Recently, there are small wind turbine developments which are suitable for urban and suburban application. However, the efficiency of the wind turbine is the main concern for all researchers due to the uncertainty of wind speed and wind direction in urban area. In this paper, a new power augmented shroud integrated with vertical axis wind turbine (VAWT) is introduced. This power augmented shroud is able to improve the performance of the VAWT significantly by increasing the wind speed. It also channels the flow to better angle of attack for the VAWT and reduces the negative torque of the wind turbine. Hence, it improves the self-starting behaviour of the VAWT, and increases the coefficient of power. The numerical method is used to simulate the wind flow for the power augmented shroud with a single bladed NACA 0015 airfoil VAWT by commercial computational fluid dynamic (CFD) software, ANSYS FLUENT 14.0. In this 2D simulation, the shear stress transport (SST) k-ω turbulence model with the sliding mesh method was used with the tip speed ratio of 5.1 for the wind turbine. The result was verified by re-simulating the experiment published by the Sandia National Laboratories. The simulation result shows that the new design of power augmented shroud is able to increase the coefficient of power significant for the VAWT which is about 147.1% compared to the bare VAWT. Therefore, for urban area application, this power augmented shroud can improve the low efficiency problem for the VAWT.