Cow Power Producers Seek Better Rates for Their Renewable Energy

For Marie Audet of Blue Spruce Farm [1] in Bridport, it’s not good enough to say that “shit happens.” On her family’s farm, shit happens to earn them money.

At least, it did until January. Since then, the market price for cow-powered electricity has bottomed out. Echoing the dismal economics of dairy farming, whenever the Audets are producing power from poop, they’re shelling out more green than they’re raking in. That’s unsustainable. Which is why they’re now hoping the state will set a higher rate for the renewable energy they produce.

In 2005, Blue Spruce Farm became the first dairy farm in the state to enlist in Central Vermont Public Service’s “Cow Power” program [2]. Five other large dairy farms have since joined the program. Each one has invested as much as $2 million for renewable energy systems that convert manure into electricity.

Here’s how it works: The average bovine produces about 30 gallons of manure per day — with 1100 cows on Blue Spruce Farm, that’s 33,000 gallons daily. The manure goes into a swimming-pool-sized anaerobic digester, where bacteria converts it into methane gas. The gas is then used to generate electricity, which is fed into the power grid. CVPS customers pay a 4-cent premium to buy that renewable energy — they have a choice of conventional or “cow power” — which goes directly to the farmers.

Cow Power has other financial and environmental benefits. The odorless liquid byproduct is spread on fields as fertilizer, while the dried solids are used for bedding material for cows and other farm animals.

“That’s what’s so attractive about all this. We get to use our crops to the nth degree,” Audet explains. “We have so many inputs that go into growing crops — land, labor, equipment, seeds — and cows eat it, and we gather it on the other end and continue to use it.”

However, as Audet points out, “Going green isn’t free.” Their customized Cow Power system initially cost $1.3 million to build and install, much of which was paid for with loans. For years, the family got a good return on that investment — as much as 11 cents per kilowatt-hour, plus the 4-cent premium — because their contract is pegged to New England’s variable spot-market rate. Consumer demand, and fluctuating fuel costs, drive the price of power for both users and providers.

“We always anticipated the price would keep creeping up,” Audet says. “We never anticipated a 50 percent drop.”

But in recent months, the wholesale price of power has dropped to a low of 3.5 cents per kilowatt-hour, largely due to the plummeting price of natural gas, which is used to generate much of the electricity in New England. Seven cents — which includes CVPS’ 4-cent premium — is well below what the Audets need to operate their system, including routine maintenance, repairs and repayments of their loans.

What’s the solution? Cow Power farmers will be paid 5 cents per kilowatt-hour retroactively for the past few months from the CVPS Renewable Development Fund [3], an independent source of cash created by the utility to provide financial incentives for farmers to generate clean energy. CVPS spokesman Steve Costello admits that the 8-cent figure — plus the 4-cent premium — is still less than ideal for the farmers. Nevertheless, he thinks it should be enough for the time being to keep them from abandoning the program altogether.

“The fear is, if their price is tied to the market price for much longer, they may not continue producing energy,” he says.

Longer term, Costello, Audet and other Cow Power producers are hoping that the Vermont Public Service Board [4] (PSB) will set a more “appropriate” price for their contracts, one that takes into account the price paid to other renewable energy generators.

Ironically, other Vermont dairy farmers just now getting into the Cow Power program have a much sweeter deal. In June, the legislature passed the Vermont Energy Act of 2009 [5], which allows new renewable energy systems to receive premium rates for the electricity they feed into the grid. Lawmakers set these so-called “feed-in tariffs” higher than the prevailing market rate in order to motivate individuals and businesses to invest in renewable energy systems.

Then, on September 15, the PSB announced new, interim prices for renewables: 12.5 cents per kilowatt-hour for biomass and hydro power, 20 cents for small-scale wind, 30 cents for solar PV, and 16 cents for farm methane. The PSB will set more permanent rates by January 15, after it’s had a chance to study the matter further.

The new rates were good news to CVPS, according to Costello, which has “two or three” new farms seeking permits to join Cow Power in the next six months, and another dozen or so farms in varying stages of analyses. And, while Cow Power still represents less than 1 percent of the total power CVPS delivers, he says, “Our goal within 10 years is to get to 5 percent, and we think that’s doable.”

Unfortunately for the Audets and the other Cow Power farmers, their older systems don’t qualify for the new 16-cent rate for farm methane — at least not yet. Audet thinks they should be getting paid the same rate as new players in the game, especially considering how much Cow Power data Blue Spruce has produced over the past five years. The farm now generates enough electricity to power 300 to 400 homes.

“When we went into this, one of the criteria was that it had to be sustainable,” she says. But today, “the best thing for us is the bedding for the cows.”