BioCycle April 2008, Vol. 49, No. 4, p. 44
Vermont dairy farmers work with a utility to diversify their incomes, using AD systems to generate biogas for electricity.
Molly Farrell Tucker

THROUGH its award-winning Cow Power program, Central Vermont Public Service (CVPS), a Vermont utility headquartered in the city of Rutland, is helping dairy farmers diversify their incomes by turning manure into electricity. The farmers process manure in anaerobic digesters to generate power, which CVPS customers voluntarily pay a premium to purchase. In addition to income from electricity sales, farmers are reaping other benefits from digesting the manure, including capturing surplus heat for their farms and hot water, using the fibers separated from manure for animal bedding and compost production, reducing pathogens and weed seeds, and improving air and water quality.
CVPS is Vermont’s largest utility, with 158,000 customers and 540 employees, formed in 1929 by the merger of eight small electric companies in central Vermont. CVPS Program Manager David Dunn was tasked to develop the idea for Cow Power in 2003, after the utility was directed by the Vermont Public Service Board (the state agency that oversees public utilities) to use insurance rebates (from the sale of a nuclear power plant) to promote renewable energy projects. “We began hearing steadily from customers that they wanted a completely renewable choice,” says Dunn. Through Cow Power, CVPS is able to offer that completely renewable choice, and demonstrate its commitment to the environment.
“We’ve heard over and over again from people in other states that local utilities are not interested in working with farms,” says Steve Costello, CVPS Director of Public Affairs. “Our farms are big customers to us, and important to the state and our other customers.” The number of dairy farms in Vermont has steadily decreased, from 10,000 in 1954 to 1,137 in January 2007, due in large part to the reality that milk prices for farmers have not kept up with inflation.
“As a result, it’s very difficult financially for dairy farmers to invest in new, innovative technologies,” says Dunn. In 2004, CVPS created the Renewable Development Fund, which has an independent board to oversee grants and other incentives to farms to become Cow Power producers. The utility began putting about 70 percent of each insurance rebate into the Fund.
Approximately 4,600 CVPS customers, including individuals, businesses and institutions, have voluntarily enrolled in the Cow Power program – approximately 3 percent of the total customer base. That puts it in the top 20 percent of the fastest-growing renewable energy programs in the country, according to the U.S. Department of Energy’s National Renewable Energy Laboratory. “What we’ve seen nationally is that there is often very little connection between the customer and the renewable energy project, ” says Dunn. “The renewable project is sometimes located out of state or even several states away. The Cow Power program is meaningful to our customers because it is helping farmers who are local neighbors.”
FOUR CENT/KWH PREMIUM
Customers sign up to pay an additional fee of four cents for every kilowatt hour (kWh) of electricity they buy through the voluntary Cow Power program, which goes to participating farms. This voluntary 4 cent/kWh tariff went into effect in October 2004, after CVPS received approval for the program from its officers and board of directors, the Public Service Board and the Vermont Department of Public Service. The tariff is also referred to as the attributes/premium: Customers pay to support this type of renewable energy generation. The money goes to the farmers so that they in turn are able to afford the environmental benefits/attributes, such as the renewable energy certificate, odor reduction, weed seed destruction and greenhouse gas reduction resulting from installing an anaerobic digestion system.
Customers can choose 25 percent, 50 percent or 100 percent of their electricity to be enrolled in the Cow Power program. Under the 100 percent plan, CVPS customers using 500 kWh of electricity per month pay an extra $20 each month, and under the 50 percent plan they pay an extra $10.
The first farm started generating Cow Power in January 2005. Farmers are paid 95 percent of the market price for the electricity they sell to CVPS. That rate varies depending on the New England energy market, but averaged approximately 6.5 cents per kWh over the last few years. In addition, farmers receive the 4-cent premium, bringing the average total to about 10.5 cents. Farmers are paid monthly for the electricity sales, and quarterly for the attributes/premium. CVPS signs a five-year contract with each farm, which can be renewed for five more years at the farm’s request.
PARTICIPATING FARMS
Four Vermont farms are currently producing electricity through the Cow Power program, and a dozen more are at various stages of investigation and planning. Each of the four farms is expected to produce between 1.2 and 3.2 million kWh of electricity per year when in full operation; a total of 5.8 million kWh was generated in 2007.
The four farms installed plug flow anaerobic digester systems designed by Stephen Dvorak, PE and manufactured by his company, GHD Inc. of Chilton, Wisconsin. The first to begin producing electricity was Blue Spruce Farm in Bridport, Vermont, owned by brothers Earnest, Earl and Eugene Audet, with 950 milking cows. The anaerobic digester system was installed in 2005 and produced 1.3 million kWh of electricity in 2007. Blue Spruce Farm started with one Caterpillar generator set; in 2006, it installed a second unit to better utilize the available gas production. The power generation operation is set up as a separate business, Audet’s Cow Power LLC.
