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Rural Power: The Key to Sustainability

By John Farrell, ILSR
October 16, 2008 | 14 Comments

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The next twenty years could see up to US $1 trillion of investment in renewable energy in rural areas. Wind and solar power will be harnessed; and non-food crops will provide the fuel for a new generation of biofuels. But will rural areas reap the benefits of this massive investment or will communities merely observe the remaking of rural economies?

The conventional wisdom is that renewable resources should be developed en masse, because huge wind farms, large concentrating solar plants and big biorefineries drive down the cost of harnessing renewable power. Federal energy policy is premised on this hypothesis, but the evidence suggests otherwise. The benefits of building big are small; the benefits of building small, on the other hand, are quite large. The key to sustainable rural economic development and the renewable energy future of America is a series of modest sized, locally owned wind farms, solar plants and biofuel refineries.

For many years, rural economies have depended upon the land: agriculture and forestry, minerals and fossil fuel resources, beautiful landscapes. But not everyone can farm. Minerals and fossil fuels vary widely in price and are finite. Beautiful landscapes may remain pristine, but tourism is a fickle business.

Renewable energy development may be the catalyst for changing the rural economy. The boom in corn ethanol and soy biodiesel has provided many farmers with a market price above the cost of production for the first time in a generation. Large wind projects are providing steady lease payments to farmers who surrender a small portion of their land to the turbines.

These benefits are sustainable because the resource is limitless. Wind will blow no matter how many turbines harness its energy and the sun will shine on rooftops and fields whether they're bare or lined with solar panels. Simply put, the rural renewable resource is vast: the wind in just the Dakotas could supply 80 percent of U.S. electricity, the sun in Nevada could power the entire country. We could fuel half the nation's cars with biofuel made of non-food biomass.

This renewable resource can be harnessed in a centralized fashion or a decentralized one. But the rewards of harnessing it will mirror the style of development. A massive wind farm in the Dakotas and a big solar plant in Nevada may provide enough electricity to power the nation, but they will do so only with a massive investment in long-distance power transmission and use of eminent domain. The beneficiaries of this development will not be rural residents and farmers, but instead will be the same big investors that dominate existing electricity markets.

If our vision is grand — to get to 100 percent renewable power — some centralized power production is inevitable. But a decentralized network of modest wind farms and biorefineries can harness the vast renewable resource of rural areas and bring home the economic benefits as well. The success of homegrown renewable energy lies in two key findings. Very large renewable power plants and biorefineries cannot be locally owned past a certain size because the capital costs are beyond the community's wherewithal. Typically this occurs when the facilities have reached a scale such that the cost savings of "bigness" are minimal. But the rewards of local ownership are significant, delivering anywhere from 25 to 300 percent more economic impact to rural communities from identically sized absentee owned facilities.

Federal renewable energy policy tends to disregard these facts. Renewable power tax credits limit the opportunities for local ownership by requiring investors to have significant tax liability and hampering the ability of cooperatives, nonprofits, units of government and other aggregators of average people from becoming investors. Some incentives, such as accelerated depreciation, are only provided to commercial projects, with no comparable incentive for residential projects. The result is few locally owned projects, except in states with strong policies favoring such development. It's as though the federal nutrition programs were designed to fight hunger with McDonald's coupons - providing plenty of calories - when supporting home cooked meals would do a lot more for nutrition and the overall health of the nation.

There are policy alternatives that do much more for energy and economic security. Renewable energy payments (also known as feed-in tariffs) provide stable, long-term incentives without bias against local ownership. They also wouldn't expire regularly, as federal tax credits are threatening to do yet again.

The coming US $1 trillion investment in rural renewable energy will help secure America's energy future, but it also requires a choice. Will we build large, centralized power plants and biorefineries that bypass the rural communities whose resources we tap? Or will we change our policies to disperse the development of renewable energy and its financial benefits more broadly, securing our economic future, as well?

Readers can find more on confluence of rural economic development and renewable energy policy in ILSR's latest report: Rural Power: Community-Scaled Renewable Energy and Rural Economic Development.

John Farrell is a research associate at the Institute for Local Self-Reliance, where he examines the benefits of local ownership in renewable energy. His latest paper, Wind and Ethanol: Economies and Diseconomies of Scale, uncovers why bigger isn't necessarily better. He's a graduate of the University of Minnesota's Humphrey Institute of Public Affairs and currently resides in Minneapolis, Minnesota.

Bioenergy, Solar Energy, Wind Power

The information and views expressed in this article are those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on its Web site and other publications.

