AG and Natural Resources

Alternative Energy Enterprises

By Diana Roberts

This article is an overview of the pros and cons of various alternative energy sources and some aspects to consider when investigating their business potential.

Biodiesel

Recently I toured the University of Idaho’s biodiesel research program that is led by Dr. Chuck Peterson. I had the opportunity to drive a new, bright yellow VW bug that runs 100% on biodiesel made from canola oil. It looked cute, had far more “pickup” than the diesel Rabbit I once owned, and it smelled delicious! I’m not kidding; I started craving French fries!

Biodiesel is actually an ester of vegetable oil that can be made in a simple batch process by mixing it with alcohol (ethanol or methanol) and a catalyst (sodium hydroxide or potassium hydroxide). Glycerol by-product and the catalyst sink to the bottom of the tank and the biodiesel is siphoned off the top. There is a market for glycerol (Proctor and Gamble imports 700 million pounds a year). The UI is also conducting experiments spreading glycerol on fields as a fertilizer. The meal by-product of the crushing process is used as animal feed, except for rapeseed meal, which is inedible. Jack Brown, UI canola breeder, is trying it as a soil fumigant.

Peterson has run farm machinery and pickup trucks on biodiesel for many years. Engines run exclusively on biodiesel have shown no more wear after 100,000 miles than those run on diesel fuel. The main drawback to biodiesel is that it gels at 54 ^oF so vehicles need a warming system for the tank and fuel lines. Biodiesel puts out 10-12% less energy per gallon so mileage is slightly reduced (40 mpg instead of 49 mpg). However, Spokane Transit Authority found that buses run on a 30% blend of biodiesel (30/70) ran cleaner, had more power, and fuel mileage increased by ½ mpg.

Obviously biodiesel has tremendous potential as an alternative energy source that is cleaner than diesel fuel and could reduce dependence on fossil fuels. In the short term it can be developed at a farm scale and production matched to niche markets. Although Peterson has been working on biodiesel since 1979, the economics of biodiesel production have not been conducive to commercial development. Due to the current energy crisis, the situation is looking more favorable. A Spokane group, including the Spokane County Conservation District, NRCS, Avista Corporation, and the Spokane Transit Authority (STA), are exploring the possibilities. STA wants to reduce emissions from their bus fleet, and Avista is interested in biofuels to supply power plants that currently run on diesel fuel.

Harvesting Clean Energy Conference

Last January I attended an alternative energy conference in Spokane that included discussion of wind energy, grain ethanol, biogas from manure, and solar energy. While each of these energy sources had some attractive features, none promised to be a silver bullet. Conspicuously absent from the discussion was hydro power – once almost taken for granted as being clean and renewable, but now totally politically incorrect because of its impact on aquatic environments. I took this shift in thinking as a warning not to get too enthused about any alternative energy enterprises without carefully thinking through the possible ramifications.

Wind Energy

There is a lot happening with wind energy, and the Department of Energy has a goal to produce 5% of US energy from wind by 2020. There are several levels of wind turbine installation in rural areas.

The industrial model supplying 250 kW to 2MW. These are extensive installations managed and maintained by large companies. The landowner is a passive observer, does not reap large revenues from the power (about $2,000 per turbine per year), and neither do local communities benefit.
The traditional model generating 10 kW to 250 kW. These are usually locally owned and operated (frequently as cooperatives) so the revenue remains in the community. The windmills are smaller and simpler and there is less risk involved than with the industrial model. Single turbines can bought second hand and set up for $30,000 and may be paid off in five years.
The small model for home or farm use supplying less than 10 kW.

Table 1 shows costs and payback of typical wind turbines based on retail electricity cost of 6c/kWh and wholesale electricity cost of 2 c/kWh. Turbines usually have an operating life of 30 years.

Table 1. Costs and payback of typical wind turbines

	Capital	Annual Energy Production	Payback Using All Farm Power Needs
10 kW	$30,000 - $32,000	20,000 - 25,000 kWh	18 - 22 yrs
225 kW	$301,000 - $315,000	639,000 - 852,000 kWh	6 - 8 yrs
500kW	$504,000 - $535,000	1.1 - 1.5 million kWh	6 - 8 yrs

Source: Isaak Walton League of America, Landowner’s Guide to Wind

Energy in the Upper Midwest, 1995

Wind energy production is clean and quiet, and the turbines do not take up much space, so farmers can use them in an “intercropping” system in their fields. A real disadvantage of this system is bird mortality. Modern turbines that revolve slowly and don’t have lattice-type towers (that are attractive as roosts) have decreased bird deaths. However, even if you believe it’s solely God’s responsibility to care about individual sparrows that fall to the ground, it would be unwise to ignore the history of hydropower and establish turbines in migratory routes and avian roosting areas (especially if endangered species are involved).

My perspective, gained from the conference, is that the safest way to enter the wind industry is with a small turbine to provide or supplement home and farm use. You can install net metering, so that when excess electricity is sent into the power grid and your electricity meter turns backwards. The grid supply functions as normal when the turbine is not generating. This sort of turbine will pay for itself more quickly if the farm uses the bulk of the power generated, because then the savings are at the retail rate. Excess power is sold to the utility company at the wholesale rate.

There are wind maps available for most areas, but they are drawn for broad regions and apparently the one for Washington is not accurate. A new, high-resolution map for the PNW will be completed by the end of 2001. Anyone considering erecting a wind turbine should consult with a meteorologist and install an anemometer, or a small wind turbine, at potential sites to determine the feasibility of the turbine. Microclimates within 300 feet can vary immensely in the amount of wind they intercept, as can turbines at different heights.