The second farm to join the program (in November 2006) was Pleasant Valley Farm in Richford, owned by Mark and Amanda St. Pierre, with 1,500 milking cows. Although Pleasant Valley Farm is not in CVPS territory, the utility signed a contract to purchase the renewable energy attributes from the farm’s generation of electricity. The farm produced about 3.2 million kWh of electricity in 2007. The average CVPS residential customer uses 6,000 kWh of electricity a year, so the farm has the potential to provide electricity to over 500 homes.
Green Mountain Dairy Farm in Sheldon became a Cow Power producer in March, 2007. Owned by Brian and Bill Rowell, Green Mountain has 1,050 milking cows, and is estimated to produce 1.8 million kWh of electricity a year. The fourth, Montagne Farm, in St. Albans, began producing electricity in September 2007. It has 680 milking cows and is expected to produce 1.4 million kWh of electricity a year, adding a neighboring farm’s manure to the system.
The four farms produce just under 100 million pounds of milk annually. Dunn estimates that an average Vermont dairy cow also produces between 20 and 30 gallons of manure a day, which can generate enough electricity to light two 100-Watt light bulbs 24 hours a day. All of the manure on the four farms is run through their digesters, along with the milking equipment wash water. “If you add up all four farms, they are probably processing 45 million gallons of farm waste annually,” estimates Dunn.
Three new farms are expected to come online in 2008. Among them is Maxwell’s Neighborhood Farm in Coventry with 1,000 milking cows and the potential to produce about 1.4 million kWh of electricity a year.
Dunn explains that while anaerobic digester technology has been available for 20 years, dairy farmers were previously hesitant to invest in the systems, in part because of the serious financial challenges they already faced. “One challenge for farmers has been getting a fair price for the electricity, so they can pay off the loan to install the digester system,” he notes. “The additional four cents per kWh, plus significant grant support, help increase their revenue stream and reduce the simple payback to four to six years.”
Costello notes that unlike wind farms, which have sometimes drawn opposition in Vermont for aesthetic reasons, the digester and generator building fit in well with the rest of the farm buildings and agricultural scenery. “They aren’t obtrusive at all,” he says. “Most people wouldn’t even notice a Cow Power farm as looking any different from the other farms they pass.”
DIGESTION AND BENEFICIAL BY-PRODUCTS
Most freestall barns built in Vermont have automated manure collection equipment. Collected manure is stored in an outdoor pit until it can be spread on cropland. In Vermont, the typical manure storage pit is large enough to hold six months of waste from the farm, plus expected rainwater. At Cow Power farms, manure is pumped into one end of the anaerobic digester, a sealed, underground concrete tank. Retention time in the digester is 21 days. Digester capacity is based on the number of cows and the amount of extra capacity the farm requires for future growth.
The biogas, approximately 60 percent methane, is fed via steel pipe to a reciprocating gas engine that has been modified to use biogas as fuel. The size of each generator ranges from 80 to 330 kilowatts, depending on the farm’s size, digester size and expected biogas production. The energy is then fed onto the CVPS electrical system for distribution to customers.
Waste heat from the engine (about 180°F) is used to maintain the digester at 101°F, and for other uses on the farm, including space heating and heating water for the Clean in Place (CIP) milking equipment systems. “If there is too much heat and the storage temperature would rise above 180° F, the hot water is circulated to a radiator where the heat is exhausted to the outdoor air,” Dunn explains. The two farms capturing the heat are saving $10,000 to $15,000 annually in fossil fuel purchases. Dunn says the other farms are planning to make the necessary plumbing changes to take advantage of the excess heat.
After 21 days, the manure is pumped out of the digester, and separated into solid and liquid portions. Various manufacturers supply separators in Vermont, such as FAN (screw-type), Bauer (screw-type) and Houle (roller-type). The solids are dumped onto a conveyor belt and transported to a garage bay, where they can be used immediately for bedding, composting or sale.
“Sawdust for bedding is increasingly expensive, due to higher transportation costs and competition from wood pellet manufacturers for home heating,” says Costello. Over the past few years, prices have risen from about $1,200 to $2,000 or more per trailer load; farms with 1,000 cows go through more than a tractor trailer load of bedding each week, notes Dunn. He adds that the four Cow Power farms use about half of the solids for their own animal bedding. The remainder is composted and/or sold.
