A dramatic shift is taking place in agricultural operations as evidenced by a “growing” desire for energy efficiency and renewable sources of energy. The shift mirrors a national trend that is gaining momentum and shows no signs of retreating.
Successful agricultural operations depend on access to energy that has three vital qualities. Those qualities are:
Reliability – even a temporary loss of power can create significant loses in production (ie: the loss of refrigeration for products that are perishable).
Predictability – price fluctuations associated with agricultural products make predictable energy prices extremely important. A sudden increase in energy prices, at the same time crop prices drop, can be financially devastating.
Affordability – because energy makes up a large percentage of the cost associated with agriculture, energy costs must be kept low. Costs associated with energy represent a significant barrier to farm production expansion (bringing power to a remote location can be extremely expensive).
The desire for reliable, predictable and affordable energy has Michigan farmers joining a national trend that was recently described in detail by Laura Campbell, Manager of the Agricultural Ecology Department at Michigan Farm Bureau.
Ms. Campbell was speaking at the Powering Michigan Agriculture with Renewable Energy event held in Lansing Michigan on March 10th. Citing information from the U.S. Energy Information Administration (EIA) Campbell noted that 80% of U.S. electric generating capacity that was retired in 2015 was coal-based. Approximately 60% of the energy used to replace that lost generating capacity will be acquired from renewable sources! As the EIA noted – that is a first!
If actual additions ultimately reflect these plans, 2016 will be the first year in which utility-scale solar additions exceed additions from any other single energy source. U.S. Energy Information Administration
The Michigan Farm Bureau represents an overwhelming majority of the farms within the state. Ms. Campbell noted the membership’s heightened awareness of energy efficiency and their desire to understand the benefits of adding renewable sources of energy to their operations. A key dynamic is that while grid based electricity prices are increasing, the cost of renewable energy is dropping.
The highlight of the event was a panel discussion by owners of a variety of agricultural businesses. In turn they described their energy efficiency strategies, the technologies they installed, the hurdles that had to be overcome, and the benefits of adding renewable sources of energy. The engaged audience provided a steady stream of questions and showed a strong desire to learn more.
Curt Monhart EAGs V.P. participated in the renewable energy event that was sponsored in part by Michigan State University. Monhart addressed the audience’s desire to learn as he noted:
“Because energy technology is changing so rapidly, education is now becoming the most important first step for any upgrade. Renewable technology, which may not have been cost effective two years ago, has most likely dropped in price rather dramatically. Most farmers are too busy with their business to keep up with all that is now possible through energy efficiency and renewable energy.”
Even though the cost of purchasing and installing energy efficient and renewable energy technologies has dropped, a sizable barrier against acquiring it still remains.
Agricultural operations, with a desire to protect their cash flow, often find it difficult to justify the up-front cost of converting to energy efficient technology or adding renewable energy. Various speakers described a variety of financial strategies that help overcome that barrier. These strategies are needed to make energy efficiency affordable by reducing the issue of the up-front expense. A short list of the strategies that help overcome the initial expense are: utility company rebates, tax incentives, Property Assessed Clean Energy (PACE) and the Rural Energy for America program (REAP).
Agricultural operations are taking a serious look at the reduction of wasted energy and the addition of on-site renewable sources of energy. The desire is to assure the profitability, and long term sustainability, of the business. The common goal appears to be to minimize the effect of the variable cost of energy along with a desire for freedom from the steadily rising cost of grid-based power.
The success of any farming operation is directly related to the availability and affordability of a sufficient supply of energy. Agriculture is joining the national trend of moving away from the traditional dependence on carbon sourced energy by first improving energy efficiency, and then adopting on-site renewable sources of energy (geothermal, solar and wind). The market forces in energy, which formerly held farmers captive, can now be replaced with a sense of freedom as energy is created on-site.
The demand for energy on farms continues to increase. If overall food prices are going to be kept affordable, controlling energy costs will be a key factor. Agricultural operators, concerned about the rising costs of energy, will need to stay educated on all that is now possible with energy efficiency and renewable, on-site sources of energy.
Photo credit: Cathie Hartung, Harvest Energy Solutions
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Interested in becoming more Energy Efficient? The Energy Alliance Group of Michigan has compiled a free report entitled Ten Questions to Ask Before an Energy Efficiency Upgrade available for free HERE!