Seeing Green in 'Brown' Energy

Jul 04 - International Herald Tribune

In a sense, it is the ultimate renewable fuel source. Weather anomalies can kill corn crops, calm the winds, obscure the sun but through rain or shine, gusts or stillness, cows and hogs and turkeys produce a steady supply of manure, one of nature's richest sources of natural gas. And now, farmers and entrepreneurs are recognizing that this immutable fact can yield a steady stream of revenue and profit, too. Slowly, but steadily, they are replacing the malodorous lagoons, used to treat the waste, with machines that can wrest energy from excrement. According to AgStar, a federal program that promotes converting manure to energy, there are more than 100 anaerobic digesters devices that create an oxygen-free atmosphere in which bacteria digest manure and release gas operating in the United States, with another 80 on the drawing boards.

"These are the only kinds of waste management systems that can actually put money in farmers' pockets," said Kurt Roos, a manager of AgStar. There are many reasons for the new spotlight on "brown" energy. Oil and gas prices have soared, even as environmentalists have sounded alarms about climate change. In the past two years, various state and federal agencies have subsidized purchases of digesters, since they capture methane, a potent greenhouse gas, before it escapes into the atmosphere. Many utilities operate in states that require them to include "green" energy in their portfolios. They will often accept manure-generated gas because many farms have installed equipment to clean the gas of contaminants. In fact, more utilities are thinking of buying the gas outright. Pacific Gas & Electric has agreed to transport gas from a big digester that Microgy, a digester manufacturer, is building in California. Microgy plans to sell the gas on the open market, but Robert Howard, vice president of gas transmission and distribution for the utility, said that PG&E might wind up buying some of the gas itself. "This technology provides pipeline-quality gas and reduces carbon emissions, so of course we're in favor of it," he said.

The environmental boons are legion. According to Agstar, digesters already are keeping 60,000 metric tons of methane from escaping each year into the atmosphere, while generating enough energy to power more than 20,000 homes. And technologies, some of which have been around for decades, have finally grown more reliable. "There's been a lot of time and energy spent on making these as effective and efficient as possible, so anaerobic digestion will be a growing business," said Daniel Mannes, vice president of Avondale Partners, a securities research firm. The potential market is huge. Agstar executives say that at least 70,000 dairy and swine farms are big enough to support a commercial digester and could collectively provide enough energy to power more than 560,000 homes, while keeping more than 1.3 million metric tons of methane out of the atmosphere. "The business model of producing energy along with food will transform the economics of rural America," said Michael Eckhart, president of the American Council on Renewable Energy, based in Washington. Indeed, anaerobic digestion yields not just methane but also leftover liquids that the farmer can use or sell as fertilizer, waste heat that can heat homes and barns, and fibrous solids that make excellent bedding for cows. "Two years ago I couldn't even convince farmers that digesters work," said Melissa Dvorak, marketing manager for GHD, a company in Chilton, Wisconsin, that sells digesters. "Now, all they ask is what the payback will be."

The deals are struck in many different ways. In most cases, farmers buy digesters and either use the gas themselves, sell it to a utility or use it to power a generator that feeds electricity to the utility's grid. In another model, the manufacturer owns the digester and sells the gas. In those cases the farmers provide the manure and the land, and get the fertilizer, bedding and a cut of revenues from sales of gas. Last year, for example, Hunter Haven Farms in Pearl City, Illinois, paid $960,000 half of it subsidized by state and federal grants for a GHD digester that processes waste from 600 dairy cows. Hunter Haven then feeds its methane into a generator and sells the resulting electricity to Commonwealth Edison for 3.5 cents per kilowatt hour. Five Star Dairy, a 900-cow dairy farm in Elk Mound, Wisconsin, anticipates a similarly sweet profit stream from the $1.2 million Microgy digester it installed in 2004. "We're not taking any risk, the reduction in odors is huge, and we're powering 600 homes with 900 cows," said Lee Jensen, Five Star's general manager. "You've got to admit, that's pretty efficient."