PROGRAM COSTS
The digester system and installation, and connecting to the CVPS electrical distribution system, cost each of the farms from $1.3 million to more than $2.5 million, depending on the number of cows, the size of the digester and generator, and the location of the farm relative to the three-phase electric distribution line. Although CVPS owns the primary electric distribution equipment up to the farm, the farms are responsible for paying to install any new poles and wires, as well as electric system upgrades that allow safe operation of the generation system. The cost of installing power poles and lines depends in large part on how far the farm is located from existing three-phase lines. “Most farms are typically at the end of single-phase lines in rural areas,” says Costello. “Because Cow Power farms are sending back so much energy onto the system, their lines typically have to be upgraded from single-phase power to three-phase power.” Some farms were located close to the three-phase, while others were as far as three miles away. Costs for interconnection ranged between $100,000 and $500,000.
At Green Mountain Dairy, CVPS installed 84 additional three-phase primary distribution poles over three and half miles of power line. “There is also a chance in the future that if someone gets connected along the line, that the new customer will pay a portion of the cost of the original installation, and that will go back to the farmer,” notes Costello.
Cow Power farmers need to obtain a certificate of public good, which is the result of a Section 248 permit application from the Vermont Public Service Board. “It takes generally six months and $10,000 to $15,000 in legal fees and testimony to get a Section 248 permit,” notes Dunn. Adds Costello: “The permitting process has been cumbersome for farmers, but the regulatory environment in Vermont has been positive.”
As much as 40 to 45 percent of total project costs at each farm were covered by grants from the CVPS Renewable Development Fund, the U.S. Department of Agriculture, the Vermont Agency of Agriculture, and Vermont’s Clean Energy Development Fund. The average CVPS Fund grant in the last round of funding was about $160,000. The farms also received grants through the U.S. Department of Agriculture’s Section 9006 program that subsidizes up to 25 percent of the costs of renewable energy systems on farms and ranches. The maximum Section 9006 grant is $500,000, which would be 25 percent of a $2 million project. “It’s a highly competitive and time-consuming national application process,” notes Costello. “The grant applications have to be reviewed by the National Renewable Energy Laboratory, and the lab goes through the applications with a fine tooth comb. But it’s hard to turn your back on these grants.”
Besides the grants, farms are investing significant amounts of their own funds, and borrowing to do so, says Costello. “But, most farms see positive cash flow from the projects from the get-go, and a four- to six-year payback on the loans they take out,” he explains. “Pleasant Valley Farm is producing about 300,000 kWh per month, so that is an extra $30,000 per month or more for the farm.”
COW POWER CUSTOMERS
Of the current 4,600 Cow Power customers, 5.2 percent are businesses that are voluntarily purchasing 17 percent of the energy in the program. The largest commercial customer is Green Mountain College of Poultney, which enrolled in the program in November 2006. Jack Brennan, Green Mountain’s President, says the amount of Cow Power the college purchases is equivalent to taking 758 cars off the street. Stark Mountain Woodworking in New Haven joined Cow Power in January 2007. The business uses more than 60,000 kWh of energy annually; enrollment will cost Stark Mountain about $2,400 extra per year.
Residential and small business customers can discontinue participation at any time. Large commercial businesses must agree to purchase Cow Power for a minimum of three years. “It’s important that there be some stability if you’re asking farms to make these major investments,” explains Costello. “Commercial customers tend to be big accounts, and because we are trying to ensure that there is a market for this energy and the environmental attributes, we didn’t want to have big customers dropping off and onto the program willy-nilly.”
He adds that it has become more difficult to attract new customers to sign up. “The low hanging fruit – the first customers – were the easiest to pick because they were the true believers,” he notes. “Some of our early customers were so excited that they asked for Cow Power brochures to bring to the local farmers’ market and to their neighbors and friends. We have also tried to keep the bulk of the money going into the CVPS Renewable Development Fund for farmers, so we’ve been frugal with our marketing dollars.”
Still, demand for Cow Power currently exceeds supply. Demand varies from month to month depending on the number of customers, customer usage, number of participating farms and farm production. In January 2008 the farms were supplying 47 percent of the voluntary customer demand. When demand exceeds the farms’ ability to supply, the four-cent premium is used to purchase renewable energy credits (RECs) on the regional market. If no RECs are available in the regional market for four cents per kWh or less, CVPS deposits the Cow Power payments into the CVPS Renewable Development Fund, which has been the case for the last 16 months.
Monies in the Renewable Development Fund are also helping subsidize installation of methane digesters on farms outside CVPS’s service area. “The Vermont Public Service Board in late 2007 approved a change that allows CVPS to provide grants within Vermont, even if the farm is outside our electric service territory,” says Costello. For example, the Boucher Family Farm in Highgate has been offered a $150,000 grant from the CVPS Fund to install a digester system to process crops grown on the farm, such as hay and corn, in addition to the manure from its 120 dairy cows. MWK Biogas of Germany will manufacture the digester system, which is expected to cost about $3.2 million.
Vermont Electric Cooperative, a utility in Johnson, will purchase the electricity generated by the Bouchers’ farm. “Vermont Electric Coop has not created a similar program, so they will buy the energy from the Boucher Farm,” he adds. “As we do with the farms in our territory, we will pay the farm the extra 4 cents per kWh premium for the renewable energy certificates and other environmental attributes associated with the generation.”
