Energy Planning Strategies
One size does not fit all

  

  It is important to find the mix of energy management techniques that will be right for your operation.

 

 

The Need for Energy Self-Reliance        

The American farmer is facing a crisis of historic proportions. Oil prices are at an all-time high. Electricity costs in most states are growing at unimaginable rates. Transportation costs are increasing. This energy squeeze comes at a time when shrinking profit margins and increased competition threaten the very existence of small farms. Incorporating the use of energy efficiency, biomass and renewable energy sources can help make farms more profitable and robust.

Farmers benefit from supplying some of their own energy—becoming more self-reliant and less dependent on utility companies—for a number of reasons. But remember, what works for one operation might not work for yours. Three benefits of energy self-reliance are highlighted and explained below.

1- Financial Viability and Cost Savings

First, the more farmers can produce their own energy, the less vulnerable they will be to the global fluctuations in energy prices. The Association for the Study of Peak Oil and Gas estimates that global reserves of oil and gas will peak around 2010 after which prices will continually climb. As farmers know, agriculture requires substantial energy use. If farmers can insulate themselves from energy price fluctuations, they will reduce their financial risks. Furthermore, many farmers may have the potential to turn their farms into net-producers of energy, meaning that they can sell their electricity or bio-fuel for a profit.

2- Limiting Environmental Externalities    

Producing energy from fossil fuels has many negative effects on the environment. In particular, coal fired power plants are a major source of local and world wide air pollution as well as a significant contributor to global warming. In addition, ozone, a by-product of fossil fuels, damages crops and reduces yields. Thus, reduced energy use means better environmental protection that will help farmers in the long run.

3- Food Security & Operational Independence

A farmer’s ability to produce their own electricity or tractor fuel and thus reduce their dependence on external sources of power means that their farming operations are more independent and less subject to global politics. For example, America’s food supply is highly dependent upon imported oil for fuel. Greater energy self-reliance could mean that, should oil become less available from other countries, agricultural production would not be interrupted.

An Energy Management Plan    

The optimal path to energy self-reliance for farmers is to implement an energy strategy. Synergies occur when several energy-saving and energy producing efforts are used simultaneously. In short, it is the combination of efficiency measures, biomass and renewable energy that help a farmer reach energy self-reliance. Implementing all of the strategies creates more benefits than each factor could alone.

Energy Efficiency    

Energy efficiency means accomplishing the same tasks (i.e., lighting, powering motors) but using less energy to do it. There is a range of ways to use energy more efficiently, although some require more effort than others. One simple way is to replace incandescent light bulbs with efficient fluorescent lights. On the more difficult side, farmers could save significant energy by installing combined heat and power (CHP) units on farms. Energy can also be saved by changing production practices. For example, a farmer can reduce tractor diesel consumption by shifting from more traditional tillage methods to conservation tillage. In fact, there are many methods that farmers can use to reduce energy consumption in order to save money, protect the environment, and meet some of their own energy needs.

Biomass    

Biomass is organic material made from plants and animals that contains stored energy from the sun. Plants absorb the sun’s energy through photosynthesis and then convert the energy into chemical energy that is stored in plants. When biomass is burned, the chemical energy is released as heat so that burning wood waste or garbage can produce steam for making electricity or for providing heat to industries and homes. Unlike fossil fuels, biomass can be quickly replenished and is a renewable form of energy because we can grow more plants.

Renewable Energy    

Renewable energy refers to non-fossil fuel sources of energy. Fossil fuels, or coal, oil and gas, are not renewable because they take millions of years to form and there are limited amounts of each stored in the earth. Wind and solar energy are both considered renewable energy sources because humans will never exhaust their ability to harness wind and solar energy. To encourage the use of renewable energy, a number of states allow “net metering,” a process where farmers can sell excess electricity that they generate on their farm (using biomass, solar or wind energy) to a utility.