14 Reader Comments

Comment
1 of 14

mike-zagorsky-136998

October 16, 2008

"huge wind farms, large concentrating solar plants and big biorefineries drive down the cost of harnessing renewable power. Federal energy policy is premised on this hypothesis, but the evidence suggests otherwise. The benefits of building big are small; the benefits of building small, on the other hand, are quite large. "

[Source?] There should be some numbers cited here.

Also, isn't π an impotent factor in why bigger is better. If I double the radius of a wind turbine, Increase the area of the wind converted into energy by ~400%.

Comment
2 of 14

john-farrell-ilsr

October 16, 2008

Follow the link in the essay to see the paper with the evidence and the citations.

There's no question that a larger wind turbine increases the amount of wind energy captured, but there is a question whether a large, remote wind farm is as cost effective as dispersed, smaller wind farms closer to load.

Thanks for reading.

Comment
3 of 14

jb1010

October 17, 2008

With solar energy, bigger is not better. In fact, bigger is more expensive because it requires a grid to carry the energy back from the solar farm. If it is mounted on your roof there is no need for grid. Solar energy - God's grid.

Comment
4 of 14

eric-mair-159964

October 17, 2008

Hi John, a good piece, thanks for putting it out there. I agree that the future is interlinked self-rliant communities providing much of their own energy and food as well as a manufacturing element to facilitate trade with neighbouring communities.
The big spin-off is that local investment stays in the community instead of lining the pockets of "big business".
Other major benefits are:
Seriously reduced transportation costs (environmental and financial).
Local energy and food security and local jobs
The development of real communities in which people look out for each other.
These are the 3 pillars of sustainability - environment, finance and social responsibility.
Keep up the good work, John

Comment
5 of 14

frederick-gralenski-155732

October 17, 2008

"The boom in corn ethanol and soy diesel has provided many farmers with a market price..." The subsidies to farmers and ethanol distilleries has provided this ridiculous and feelgood boom. The rest of us poor schmucks have to finance these subsidies.

Comment
6 of 14

alvaro-zopatti-154714

October 17, 2008

Wonderful article. Here in Argentina we are not having this debate yet, so it is important for us to be aware of what is happening up there. Thank you.

Comment
7 of 14

james-peeples-159983

October 17, 2008

Excellent article as many of us who know ILSR well have come to appreciate. Folks like you and my old friend David Morris have done great work over the years to get renewable the serious attention they need. The results, so far, have been the beginnings of an economic renaissance in the rural Midwest and elsewhere.

I am concerned, however, that some technologies on the energy demand side are being overlooked, especially when it comes to biofuels, an industry in which I have 25 years of experience.

One of the most promising applications for biofuels is in the railroad sector which presently consumes something like 9 billion gallons of diesel fuel per year and is responsible for unacceptable levels of PM, NOx, and GHG emissions in urban areas.

My company, AHL-TECH (www.AHL-TECH.com) is developing the world's first, and greenest, ethanol-electric hybrid locomotive for all classes of service. Our technology involves the use of an engine that is designed to operate exclusively on "neat" (95vol%) bioethanol (preferably cellulosic, when & where available).

AHL-TECH would be interested in speaking with you, David, and ILSR to determine how we can raise the profile of this technology, which can be deployed within one year, which would open a huge U.S. market for bioethanol and other biofuels.

Please call me at (703) 256-4497 to discuss, or we would appreciate you passing this along to others in the organization.

Keep up the good work!

Comment
8 of 14

tracy-dahl-143498

October 17, 2008

The Danish model is very much along the lines suggested by the author. For the most part, the green revolution there was implemented on a small scale, but the cumulative effect has been enormous. Farmers formed cooperatives to share in the cost of erecting wind turbines, then shared in the revenue. In the case of wind power, it doesn't even take very much land out of agricultural production. It has worked exceedingly well, with Denmark now producing >20% of their grid power from wind energy. There is no reason why it couldn't work just as well with solar power in areas where that resource is abundant, although the dedicated land use is greater. Typically, the areas with the best solar resources are not very good for agriculture, such as the desert southwest. Since cattle ranching has largely become unprofitable, large western ranches are an obvious candidate to convert to "solar ranches".

This is a true model of successful capitalism, resulting in major environmental benefits. All it requires is for government to establish the ground rules to let it succeed.

Comment
9 of 14

SWM999

October 17, 2008

I'm sure that there is a great deal of merit to what Mr. Farrell has to say, but there also seems to be some incoherence from the perspective of energy policy and I would suggest that is because Mr. Farrell's primary concern appears to be rural development, rather than reducing carbon emmissions and / or foreign oil dependency. For example, he lauds policies that have led to a large expansion in ethanol and biodiesel made from food crops, despite the fact that most of the research I have seen suggests that these very expensive, politically motivated subsidy programs are yielding minimal carbon reduction benefits, while fueling a food crisis in much of the world. If that much money were being spent in to subsidize jobs of such dubious economic value in cities, I might well be calling it workfare.

