BioCycle September 2004, Vol. 45, No. 9, p. 34
Central Vermont Public Service Corporation creates a two-pronged strategy to expand renewable energy supply and meet customer demand through cow-powered generation.
We first imagined the idea of creating both the supply and demand for a new renewable energy supply in Vermont over two years ago at Central Vermont Public Service (CVPS) Corporation. While there are a few very innovative utilities across the country (Alliant Energy and East Central Energy are two leaders) that include some farm methane generation in their power supply mix, CVPS wanted to take that idea one step further and create a direct link between electric customers and Vermont dairy farms. CVPS’s current power supply mix is about 50 percent renewable, but our customers told us they want new renewable choices. From that interest, CVPS Cow Power™ was born. The use of an anaerobic digester to produce energy on a dairy farm is not a new idea, just an evolving idea.
Two of the first pioneers of farm anaerobic digester technology still have operational systems today. Robert Foster of Foster Brothers Farm in Middlebury, Vermont, and Richard Waybright, of Mason Dixon Farms in Gettysburg, Pennsylvania, are examples of how a system can provide value.
Vermont and dairy farms are nearly synonymous. Dairy is the largest sector of the agricultural economy, and dairy farms have a significant impact on the overall Vermont economy as well as the look of Vermont. It seems easy for me to draw the conclusion that there is a direct affect on tourism related to farm stewardship of the land.
LAUNCHING THE COW POWER PROGRAM
In early 2003, we met with many of our partners in Vermont. We met with our Agency of Agriculture, our two U.S. senators, the Vermont Economic Development Authority, the Department of Public Service and others to discuss our idea. Our initial ideas were edited and evolved into CVPS Cow Power, our new tariff that was recently approved by the Vermont Public Service Board, our regulators.
Unlike many states, Vermont does not yet have a Renewable Portfolio Standard imposed on electric utilities. Central Vermont Public Service was none-the-less very interested in meeting the demand of our retail customers for new renewable supplies.
In late 2003, we completed a market study of our customers to measure their interest in different types of renewable energy, and their willingness to pay for these new energy supplies. The results indicated a significant interest in farm generation, particularly if it provided a financial benefit to a Vermont farm, and also provided environmental benefits.
These benefits include reduced odor, and reduced pathogens in the waste. Many customers indicated their interest in paying a higher premium for farm generation than any other renewable source. CVPS Cow Power was also awarded the Vermont Agency of Agriculture, Food and Markets’ Commissioner’s Seal of Quality. To learn more, check out www.vermontagriculture.com/aboutsoq.htm.
FINANCING THE PROJECT
In early 2003 and 2004, CVPS received an insurance refund from the Nuclear Electric Insurance Liability Fund, as a direct result of the sale of Vermont Yankee Nuclear Power Plant to Entergy Nuclear. Our regulators asked us to use this money to support new renewable generation in Vermont.
A collaborative group was put together to formulate a plan. Participants included the Conservation Law Foundation, the Vermont Agency of Agriculture, Agricultural Energy Consultants, the Citizens Awareness Network, GHG Spaces, the Biomass Energy Resource Center and Renewable Energy Vermont.
The collaborative earmarked 30 percent of this money to be granted to the Vermont Energy Investment Corporation’s Solar and Small Wind incentive program (http://rerc-vt.org/incentives/index.htm), and 70 percent to the newly created CVPS Renewable Development Fund to support new farm generation projects that would supply electricity for the new voluntary renewable tariff offering that we call CVPS Cow Power. The CVPS Renewable Development Fund was started with nearly $600,000.
Eligible dairy farms that use the anaerobic digestion of agricultural products, by-products or wastes to generate electricity through an interconnection with CVPS’s electric distribution system would be eligible for incentives. Incentives were created to reduce the financial barriers to project implementation. Such barriers include equipment purchases, interconnection costs, permit application, engineering and legal fees, and system impact studies. The incentives can also provide loan interest rate buy-downs.
MARKETING AND PRICES
The CVPS Cow Power tariff offers a retail market for the farm generators’ output. The gross electric output of farm generators is purchased under a wholesale purchase power agreement that will pay the farm 95 percent of the hourly Locational Marginal Price for power. This is roughly the regional wholesale price for power, which has averaged about $45/MWh over the last year. A 4-cent premium from CVPS retail customers who participate in the CVPS Cow Power rate will also be paid to the farmer for every kWh purchased by customers.
If not enough CVPS retail customers choose to participate, the renewable energy produced by the farm can be sold into the New England market, where other states have mandated portfolio standards, like Massachusetts and Connecticut. CVPS would market the Renewable Energy Certificates (RECs) produced by the Vermont farm in these markets and pass through the value to the farm. The market in Massachusetts and Connecticut has varied between $38 and $43/MWh over the last year for Class I or new renewable RECs.
Our first farm participant is the Blue Spruce Farm in Bridport, Vermont – operated by three brothers, Eugene, Earnest and Earl Audet and their families, and founded by their father, Norm, 45 years ago. Blue Spruce is installing a digester that can produce enough biogas from 1,500 head of cattle to fuel a 275 kW generator. This will produce enough energy to power 300 average Vermont homes. We also have some large commercial customers interested.
The farm generator at Blue Spruce should be operational by early October. CVPS customers started signing up for CVPS Cow Power September 1, 2004. The digester was designed by Stephen Dvorak of GHD Inc (www.ghdinc.net). The engine generator set is designed by Marcus Martin at Martin Machinery. (email@example.com).
Based in Rutland, Vermont, Dave Dunn is program manager for the Central Vermont Public Service Cow Power Tariff and Renewable Development Fund. A graduate of Cornell Univeristy’s Animal Science program, he has been with CVPS since 1992. For more information, he can be contacted via e-mail at firstname.lastname@example.org, or visit www.cvps.com/cowpower/index.shtml.