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Power Surge

As global demand for energy continues to rise, renewable sources are playing an increasingly important role - environmentally and financially.

Apr/May 07
(page 2 of 2)
Farming for Fuel
Ethanol, once thought to be the least viable of renewable energy sources, is now taken very seriously. Currently, there are 106 ethanol plants operating around the United States, with a combined capacity of 5.1 billion gallons, according to Renewable Fuels Association. The interest in ethanol has been driven, in part, by cost. Today, according to Credit Suisse First Boston's energy group, it costs $2.60 to make a gallon of gasoline with crude oil priced at $70 per barrel. At that same price, it costs half that amount to produce a barrel of ethanol.

The U.S. farm community, particularly in the Midwest, will be a great beneficiary in the increased use and production of ethanol and other biofuels. "Many agriculture-related industries are benefiting from the increased revenue," says Ken Lemke, an economist with NPPD. "One of the things that we like about renewable energy, especially in Nebraska, is that it has had the ability to bring these additional revenues to smaller communities."

And the revenue is impressive. Corn, which is the basic ingredient in ethanol, has been historically set around $2.00-$2.50 per bushel since the 1970s. With the increased demand for ethanol, a bushel of corn could rise to more than $3.00 per bushel, putting an additional $9 billion in farmers' pockets. And biofuels and wind investment could create more than 250,000 jobs within the next 10 years, mostly in non-urban areas.

These revenues are not lost on the farming community, according to Hanson. "The farmer is starting to look at their land as not just something that creates crops for food," he says. "As more farmers become aware of the potential for [growing renewable energy], you'll start to see more diversification of farm income." Landis agrees. "You are going to see a rebirth of the smaller rural communities," he says. "There is an almost `dot-com' boom in half of Iowa's small towns because they are building ethanol plants all over the place."

The Future of Renewable Energy

For those companies thinking about switching part of their energy consumption to green power, Hanson recommends talking with companies that have already done so. "It doesn't hurt to have someone come in and help you think through some of your options in terms of available resources," he says. He also reminds companies that finding a renewable energy opportunity is all about location, location, location; and he advises asking questions: What is the energy demand for your facility? Is it power or heat? Do you need power in the daytime or the nighttime?

"You are more likely to consider a sun project in Arizona than in Minnesota," says Hanson. "You are more likely to consider a wind project in the Great Plains or Texas, rather than in Georgia. California is a great place because you have good solar incentives and high electricity rates."

According to Durbin, many think a multipronged approach will be the most viable way to provide the energy we will need in the future: "We are always going to have a need for coal-fired and nuclear power plants that provide baseload energy, so it's all about balance."

Hanson also sees companies not only consuming, but generating energy in the future. "They will install solar panels and generate electricity that they send back to the grid," he says. "And they'll make money doing it. That's where we are heading." In the end, he feels it is going to take the commitment of the government to move us along a truly viable renewable energy path. "We can solve our energy problems, but will we? Answering that will take a lot of political will."

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