Energy Management: The Dairy Farm

If a farm both reduces energy use and creates energy, it can reduce the percentage of power purchased from utilities. The following scenario shows how a typical small to medium size farm that has 300 dairy cattle, 160 acres of corn/soybeans (in rotation), 40 acres of wheat and 30 acres of alfalfa can maximize energy savings and become more energy independent using the synergistic effects of combined energy strategies.

Base Year 1: Energy Efficiency

For our hypothetical farm, let’s assume that it is the first year the farmer adopts energy efficiency measures. While energy savings can vary depending on the particular energy use of a farm, it is reasonable to assume that a typical farm could save up to 30 percent of its energy costs by, among other things, installing energy efficient lighting and new efficient motor pumps. These energy efficiency measures can lower energy consumption. These measures are combined with insulation in the home and workshop, which decreases heating oil consumption. In addition, the federal government reduces the cost of the efficiency measures by offering the farm tax credits on each efficiency up-grade installed.

Base Year 2: Biomass

Manure is another biomass product found on farms that is a potential renewable energy source. Diary farming uses a lot of electricity to run the pumps that milk the cattle, to refrigerate the milk once collected, and to heat and cool farm buildings. Using manure to generate electricity can achieve several important goals. It can be used to generate the energy that the farm needs, reducing the amount purchased from a utility. It can solve odor and water pollution problems, as well as produce useful by-products that save money.

Continuing the hypothetical steps to energy self-reliance, let’s assume that in the second year, a farmer applies for and receives a grant from the state government office of natural resource management to build an anaerobic digester. The grant provides matching funds for the digester up to twenty five percent of the capital costs. An anaerobic digester converts manure (volatile solids) into methane gas which is captured and burned in a generator to create electricity. A 300 cow diary operation could produce enough manure for roughly 50 kilowatts (kW) of electricity capacity. After the manure goes through anaerobic digesting there are solids that remain, which can be used both as fertilizer and also bedding for animals, saving the farmer from having to purchase those products. In some cases, farmers have saved over $60,000 a year in animal bedding alone.

A Synergy Is Created    

In our example, there is a synergy created between the efficiency measures adopted in the first year and the digester installed in the second year. The efficiency measures lowered the farm’s annual rate of consumption of electricity by 30 percent. This means that the electricity being generated by the digester is now providing a higher percentage of the amount of the electricity that the farm consumes. In that way, the energy efficiency measures amplify the net benefit of installing the digester by reducing the total consumption of electricity from off-farm sources. Thus, by implementing both energy management strategies, as well as digesting and efficiency measures, this farm has reduced its total energy costs. It also is now less dependent on outside sources of power to operate the farm. The farm has accomplished the goals of decreasing dependence on outside sources of power and reduced environmental harm.

Base Year 3: Renewable Energy    

During the third year, our hypothetical farm signs a contract with the local power utility to install a net-metering device on the farm. Net-metering allows a farm to sell the electricity it generates on the farm to its electrical utility. At night when the farm’s electricity consumption is low, the digester is still generating electricity. Since the farm does not use all the electricity the digester is generating, the excess power can be used to off-set or reduce the cost of future electricity use. The power ‘credit’ earned by the farm at night literally turns the electrical meter backward thereby showing a negative consumption of electricity and earning energy credits that can be used for power that the farm will use later.

If the farmer should also opt to install photovoltaic cells on the roof of the barn, the farm can apply for and receive a grant to reduce the initial capital costs of the solar panels. The farm is also eligible for federal and state tax credits that reduce installation costs. The solar panels are connected directly to the circuit breaker in the barn so that during the day, while electricity consumption is at a high level, the solar panels are providing electricity directly to where it is needed. This is in addition to the power that the anaerobic digester is already generating. The additional power further reduces the farm’s daily consumption of outside energy, producing the financial, environmental and operational benefits that self-reliance can provide.

