Dennis Haubenschild's tale of how he began generating electricity with biogas from his Princeton, MN, dairy farm — and his roller-coaster relationship with the utility companies — is a metaphor for the state of that industry.
Haubenschild installed an anaerobic digester to capture and convert biogas from his 900-cow dairy into electricity in 1999. He had a five-year contract with his local electrical co-op to buy and sell electricity at the retail rate of 7.25¢/kW — an unusually good arrangement.
Even before his contract expired this year, however, he knew the good deal was a goner.
“I heard the co-op — East Central Energy — got so much heat from other co-ops, not only in Minnesota, for setting such a bad precedent that they decided not to renew,” he says.
Today he has a more typical contract with Great River Energy (GRE), his region's major electrical generating company. Now he buys electricity at retail, but sells at wholesale, which leaves him with about half the return of the original contract.
Haubenschild is negotiating to improve the contract by allowing GRE to cut him off during peak energy-use periods and supplying his own power with biogas and additional backup generation.
Haubenschild's experience is typical of what happens to on-farm electrical generators.
It's nigh impossible in most states to hook up a small generating unit to the electrical grid in a truly profitable manner, says Kurt Roos, director of the Environmental Protection Agency's (EPA) AgStar program, which fosters biogas energy production through a variety of methods.
Capturing biogas through an anaerobic digester offers several advantages over typical manure stockpiling and hauling methods. A digester reduces odor and air emissions and improves the final waste product coming out of the storage facilities.
More than 100 anaerobic digesters have been built in the U.S., with at least that many more planned or under construction, EPA says.
Start-up costs and other barriers
Relatively high costs and a general unwillingness of electrical companies to cooperate with on-farm electrical generators are primary barriers.
New York and California have used state initiatives and/or legislation to force electrical providers and sellers to work with biogas electrical producers. But most states haven't.
“It takes away from (utility company) customers because if you have a dairyman who's spending $50,000 a year on electricity and suddenly he's not — that's a concern,” says Allen Dusault of Sustainable Conservation, a California-based non-profit organization promoting ecological collaboration and problem solving.
Electrical companies have some valid concerns about co-generators, such as the electrocution of workers in the event they shut down power to a section of line and a farm-based generator continues to feed energy into it. But these and other issues can be handled with technical standards, says EPA's Roos.
Many electrical companies charge enormous insurance fees, which are prohibitive to farm-scale biogas generators. Another barrier is “stand-by provisions,” which stipulate that if you quit buying electricity, you must pay the company a portion of the income you took from them.
A common tactic is to require farm generators to cover expensive studies on the effects of hooking into the grid, then deny the request. The only appeal is to the company that just refused the application. Other electrical companies simply refuse to buy from small biogas generators.
Some say legislation is the only way to force cooperation and reasonable pricing. That's what New York did in 2002 after the governor championed a law favoring farm-based biogas generation. New York's “net metering” law could provide a good working model for other states.
Tom Fiesenger, research and development specialist with the New York State Energy Research and Development Authority, says the law provides a specific process for hooking into the system, payment rates, and the many other details.
At press time, California was forging similar legislation, though without some beneficial components of the New York law. At last viewing, California's proposed legislation didn't provide retail price or fee elimination. It also had less rigorous requirements on the electrical companies.
On the other hand, the mere presence of such a law in a state, or of net metering agreements enumerated by power companies, doesn't mean a farm-based biogas generator can be run profitably. A net metering law won't force fair or favorable treatment unless written specifically to do so. Many states have such laws that apply to wind power, solar power and even fuel cells, but not biomass or anaerobic digestion.
The biogas energy industry needs federal subsidies/incentives to compete with all the other subsidized energy segments, says Ken Krich, project manager for Sustainable Conservation's dairy methane digester energy program. New York's net metering law does that by providing farm-based biogas generators a retail price for the electricity they produce above their own needs, and by eliminating obstructive fees.
Any legislation that effectively fosters biogas electrical generation must do all these things, say biogas industry supporters. Such laws will only come, however, if farmers push for them.