Startup Profile: Manure Digester Co. Sustains Farmers by Providing Alternate Revenue Source
September 20, 2011 | Jenny Frech
Skagit County, Washington is home to thousands of dairy cows, and their manure. In the manure, Kevin and Daryl Maas see the preservation of their community’s rural heritage. Two manure digesters built by their company, Farm Power Northwest, transform the waste and potential pollutant into a clean, renewable energy source.
“Farming is moving in the wrong direction” from small family farms to large corporate operations, says Kevin Maas. Today milk travels thousands of miles to its destination. Farm Power NW aims to “keep farms small, and stop the trend.”
Maas earned his MBA to learn how to connect farmers with renewable energy opportunities. As part of his coursework, he created the business plan that would establish Farm Power NW. The company’s first manure digester took more than two years from the planning phase until the first energy was produced.
The concept is simple. As manure decomposes, it creates methane gas. The methane gas, if captured, can be burned and used as fuel to power generators, or it can be scrubbed and used as natural gas.
Manure and food waste enter an anaerobic (oxygen-free) chamber where bacteria and 100 degree heat are used to simulate a cow’s digestive tract. Methane gas is produced, captured and burned. Unlike most renewable energy sources, digesters run 24/7 and are not dependent on the weather.
About 10% of waste material in the digesters comes from local chicken, seafood, and fruit processors, but accounts for 30-50% of the energy generated by the digesters. Initially the digesters ran at about 35% fuel efficiency, which is similar to coal and nuclear plants.
Today, Farm Power NW estimates that its digesters run at about 75% efficiency.
Each digester used by the company is large enough to process the manure of 1,500 cows. This in turn provides 750 Kilowatts, enough energy to power 500 homes. The reduction of greenhouse gasses is equivalent to taking several thousand cars off of the road. Neighbors also appreciate that the odor from farms and fields is reduced.
The digester process also creates several bi-products that benefit the farmers including: a clean bedding source which saves $1,300 per month in bedding costs; a pathogen and weed free source of liquid fertilizer; and a simplified manure management system, which reduces fly populations on farms.
Another added bonus is waste heat. Generally lost into the atmosphere, this waste heat can be stored in water and pumped through buildings as a heat source. One farm plans to use it as a main source of heat for their greenhouse, saving them $40,000 per year in heating costs.
Manure digesters have been used for many years to provide power for individual farms. Kevin and Daryl envision this technology being used on a large scale to provide renewable energy to power companies.
Business Model and Funding
Farm Power NW is a third party energy provider. They find farmers willing to provide manure, investors willing to invest in a renewable energy source, and then build relationships with the utilities that purchase the generated power.
Farm Power NW is funded by state and federal grants, bank loans, and small loans from community investors. Farm Power NW has paid small dividends to its investors, but most of the money is invested back into the company.
The digesters cost $3-5 million to build and tie into existing infrastructure. Each digester will take about ten years to pay off. Puget Sound Energy purchases the energy at the $0.08 cents per kwh. Since Farm Power NW is carbon negative, other companies can purchase carbon credits to offset their own carbon output.
There is no cost to the farmers that sign on for these projects, just a commitment to provide manure. Farm Power NW provides the infrastructure needed. “We just want to get these built,” says Maas, “with no barriers to the farmer.”
A Need for Long Term Investment in Sustainable Agriculture and Digesters
“I see that society overall needs a tremendous amount of long term investment. Investors want to invest [in green technologies],” says Maas. “But it needs to be easier for people to bring together farmers and investors. Younger farmers need support.”
“[Opportunities] are out there if you’re committed to the long term; if it’s clear that you’re building something twenty years out. It’s something that can be done. We need a new view of business building.“
“If digesters are not supported by the heart of the sustainability movement, it will be one more thing that limits sustainable agriculture,” Maas cautions. The sustainable agriculture movement is “distracting ourselves with iPhone apps and websites. Farmers are getting lost in the noise.”
Maas says the real route to sustainable farming is providing opportunities for alternate revenue on the farm, and renewable energy from waste products is one effective way of utilizing an untapped income source.
Future of Farm Power NW
Two more digesters are being planned for the Pacific Northwest region. Other areas of the country are also being considered.
“We would like to expand. But, we have to be careful to not be too aggressive, and do what we promise. All of the projects we announced, we finished,” says Maas.
Maas has heard from farmers that want this technology, but have been disappointed by broken promises from other providers. Third party providers often make big plans, get farmers on board, make announcements, and then lack the know-how to make it happen, says Maas. Then, the third party energy provider disappears.
Establishing a good relationship with a utility company is essential. The utility company determines whether or not this type of project is feasible. If a utility company is unwilling to work with small-scale energy providers, then this type of project is impossible. Maas says, “even when you have a great, cooperative utility to work with, the process is complicated.”
Part of the early success of Farm Power NW is its familiarity and relationships with local farmers, utilities, and energy regulations. There have been obstacles, according to Maas, “but none so big that they couldn’t be overcome.”