Achieving Self-Reliance    

The hypothetical farm in our example implemented a separate energy management tool in three succeeding years; energy efficiency in year one, biomass in year two and renewable energy in year three. Chart 1 shows how using the “Percent of Electricity Produced on Farm” can lead to greater self-reliance. Each line represents one of the three energy management strategies used by the farm in the preceding example. The increasing green line is the cumulative effect of all three strategies. Notice that alone, each only contributes a limited amount of energy to reduce the amount of off-farm energy needed. However, combined, these individual strategies can significantly decrease the dependence on off-farm energy.

Notice that in year four the farm has an increase in on-farm electricity production. The increase in on-farm electricity is due to the synergy created by employing the digester and solar panels with the net-metering device on the farm. Under most net-metering rules, utilities must credit the farm account for kilowatt hours that the farm produced in excess of what the farm consumed during a month. Some states require the utility to pay the farm for the excess power it generates. Therefore, in months in which the farm generates more power than it needs, it can earn income from generating electricity. While this may not be a significant amount, it is an additional benefit worth highlighting.

The efficiency measures implemented in the first year lowered the energy consumption of electricity from the grid. In addition, by adding biomass and renewable energy in the second and third year, the farm becomes a net producer of electricity during some months instead of a net consumer. This creates the potential for the farm to sell electricity to the local utility. While energy has been an expense, it now has the potential, at times, to provide income.

Energy self-reliance for this farm has other benefits as well. By creating its own electricity, the farm has reduced the demand on the power grid, freeing up electricity for neighboring businesses and residential consumers. Decreasing overall demand on the power grid during periods of high demand, like the summer when air conditioners test the grid’s limits, reduces the likelihood of power outages and the need for new generation. The solar panels will be most productive during the “peak” period of electricity consumption, which is during the middle of the day. Moreover, any reduction in kilowatt hours used reduces the likelihood that new fossil fuel or nuclear power plants would need to be built.

Renewable Scenario: The Orchard and Vegetable Farm    

The previous example is meant to encourage the reader to think about the possible synergies between the different energy management measures. The principle of combined energy strategies could work for a variety of farm operations, including ones that might not produce manure. To demonstrate how an energy management strategy might work on a different agricultural operation, imagine a farm that bases its production on five acres of vegetables, 30 acres of prairie hay, and a 20 acre apple orchard. Energy use includes heating oil for a greenhouse where plants are started before being planted and diesel to run the tractors used to care for the orchard and bale the hay.

Base Year 1: Energy Efficiency     

In year 1 the farm could invest money in energy efficiency measures. By adding insulation in the workshop and residence, placing fans with new models that have energy efficient motors, installing compact fluorescent lighting and replacing old appliances with Energy Star rated models, the farm would realize impressive savings in energy costs over a relatively short time period.

Base Year 2: Biomass

In the second year, the farmer decides to make biodiesel on the farm. In the spring, the farmer converts his 30 acres of prairie hay into rapeseed. Rapeseed can produce approximately 120 gallons of biodiesel per acre. Therefore, the 30 acres of rapeseed will net about 3,600 gallons of biodiesel for on-farm use. The farm also installs a rapeseed press to make the bio-diesel. The biodiesel produced on the farm is then used to run the tractors that harvest the apples and the trucks that transport them to market. The farm is able to produce enough biodiesel to reduce the farm’s diesel consumption by 50 percent.

Base Year 3: Renewable Energy    

During base year 3 the farm installs a windmill to generate electricity on the farm. The farm also installs a net-metering device after contacting the local power utility. The windmill is connected to the net metering device. The new windmill is able to provide on-farm electricity for the residence, the greenhouse and the workshop. Any excess electricity that the windmill generates is sold back to the power utility to offset future energy needs.

Synergies Created on the Orchard and Vegetable Farm    

If this hypothetical farm were to implement each energy strategy, it would realize energy savings as shown in Chart 2. Energy efficiency measures lowered the total consumption of energy thereby amplifying the proportional effect of generating energy through biodiesel and wind power. Furthermore, together all three areas maximize the potential to save money by creating energy on the farm. The biodiesel and windmill not only reduce environmental degradation by replacing fossil fuels and reducing the air and water pollution, but also grant the farmer a degree of control over his or her energy choices.