Institute for Energy and the Environment Vermont Law School Presenters: Matthew Stern Johnathan Hladik

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1 Institute for Energy and the Environment Vermont Law School Presenters: Matthew Stern Johnathan Hladik Special Thanks to David Contrada and Danielle Changala

2 Ag Efficiency: Good for the Farm, Good for the Grid

3 Projected Growth In Rural Demand Recently, the National Rural Electric Cooperative Association (NRECA) predicted that new generation of 22,067 MW is needed. BUT, heavy reliance on COAL is causing delays due to risks and uncertainty regarding CO2. Financing Constraints - 68% of long term debt is from Rural Utility Service. Renewable Energy needs to be connected - projected 662 MWs of additions. Requires total 10 year capital investments of $65 Billion; $10 Billion of that going to transmission costs.

4 The Cost of Transmission Typical Capital Cost of Transmission Per Mile 345 kv Single Circuit $915, kv Single Circuit $390, kv Single Circuit $285,000 Upgrade to 138 kv $400,000 Source: National Council on Electricity Policy, Electricity Transmission: A Primer (2004). Average Cost PER CUSTOMER Per Mile (138 kv) Rural Electric Cooperatives $55, Investor Owned Utilities $11,111 Municipal Owned $8,369.09

5 Efficiency Is Cheaper Cooperative Electric Utilities are At Cost Providers. Incentives are aligned for Efficiency - the lower cost source. NRECA reports that Rural Electric Co-ops are already active with Efficiency Programs, but there is more low hanging fruit to harvest.

6 Early Resource Planning is Key The Vermont Electric Power Company s Northwest Reliability Project is a prime example of where Energy Efficiency could have prevented new transmission lines mile 345 kv line, 32.6 miles of 115 kv lines and upgrades to 12 substations to meet increasing peak summer demand and reserve reliability. Vermont Public Service Board Holding: Demand Side Management and Energy Efficiency could not meet the projected need in a timely manner... VELCO did not adequately plan for the growing stress on the grid. Board ordered future transmission projects to be developed through multi-party consideration of alternatives to new transmission.

7 What Does this Mean for the Farm? NRECA Report estimates rural energy demand to be twice the rate than the national average, in part due to energy intensive agriculture needs. Energy expenses can account for as much as 10% of farm operating costs. With average operating margins below 10%, fluctuating prices can hit hard. While not all rural communities are agricultural communities, agriculture is an energy intensive industry and therefore, a target-rich environment for Energy Efficiency. Ag Efficiency is especially appealing for reducing peak demand.

8 Copies of our materials will be available after the presentation. For more information, please visit agenergysolutions.org or vermontlaw.edu/energy.

9 Steps To Making A Difference Sustainable Energy Use The Need for Energy Planning Employ Current Technology Utilize Available Resources By taking these three steps, farmers will be able to protect their bottom line, embrace their role as stewards, and work as responsible members of our community to reduce stress on the grid.

10 An energy plan is an energy strategy. Multiple strategies create a synergy. Your plan will include: Efficiency: production practices and equipment use. Alternative sources: producing and using renewable energy. Planning

11 Technology Energy Plan Options Level One: Under $100 Simple steps Weatherize buildings (37%), wrap water heater (25-45%, install a motion sensor Level Two: Under $5,000 Energy efficient fans high volume, low speed (20%) Radiant heating reduce heat loss (20%) Efficient Greenhouse Heater - power vented (one year pay-back) Level Three: Under $25,000 Wind turbine, solar panel, wood boiler

12 Resources State financial incentives and renewable energy standards offer farmers incentives to achieve energy self-reliance. On-line information and resources for your questions and concerns found at DSIREUSA.org.

13 Rural Energy for America Program (REAP) Mandatory funding; preference given to small projects. Who is eligible? Agricultural producers, rural small businesses Those who show demonstrated financial need What types of projects are eligible? Energy efficiency: projects that save energy (efficient motors, weatherization, efficient lightning and ventilation) Renewable energy: projects that use renewable energy (wind turbines, solar systems, geothermal, anaerobic)

14 A Corn and Soybean Farm 60 acres of corn 60 acres of soybeans 300 head of dairy cows

15 Base Year 1 Energy efficiency measures taken. Insulate workshop, barn, and residence, install compact fluorescent lighting, replace old appliances with Energy Star rated models. Savings of up to 30% of energy costs.

16 Base Year 2 Explore alternative energy sources. Apply for REAP assistance through local FSA office to purchase renewable systems. Renewable grant for 25% of project cost. Guaranteed loan for 50% of project cost. State based incentives for the remainder.

17 Base Year 3 Install an anaerobic digester to power your dairy operation. 50 kw per day used to power pumps, heat and cool buildings. Install a wind turbine to your power irrigation system. 40,000 kwh needed per growing season for 120 acres; 2.5 kw rated output, 40 ft. guyed tilt-down tower, $24,000. Net metering allows many to sell excess electricity back to the utility. Earn valuable energy credits.

18 Ag Efficiency: Good for the Farm, Good for the Grid Institute for Energy and the Environment Vermont Law School (802)

19 REAP: How Will My Proposal Be Evaluated? Quantity of energy replaced, produced or saved, Environmental benefits, Commercial availability of equipment or systems, Technical merit of the project, Bonus points for being a small agricultural producer or very small business, Use of the simplified application for small projects, Receipt of previous Section 9006 awards, and Return on investment.

20 Reliability and the Grid The North American Electric Reliability Corporation sets mandatory standards for reliability. Grid must be upgraded to protect reliability. Need for upgrades is determined by maximum peak demand.