PLANS FOR THE FUTURE
CVPS hopes to have a dozen farms online by the end of 2010, and between 7,500 and 10,000 customers enrolled by that time. “One percent of CVPS’s energy sales are currently being produced by Cow Power, and we hope it will be five percent in that same time frame,” Costello says. Going beyond five percent, there will be 200 to 400 farms instead of two dozen. Dunn explains: “If we are successful at incorporating other organic substrates, such as fats, oils and grease, crop residues, food processing waste, etc., it may grow to 10 percent. If the technology evolves to be cost-effective for farms of 200 cows and above, we may approach 20 percent in the next 20 years.”
CVPS is focusing on finding new technology that will help smaller Vermont farms with 200 to 300 cows to become Cow Power producers. “It’s a challenge for the farmer to get the system up and running, and also run the day-to-day operations of the farm,” says Dunn. “It takes six to eight months to procure the equipment alone. We’re hoping to find someone who can come in and be the construction manager for these smaller farms, so the farmers can continue to do what they need to do to keep the farm running effectively.” He adds that it will also be a challenge for these smaller farms to maintain the digester equipment. “Larger farms have several employees who can share these responsibilities, but on smaller farms it’s the farmer’s job.” CVPS is exploring having an individual or business travel from farm to farm to do the routine maintenance and repairs.
Dunn expects that the smaller farms may use other types of digester systems. “The GHD system is designed for farms with 500 cows or more, but the average farm in Vermont has 120 cows,” says Dunn. “We’re now seeing more digester designers from outside the U.S. who are interested in providing their services in Vermont. There are thousands of on-farm digester systems in Europe, versus maybe 100 in the United States.”
Smaller farms could make the numbers work, Dunn says, by processing other organic wastes with the manure, such as food waste, crops, glycerin, distillage from ethanol and bakery waste. “Producers are looking for places to bring their wastes,” notes Dunn. “Adding these organic wastes will boost revenues for smaller farms because they will have greater electricity output.” Many organic wastes have greater biogas production potential than manure alone.
Sidebar
GREEN MOUNTAIN DAIRY
IN MARCH 2007, Green Mountain Dairy Farm in Sheldon, Vermont became the third farm to join the Cow Power program. “Digesting the manure is providing bedding for the herd, diversifying the farm’s income, reducing manure odors, improving water and air quality and reducing methane emissions to the atmosphere,” says Bill Rowell, who runs the farm with his brother Brian. He estimates the farm is saving $80,000 annually by using digested manure solids instead of sawdust for bedding. The farm now uses only 20 percent sawdust, mainly for bedded pack that new calves are born on.
The anaerobic digestion process also has improved air quality by significantly reducing the odor of the liquid manure. “If we roll the window down when we’re spreading manure, the neighbors have begun waving with all five fingers,” he says.
The total cost to install the anaerobic digestion system was about $2 million, with $1.3 million coming out of the Rowell’s pockets. Grant funds and the four-cent premium were “an economic vehicle to get the anaerobic digestion project off the ground,” he says. “However, the government needs to put more money into the program and make it viable for other farms. Even with the four-cent premium, it’s marginal for us. We’re still short about two cents a kilowatt hour to make it a profit center versus a break-even center.”
He predicts that Cow Power farmers may be paid more after CVPS renegotiates its long-term contracts with its two major power suppliers, Hydro Quebec and Vermont Yankee Nuclear Power Plant. “If their prices go up, so will ours,” he says, continuing that Cow Power farmers could also make more money by working with private companies that purchase carbon credits. “The real thing isn’t to get paid twice for producing energy, but to make it more viable so that we see more of these projects,” he notes.
Green Mountain Dairy’s 1,100 cows produce about 25,000 gallons of manure a day and a total of 10 million gallons a year. The farm originally expected to generate 210 to 225 kilowatts of electricity per hour (kWh), based upon that amount of manure. In fall 2007, the Vermont Public Service Board amended Green Mountain Dairy’s Certificate of Public Good to allow it to also process agricultural waste products. “We requested the amended certificate so as commodities come into focus we don’t have to wait for permission to add them,” explains Rowell. About 10,000 gallons of substrate whey (waste ice cream) are being delivered weekly from Ben and Jerry’s ice cream plants in Waterbury and St. Albans, Vermont. Adding this waste ice cream boosted the farm’s production of electricity to 300 kWh. “It’s a good deal for us and for Ben & Jerry’s because it reduces their expenses in getting rid of the whey,” says Rowell. “The dairy industry is huge in Vermont and we can’t afford to lose any companies that use milk in their products.” The farm is building a new barn to house another 600 heifers and calves, and the additional manure will further increase the farm’s power production.