Power struggle

Cow power Politics

-- California dairy interests say the state's major utilities are impeding the energy payback of methane digesters.

-- Investor-owned utilities maintain the law doesn't require them to pay for excess power generated by digesters.

-- Log onto www.pge.com/suppliers_purchasing/new_generator/ebio

As Jake de Raadt corrects the start-up glitches in his plug-flow anaerobic digester, the Lemoore, Calif., dairy producer has high hopes for his $750,000 investment.

If all goes as he hopes, the methane digester will regularly generate 130 kilowatts (kw) of electricity an hour. That will power much of his dairy's energy needs and shave off about $2,000 from his monthly energy bill.

He also expects the manure-handling system to reduce methane gas emissions and odors at his 6-year-old dairy, where he milks 850 cows.But most of all, de Raadt hopes his local utility company will someday pay him for the excess power his digester generates but doesn't use. "I'd like to sell more power to them," he says. "That's what would really make this methane digester project fly."

That power purchase, however, isn't likely to happen anytime soon. Under California law, investor-owned utilities (IOUs) aren't required to buy electrical power from dairies. And don't. It's a sore point for the industry.

With no shortage of manure in California, the nation's No. 1 dairy state, producers say cow waste is a renewable energy source that can be converted into much-needed electricity. But the state's two largest IOUs are impeding that potential, dairy interests say.

"The utilities don't want us or new power, and they show it by attitude, action and a ridiculously low value credited to dairies for electricity produced," says Mark Moser, president of RCM Digesters, Inc., which builds methane digesters across the U.S.

For now, the most that California dairies can count on with the state's two biggest energy providers, Pacific Gas and Electric Co. (PG&E) and Southern California Edison, is a net metering agreement. That means dairies with methane digesters can net, or offset, their electricity use against the power they generate. But they don't get paid for any excess power they feed into the electrical grid.

Like some other dairies, de Raadt's Eden Vale Dairy has an interconnection agreement with PG&E to net meter his energy bill. Each month, PG&E credits a portion of his energy use in exchange for the electricity his digester feeds into the utility's grid.

For de Raadt, that credit amounts to 3cents to 5cents per kw hour (kwh) each month, but only on the generation component of his dairy's monthly unbundled bill. (The typical bill includes other components, such as distribution and transmission charges, taxes and metering costs.)

Producers who generate energy from methane digesters want to sell the excess to PG&E; de Raadt would settle for a buyback rate of 71/2cents to 8cents per kwh. Others believe a buyback of at least 13cents is more appropriate, "considering that PG&E charges the general California household 13cents to 21cents per kwh used," says Leo Langerwerf, who milks 400 cows at his Northern California dairy near Durham.

Langerwerf is the only dairy producer in the state with a contract that requires PG&E to buy all of the excess power generated from his methane digester.

That agreement with PG&E was inked in 1982 when Langerwerf installed his anaerobic digester. Today, his digester produces 70 to 80 kw an hour. That's more than enough to run his dairy and on-site home. The rest--about 40%--is sold to PG&E for about 7cents per kwh.

Despite his exclusive arrangement with the utility, Langerwerf is not a fan of PG&E, which he calls "Pacific Graft and Extortion." He believes the company would love to see him cancel his biogas contract. He also thinks the IOU deliberately imposes high costs, expensive studies and other hassles to discourage dairies from hooking up their digester-powered generators to the PG&E grid.

"For me, it's great getting paid 7cents [per kwh]," Langerwerf says, but he dislikes waiting two months for PG&E to pay him for the electricity he dumps on the grid. "It makes me mad that PG&E can walk over everybody. There's a shortage of energy in California, but they're not helping farmers with digesters. If I had the money, I'd stick in another digester."

RCM Digesters' Moser says PG&E can take up to a year to approve an electrical connection with a dairy digester, versus a six-month average of the state's other IOUs. And, Moser says, PG&E will charge $30,000 to $60,000 to connect digesters to its system. That compares to $10,000 for utilities in other states.

"Dairies with digesters spend more in California to interconnect with a utility than anywhere else in the country," says Moser.PG&E says California law mandates the actions of its Net Energy Metering for Biogas Customer-Generators (NEMBIO) program. "It was all put together by statute," says PG&E spokesman Paul Moreno. "We didn't make the ultimate rules."

Extra costs and lengthy waits to interconnect digesters to the grid result from required reviews, detailed interconnection studies, securing protective devices and conducting physical inspections, Moreno says.

"The process has to be followed to ensure the safety of our customers and crews and the protection of our grid," he says."We're certainly supportive of the legislation that created the NEMBIO program, and we're more than happy to continue to find ways to create more interconnection with methane digesters," he adds.

Moser disagrees. "There are going to be lots of methane digesters when PG&E stops screwing around," he says. "The technology is all worked out. Only the utilities are stopping us."

The State of California,

de Raadt hopes, will reimburse him for $300,000 of the cost of the digester. Rebate money is also available from PG&E, but de Raadt is careful about that. "First, we want to see what strings are attached," he says.

Renewable energy from methane digesters is "a win-win situation for the environment, dairies and consumers by reducing our dependence on foreign energy sources," says Michael Marsh, CEO of Western United Dairymen.

The future is uncertain for more digesters on California dairies, where eight biogas projects are running, and more are under construction."If the State Legislature determines that it wants these projects to move ahead and commits to that by requiring utilities to pay producers for their power, then they'll take off," Marsh says. "If not, it's going to be very difficult to make digesters operational in California." In other countries, dairies are paid 15cents per kwh for their electricity.

Three issues could help resolve the impasse between methane digesters and utility companies. Record fossil fuel prices could spur further development of renewable energy from dairies. Other states are already embracing biogas programs which could influence the IOUs. And the state's dairy industry is pushing for legislation to ensure that digester-generated energy is fairly compensated."In California, we need more energy," concludes de Raadt. "Let's make it work."

Betting on biogas

When it comes to requiring more energy from renewable sources and mandating that utilities pay for excess power generated by methane digesters, California takes a back seat to other states.

New York, Pennsylvania, Vermont and Wisconsin--all major dairy states--have programs that encourage renewable energy efforts by dairies.For example, Vermont revised its net metering law in 2000 specifically to apply to farm methane systems. Now farmers who produce up to 125 kw can sell their excess electricity to the grid, providing much-needed additional farm income.

But, to its credit, California does have SMUD--Sacramento Municipal Utility District--the nation's sixth largest community-owned utility. The not-for-profit company serves 1.2 million people.

Although SMUD's territory has only 43 dairies, it supports dairy-generated power.

"We feel distributed energy generation is a good thing," says Ruth MacDougall, a renewable energy project manager for SMUD. "It makes our grid more robust. And renewable energy makes our power supply cleaner and more diverse. We'd also like to see our ag sector stay strong."

SMUD provides qualifying dairies with incentive funds of 13% of the total cost of building a methane digester. So far, SMUD has accepted applications from three area dairies. They're not huge--only about 1,000 cows each--but combined, their methane digesters will generate 500 kwh. That's enough to power 500 homes.

SMUD will also offer them a net metering program that aggregates the power on all the meters on each dairy, not just the digester. The offsetting rate totals 9.4cents per kwh, MacDougall says.

Moreover, SMUD will pay each dairy for the excess power it generates. That rate is its average market price for renewable energy. One dairy has negotiated with SMUD an excess power rate of 5.6cents per kwh. In contrast, California's two major investor-owned utilities pay nothing for any of the excess power generated from dairies.