Press Release by Issuing Company Sunday, 24 April 2011
The rising price of crude oil, which means higher diesel fuel costs at planting and harvest time, is the chief concern of most Cornbelt farmers when it comes to energy. But for others, the high cost of propane to dry the wet 2009 corn crop was a concern that leads also to costs and availability of electric service. Not everyone has their own wind turbine that can provide enough electric current to operate a farmstead and bin site. That puts rural America on the bubble when it comes to future energy needs and rural electric coops may not be able to provide service quite as cheaply as they have traditionally. Just about everyone outside a metropolitan area may want to start thinking about the decisions that need to be made today so energy will be available tomorrow.
Numerous issues rise to the top in any debate over future energy needs of agriculture. And many of those are reflected in an extensive report issued April 20 by USDA’s Office of the Chief Economist. No, there are not any quick fixes, such as tractors and combines that plug into electrical outlets on the small wind turbine behind the machine shed, or solar panels for grain bins that provide sufficient energy to dry grain. For all practical purposes, the energy needs of a Cornbelt farming operation will come from a rural electric cooperative, and few are generating any power from renewable energy resources. However, it is those utilities which may have the most capability for tapping onto wind, solar or geothermal energy resources.
The study by a variety of economists and renewable energy specialists say Rural America is well suited for generating energy from renewable resources:
1) The Great Plains have both wind and biomass resources. None of the top 5 states with wind power turbines are in the Great Plains, which means that resource is underutilized. Biomass fuels are less dense than fossil fuels, more costly to transport, and have about one-third of the energy value. The Cornbelt is a major source for biomass, but only 2 Midwestern states are leaders in biomass power, indicating underutilization.
2) The Southwest has both solar and geothermal capabilities. Only 500 solar power generating installations are in operation, despite a wide potential geographic area of the Southwest that has not been utilized. The Earth’s temperature near the surface can be used for heating and cooling, but is insufficient to support geothermal power. Power must be generated by deep wells that heat water into steam to drive turbines.
3) Coastal areas have the potential for offshore wind farms, but siting issues have hindered their development in many regions.
However the problem is the lack of transmission lines to carry electricity from the point of generation to a distribution network that delivers electric service to rural customers, and the cost of the transmission lines will need to be factored into the cost paid by the customer. Unlike metropolitan areas that continue to grow, wiring a new subdivision does not take the financial resources required by rural electric cooperatives to supply power to rural areas where population trends are declining. Currently, rural electric coops serve 12% of all utility customers, and while they own only 6% of transmission lines, they own 42% of the distribution lines that connect homes and farms, supplying 5% of the electricity generated in the US. While they have 7 customers per mile of wire, investor owned utilities have 35 customers per mile.
The USDA study suggests that rural electric coops, which have tax exempt status, lose out on any tax-based incentives to invest in any new energy generating plants, unlike investor-owned utilities in metropolitan markets that could take advantage of such benefits. The financing challenges may have to rely on various federal and state loan and grant programs, but many of those programs have a limited scope that may prevent access to funds. And a rural electric coop interested in participating in such a program may not have the funds to pay for extensive engineering and other technical studies that would be required to qualify for consideration.
The report spotlights the Rural Electric Convenience Cooperative in Auburn, Illinois, which used a combination of state and federal grants to build a wind turbine that provides renewable energy for coop members. But to reduce the cost, it was located atop a 60 foot pile of tailings from a nearby coal mine, putting the turbine high enough to capture better wind speeds.
The authors of the study say it is possible for rural energy needs to be supplied by renewable energy resources; however, the potential is dependent upon the location of the utility, economic conditions, the cost of the technology, and government policies. Consequently, those who are in government policy-making roles will have to beware of the impact of their decisions on the capacity of rural electric cooperatives to take advantage of any programs that might be created, restricted, or ended.
Farms and other rural utility customers have a direct interest in the availability and cost of electric service, and one of the issues that may be influential on both is renewable energy. Currently, few rural coops are using renewable resources for energy, either because of technology cost, disadvantageous tax issues, problems with geography, or other negative factors. However, state and federal policy makers can have a great impact to spur development of renewable sources of energy for utilities serving rural customers.