?

There also may be state tax benefits for installing such a device; Iowa residents can buy the equipment and pay for the installation with no sales tax and can earn $0.01 in credit for each kilowatt hour of energy sold back to the electric company, even if that results in just a reduction of your bill (please note that this is my understanding of the law – don’t use this as the basis for an installation). Thus, if you could sell back a few hundred kilowatt hours a month, you would earn a $30 or so tax credit each year.

The bottom line is that this is a major step one can take if they’re really interested in green solutions. Even better, it can end up paying for itself and more, resulting in not only doing the right thing for the environment, but doing the right thing for your wallet as well.

Read about how installing solar panels can affect your home insurance.

Trent Hamm

Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.