Establishing a cooperative with other landowners is a time intensive process, but benefits the local community the most. Allowing large companies to install turbines on your property is the simplest method. However, anyone considering this option must fully understand the land lease agreement and read all the small print. Know exactly how the turbines will affect your land value, what land rights you are relinquishing, and the responsibilities you are incurring, for example, who will dismantle the turbines at the end of the contract or if the utility company goes bankrupt?

Ethanol

Using ethanol as a gasoline additive reduces emissions, and, unlike the fossil-based additive MTBE, it doesn’t pollute groundwater. Ethanol from grain and fiber is a renewable energy source and can utilize crop residue, but it is also controversial. Critics hold that ethanol production requires more energy (from fossil fuels) than it will produce, and the production process releases CO₂ and odors into the atmosphere. This CO₂release may be counterproductive to efforts to use direct seeding systems to sequester atmospheric carbon in the soil.

Currently ethanol is produced primarily from the starch in grains such as corn. When the price of corn is high this is not economic. Ethanol production from fiber such as trees and crop residue is more efficient than production from grain in terms of energy gain and cost of the raw material. However, it requires an extra step to convert fiber cellulose to starch, which increases production expense. Researchers have isolated fungi that produce enzymes that can perform this task cheaper than does conventional acid hydrolysis, but the process is not yet commercially available.

There are plans to open ethanol plants in the Pacific Northwest near Portland and Moses Lake. They will produce ethanol from wheat grain – but will import it from the Midwest as hard red spring wheats are more desirable than soft wheat for the fiber characteristics of their bran layer in the meal by-product.

Solar Energy

The economics and efficiency of solar energy collectors have improved immensely. Solar energy is unlimited and clean. However, in most temperate regions, especially the Pacific Northwest, solar collectors are practical only where they can supplement other electricity sources or in remote situations requiring low energy input, such as livestock water troughs. Greenhouses and grain dryers can often incorporate solar energy to save money in the long run, though they are usually more expensive to build.

Biogas

Producing natural gas from composting manure can be a most efficient and cost effective way of dealing with this waste. The composted manure can then be spread on fields. The gas is then usually burned on site to heat buildings. Location of the digester is crucial as offended neighbors may quickly veto the project.

Anaerobic digestion makes the most sense for confined animal feeding operations. Apparently the sale of the nutrients in the solids by-product brings in the most income and the energy sales are extra. This may offset some of the expense of mandated manure handling systems.

Biomass combustion is another option, using systems that produce little emission and can burn almost anything, including manure. They might work best on a farm with lots of carbonaceous residue. The heat generated is used to make steam and then turn a generator. Locating these in a place where waste heat can be used (crop drying, greenhouse, or industrial use) is a big factor in their economics.What you can doMy recommendation to anyone wanting to get into alternative energy production is “Homba goshly” (phonetic spelling for “go carefully” in Zimbabwean). Start at a level that will supplement your home and farm energy use rather than seeking to capture a sizeable portion of the energy market.

Margie Schaff outlined some important points at the January conference.Carefully prioritize your goals·

Do you want to save energy expenses or generate income?

Do you want to go commercial or start a small, local project?

Analyze your potential Show this on paperKnow current prices for land use and powerDevelop a business planHave a customer willing to payKnow how to connect into the gridKnow where you are on the grid

Know the possible financing sources and be creative
·        Find more than one financier
·        Be persistent and consistent
·        Be political Consider green credits in any economic analysis of alternative energy, as they can make or break the deal.The last point, “be political” is crucial. The maxim “produce it and buyers will come” is a little fanciful for most value-added or green agricultural products. Governor Gary Locke opened the January conference by saying that the energy demand is a golden opportunity for rural Washington, and that state government can provide tax breaks for those creating their own power proposal. I expect that the legislature will need reminding of this, so talk with your representatives. We also need incentives, like legislation or credits, to encourage individuals and groups (schools, businesses, and organizations) to use alternative energy sources and green products. Environmental groups may be your strongest allies in accomplishing this, and I believe the time is ripe to form solid working partnerships with them. .

Sources and Resources

Energy Program, Union of Concerned Scientists, Two Brattle Square, Cambridge MA 02238. Excellent fact sheets on various alternative energies. www.ucsusa.org/energy

USDA Rural Development-Cooperative Service. Guaranteed loan programs http://www.rurdev.usda.gov

Wind energy information and useful newsletter. www.windustry.org

Windustry – Lisa Daniels: 612-374-2261 Technical assistance and spreadsheet for analyzing wind energy economics on your land National Wind Coordinating Committee, 1255 23^rd St NW Ste 275, Washington DC 20037. Phone 202-944-2300 www.nationalwind.org

Forum for discussing wind energy issues A leading advocate for smaller scale, locally owned wind development Heather Rhoads-Weaver, Northwest SEED (Sustainable Energy for Economic Development), 2724 S. Elmwood Place, Seattle, WA 98144
206-328-2441 / Fax 208-694-8577 heather@nwseed.org

Thoughtful story on the pitfalls of the wind energy business http://www.tri-cityherald.com/news/2001/0812/story1.html

The Last Mile Electric Cooperative, formed to develop wind power projects in the Northwest on an at-cost, "non-profit" basis: http://www.ourwind.org/

US Dept of Energy Biofuels Program
www.ott.doe.gov/biofuels

Bryan and Bryan Inc
www.bbiethanol.com

Etha University of Idaho biodiesel site
http://www.uidaho.edu/bae/biodiesel/

USDA biodiesel research results and support for biofuel http://www.ars.usda.gov/is/pr/2001/010807.htm

WSU Extension Energy Program:
Cristina Love lovec@energy.wsu.eduFor more information contact WSU Extension, (509)477-2048

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