* Government incentives for small turbines

* Hurdles include jealous neighbors, city ordinances

By Andrew Stern

CHICAGO, May 6 (Reuters) - The idea of wind turbines churning out free electricity alongside every home and office building has appeal, judging by the throngs around "community wind" purveyors at a Chicago wind power convention this week.

Darrin Russell of Southwest Windpower was inundated with questions during the Windpower 2009 convention where he explained the economics of the company's workhorse 2.4 kilowatt Skystream turbine, which plugs into the local electrical grid.

"It's nice watching the (electricity) meter go backward. Sometimes it gets going pretty fast when the wind blows hard" which it does often at the company's headquarters in Flagstaff, Arizona, he said.

Russell paid practically nothing for his own turbine, which costs roughly $14,000 to buy and install, thanks to a newly enacted 30 percent federal tax credit for wind projects large and small, state tax credits and rebates of up to $9,000 from many utilities eager to promote renewable energy. The first month his electricity bill was zero.

The company sells to business, homeowners and developers.

"Some companies like to line them up outside instead of flags" to promote their green credentials, he said. "Helps keep their offices cool at least."