Catch the wind: Midwest farmers are well-positioned to harvest and sell wind energy
By Gene Johnston
Successful Farming Managing Editor
3/25/2005, 3:27 PM CST
Farmers looking to diversify their income stream may find the answer blowing in the wind. Literally.
That message was delivered to a gathering of 50 farmers on the campus of the University of Northern Iowa in Cedar Falls, Iowa, recently. At the Introduction to Wind Energy and Energy Crops; a Conference for Farmers seminar, several speakers said that farmers need to be active participants in the growing national interest in renewable, low-polluting energy sources, such as wind. Federal and state government programs are either in place, or being developed, that could help you pay for the hardware.
The conference was sponsored by the Iowa Farmers Union Foundation, the Iowa Energy Center, The Center for Energy and Environmental Education, and The CHS Foundation.
"A disproportionate share of renewable energy is going to happen here in our area," said Ed Woolsey, president of Green Prairie Energy, an Iowa-based renewable energy company, and conference leader. Renewable energy sources such as wind, methane from manure digestion, and biomass energy crops are well-suited to the Midwest. "If it's going to happen here, take advantage of it," he urged the farmers.
Some of the highlights from the meeting were:
- Farmers who participate in wind energy production passively by leasing land to energy companies for placing wind tower turbines may be leaving money on the table. Typical leases for a half-acre of land for turbine placement are around $2,000 per year. While that may sound pretty good to a farmer, there may be no provision for inflation in the lease contract, industry experts said. Leasing may be a good option if it is available to a farmer, and if he or she has no interest in being an active participant in alternative energy. But if he does want to be an active owner of a wind project, the returns he can achieve might be as much as 10 times the lease payment, said Woolsey.
- A farm family team on the panel, Larry Tjaden and his son, Scott, from Floyd county in Iowa, presented an example of how actually owning a wind turbine can be more lucrative than leasing land to an energy company. In 2001, the Tjadens built a 4,000-head hog finishing unit on their farm. "In January of 2004, the power bill for that hog site alone was about $600," said Larry Tjaden. "As I paid that bill, I told Scott that we need to start asking ourselves what we could do lower our utility costs. We started thinking about putting up a wind turbine to generate our own electricity."
Scott took off with the idea, and researched wind power on the Internet. One thing he discovered is that there are plenty of used and refurbished wind turbines available at a discounted price. Many of those machines come from either California, or Europe (Denmark is the acknowledged world leader in wind energy technology and production). Scott and his uncle, Dean Tjaden, went to California and found a used mid-size tower and turbine that fit their criteria, and bought the 100-foot tall unit. It took 5 trucks to haul it back to Iowa, and that alone cost about $30,000.
The Tjadens spent last summer and fall putting the project together. Dean did the legwork with the local zoning and public notice requirements for obtaining a construction permit. The unit was erected in a windy spot in the middle of one of their corn fields, and went on line and started producing electricity last November. The total investment was over $200,000. But a good share of the cost for such a project - 40% or more - can be covered by federal and state grants and tax incentives to promote renewable fuels development. (Even the 2002 farm bill has a provision whereby farmers can get grants - no payback - for this type of project. It's administered through local FSA offices.)
Ironically, the electricity produced by the Tjaden's turbine isn't used directly on their farm. Because of the 3-phase hookups required to tap into their local electric power grid, it works better for them to simply sell the power to their local utility, Dairyland Power, and that income offsets the farm's power bill. On the windy day that Larry and Scott spoke at this conference, their turbine had cranked out 8,000 kilowatts of electricity in the previous 48 hours. They estimate that the turbine will produce $20,000 to $24,000 a year in gross income, and that does not include the tax credits they will receive for their renewable energy investment. The turbine could pay for itself in 6 years or so, then still have several years of useful life of producing income for the farm.
The Tjadens have become strong supporters of renewable energy development by Midwest farmers. "We hope we can help influence additional privately owned wind turbines in Iowa," said Scott.
- Many of the smaller, on-farm renewable energy projects are being done in conjunction with local and regional power companies and cooperatives. They, too, have a strong interest in exploring new energy sources. In some cases they are being mandated by law to secure a certain portion of their power from renewable sources, and they may also be mandated to buy the excess power from on-farm projects like the Tjaden's. One speaker was Jacob Kvinlaug, manager of Consumers Energy Rural Electric Cooperative in Marshalltown, Iowa. That electric co-op has put up two wind turbines on its own property as a demonstration, and is actively encouraging farmers in its area to do the same.
Kvinlaug listed four things you need to know before moving forward with a wind turbine project:
What exactly is your wind resource?
You can find maps that will give averages, but you really need to run wind-speed tests on your own farm. That means putting an anemometer in place for several weeks to get an accurate record of wind speed at a height of 50-100 feet, where the turbine will actually be running. Consumers Energy has an anemometer that they rent to their customers for this purpose. Kvinlaug says they are not that expensive, about $400, and it might be a good investment for anyone getting serious about wind power.
What will it cost you to connect to your local electric grid?
Your local power company should be able to help you with this. You may have to lay some expensive underground lines to hook into a substation. "This may be simple, or maybe not," Kvinlaug said.
What will your local utility or electric co-op pay for energy buy-back from you?
In Minnesota, the law says that for small energy projects, the utility has to buy power at the full retail cost of electricity. That's not true in other states, and they may pay you the wholesale value, or the difference in wholesale and retail.
What wind machine will you put up and what will it cost?
Don't forget to research fully the cost for the foundation for your tower and turbine. "Companies that sell them don't always tell you a lot about the cost to build the foundation," said Kvinlaug. For instance, the Tjadens have a concrete foundation for their tower that is 35 feet across and 8 feet deep in the ground, with 98 big bolts anchoring the tower. They had to hire two huge cranes to set the tower and turbine in place.
"Once you know these 4 things, you're ready to go talk to your banker about financing," says Kvinlaug. "The co-op energy industry is waking up to this. Consumers Energy is really trying to help people get involved with it."
Gregg Heide is a fourth generation farmer at Pomeroy, Iowa. He's been visiting his state legislature this spring, trying to promote more state government incentives for farmers such as himself to invest in wind energy. He's considering putting wind turbines on his farm, and may try to form a farmer co-op with his neighbors to develop a wind farm that they would own together (some farmer groups have already done this in Minnesota).
Heide gave this example of the potential: On 160 acres of corn, at today's yields and prices he can generate about $60,000 in gross crop revenue. If he put two of the newest, biggest, and most efficient turbines on that ground, he might be able to generate five times that amount in gross revenue. "If I leased that ground to an energy company to put up the turbines, they might pay $4,000 per turbine for an annual lease payment. If you go that route, I think you could be leaving a lot of money on the table," Heide said.
He also said that if you are interested in pursuing wind energy development on your farm, start by going to your local utility company or co-op and see if they are interested in helping you. If they are, they will be able to provide you with lots of resources. Then, he said you should hire a consultant who knows the business. That person can help you find sources of equipment, and help you take advantage of all the government programs for technical help and financing.
Many sources offer help for people interested in developing wind energy projects. Here are some places to get started:
Iowa Energy Center
Next Generation Power Systems (Wind turbines: Minnesota)
Energy Maintenance Service (Wind turbines: South Dakota)
Energy Foundation
You can email Ed Woolsey, Green Prairie Energy at: Ed@ewoolsey.com
