September 16, 2009 | General

Small-Scale Biofuels Production

BioCycle September 2009, Vol. 50, No. 9, p. 41
Greenhouse operation, grass seed cooperative and small-scale ethanol plant manufacturer make headway in achieving energy independence.
Dan Lemke

INTEREST in small-scale biofuels production is gaining momentum around the country, including Minnesota, already a hotbed for alternative fuel production. The North Star State processes more than 300 million bushels of corn into nearly a billion gallons of ethanol each year. There is also more than 60 million gallons of biodiesel production capacity in Minnesota. While the majority of that production is in large-scale facilities, the number of smaller scale operations is growing.
One example is Alternative Energy Solutions. After years of growing vegetables and flowers for family and friends on their Winona County farm, Ed and Joyce Kreidermacher took the plunge in 1985 and built a full-fledged greenhouse on their land where they have a hog farm in the bluff country of Southeastern Minnesota near the small town of Altura. They raised a wide variety of plants and for a while even marketed some of their pork products through their retail store.
Today the Pork and Plants operation covers about 1.3 acres, with 65,000 square feet of covered greenhouse producing thousand of perennial and annual plants as well as vegetables. Everything sold in the Pork and Plants greenhouse is grown on-site.
The newest innovation to the family operation is the construction of an on-site grinding and pelleting operation run by brothers Eric and Paul Kreidermacher. This affiliated business, called Alternative Energy Solutions, produces biomass pellets from agricultural biomass, ag processing leftovers, native grasses and even wood waste. Material is sourced from their own operations as well as neighboring farms. The pellets are burned in on-farm boilers to heat water that is pumped through the greenhouse to provide heat. “When people think of biofuels most of them think of big operations like ethanol plants,” Eric Kreidermacher says. “But this is another example of what can be done.”
Using products like corn stalks, oat screenings, soybean straw and prairie grasses, Alternative Energy Solutions is helping the Pork and Plants operation cut their energy costs by about half using alternative biomass fuels. Powering the greenhouse operation consumes about 20,000 bushels of corn or 500 to 600 tons of pellets, Eric says. Once up to full capacity, the Kreidermachers’ two pellet mills could produce significantly more fuel than Pork and Plants will use, making biomass pellets available for others.
“This is a great example of producer-owned energy because they are using a renewable biomass product, some that they produce themselves, and are converting it to heat for the greenhouse operation,” says Alan Doering, Senior Associate Scientist for Coproducts at Minnesota’s Agricultural Utilization Research Institute (AURI). “What they are doing is truly innovative.”


Northern Excellence Growers, a 29-member cooperative formed in 2002, contracts for 18,000 acres of Kentuckybluegrass, ryegrass, timothy and other specialty grass seeds. The Northern Excellence processing plant in the extreme northern Minnesota town of Williams cleans and bags about 8 million pounds of seed annually.
The cleaning and processing also generates about 2 million pounds of grass seed chaff and screenings. Instead of paying $10,000 to $15,000 a year for disposal, Northern Excellence is installing a 100 kWh system to gasify chaff and straw and make electricity. The gasifier will furnish energy to run the seed cleaning plant and save the company at least $60,000 a year in electricity and waste disposal costs, according to Brent Benike, General Manager of Northern Excellence Seed. “When you farm in Northern Minnesota your whole life, you have no choice but to be innovative,” he says. “You have to be able to adapt either through processing or how you use your crops.”
Adds Michael Sparby, AURI project director: “Northern Excellence has a history of being innovative, first by identifying new grasses to produce by looking at varieties such as perennial ryegrass, Then they had the willingness as a young cooperative to take a look at utilizing waste streams to reduce their energy loads.” The Northern Excellence gasifier is expected to be test fired in October 2009.

Developing smaller-scale ethanol plants comes with challenges, including regulatory and financial. “There are fairly serious regulations that producers have to be aware of,” says Doug Root, AURI renewable fuels scientist. Permits are required by the Clean Air and Clean Water Acts, the Alcohol and Tobacco Tax and Trade Bureau (because ethanol is alcohol), CERCLA (Comprehensive Environmental Response Compensation and Liability Act) and the Community Right to Know Act. In Minnesota, an air permit is also required.
AURI commissioned a study on the financial viability of plants that produce up to 2 million gallons of ethanol annually – small compared to commercial plants that average 50 million gallons per year. Factors analyzed included ethanol yields and revenues, and the costs of feedstock, shipping, labor, energy, project development, financing, engineering, construction, start-up and working capital. Ten year financial forecasts for 100,000-gallon, 1-million and 2-million gallon per-year ethanol facilities were produced. “All three of the small-scale ethanol scenarios yield negative financial results,” the study stated. “This is due to the current and forecasted low ethanol prices that make profits challenging for existing large-scale plants with no debt.”
The less than favorable economic forecast hasn’t prevented operations from proceeding. A southern Minnesota company, Easy Energy Systems, introduced three modular ethanol systems in December 2007 that are portable. “Rather than hauling feedstock hundreds of miles to an ethanol facility, you take the system to the feedstock,” says Tom Gallagher, Easy Energy sales manager. The smallest system, with eight modules, produces 500,000 gallons/year of ethanol; the largest produces 2 million gallons. “Our intention is to build the modules in our factory and ship them to customers anywhere in the world,” Gallagher says.
Easy Energy, founded three years ago, is an affiliate of Easy Automation Inc, the largest U.S. provider of software and automation systems to the feedmill industry. “We are just now promoting commercial (ethanol) units … As we’ve developed, we intentionally stayed under the radar,” he adds. Most interest has come from “private individuals, large farmers and farm cooperatives with convenience stores that have gasoline pumps. If they produce their own ethanol, and if they are blending for the convenience store, they get the national blenders credit.”
Easy Energy is trying dozens of prospective feedstocks, such as sugar cane, sweet sorghum and waste paper, as well as corn. “Obviously $7 corn doesn’t work; you can only make corn work right now if you have a feedlot next door and can feed the distiller’s grains (ethanol by-product) to cows,” explains Gallagher. “If you’re using a feedstock that you’re paying for and then paying to get rid of the by-product, that’s tough. The idea is to take it to the location of the feedstock.”
Interest in small-scale biofuels production isn’t likely to disappear as long as fuel prices fluctuate and businesses as well as individuals seek to have more control over their energy costs. It also stands to reason that as technologies develop, new opportunities will arise to develop local sources of energy to power the future.

Dan Lemke is Communications Director for the Agricultural Utilization Research Institute, a Minnesota nonprofit corporation that works to create new uses for agricultural products, including the development of alternative energy.

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