He points out that big projects have problematic implications for the transmission grid, but then goes on to complain that rules prevent small communities from owning big projects, leaving the impression that his concerns about the grid might suddenly evaporate, if new rules made it easy for small communities to own very big projects. In fact, the grid is / should be a large concern, especially from a national security perspective, so we need large highly redundant grids from centralized sources and / or more distributed sources. However, we need to be clear that those concerns need to be addressed regardless of who owns the projects.

It is definitely important to level the playing field so the cards are not stacked against local ownership and distributed generation, and considerations such as national security and net carbon emissions must also be factored in. However, we also need to be careful (or at least very explicit) about layering on social engineering considerations that are peripheral to the primary targets of emission reductions and energy security.

Comment
10 of 14

jeff-almen-72411

October 17, 2008

John...Having spent 23 years working for the electric co-op industry and being raised on a farm very well served by a consumer-owned electric cooperative 100 miles from Minneapolis, I find it curious that this column and your August 2008 Rural Power white paper make no mention, either positive or negative - of the nation's electric cooperative industry. Co-op's serve 75 percent of the rural land mass, 40 million rural consumers, through more than 900 local distribution organizations, and today, they are working hard to balance green with affordability.

Affordability is top-of-mind for most rural consumers. Recent figures from the National Rural Electric Cooperative Association show that average rural incomes are 21% lower than the national income average.

In addition, rural consumers, through their consumer-owned co-ops, control most of rural America's power line assets and have a rich local expertise and broad national infrastructure when it comes to the pragmatic aspects bringing power to low density areas.

I mention these facts, because their is a gapping void in your enthusiasm for rural power and sustainability.

Comment
11 of 14

mary-saunders-73470

October 17, 2008

I applaud Jeff Almen's comments above.

Co-ops can be good options for neighborhoods in urban areas as well. The drawbacks of other forms of organization are painfully obvious. A neighborhood in Portland is already moving in this direction.

Pools of non-industry smart people haven't worried about scale and form of organization so much previously.

Policy-oriented people are looking for news from outlets like REW rather than to mass media.

MIT had an idea-generator earlier this week where anyone who participated was given a few minutes and free food for proposing ideas about sustainability projects for the campus.

Many young people have an appetite for transparency, which I believe the co-op form encourages. Some corporations are choosing to operate this way, and my hope is more will soon.

Many potential investors and customers want to know how the businesses work that they patronize. A visual analogy for that is the see-through tower case for a home computer. Some people paid extra for that as an option.

I like the term natural aggregators and the notion of absentee owners as opposed to on-site owners. These concepts are easy for lay people to understand when we lobby up and down for micro-grids and other forms of distributed energy.

Moving people to large energy plants already happens. Google does this.

Moving energy to the people needs emphasis to make change as quickly as we need. To expedite this, info has got to go first.

Thanks to REW for helping that along.

Comment
12 of 14

Erich

October 17, 2008

If "Affordability is top-of-mind for most rural consumers." , then look at Biomass pyrolysis systems.
Old hat technology that in it's new version has the only CARBON Negative fuel cycle by returning Biochar to the soils.

I've seen cost figures of $3M / MW , which compares nicely to solar-thermal's- $6M / MW, PV's -$8M / MW and is just twice the price of new coal power plant's at $1.5M / MW

Charles Mann ("1491")in the Sept. National Geographic has a wonderful soils article which places Terra Preta / Biochar soils center stage.
http://ngm.nationalgeographic.com/2008/09/soil/mann-text

It's what Mann hasn't covered that I thought should interest any writer as a follow up article.

The Biochar provisions by Sen.Ken Salazar in the 07 farm bill,

Dr, James Hansen's Global warming solutions paper and letter to the G-8 conference last month, and coming article in Science,
http://arxiv.org/ftp/arxiv/papers/0804/0804.1126.pdf

The many new university programs & field studies, in temperate soils

Glomalin's role in soil tilth & Terra Preta,

The International Biochar Initiative Conference Sept 8 in New Castle;
http://www.biochar-international.org/ibi2008conference/aboutibi2008conference.html

This data base will answer any questions;
http://terrapreta.bioenergylists.org/?q=node

Comment
13 of 14

fred-linn-151968

October 18, 2008

------------"[Source?] There should be some numbers cited here."-----------

Mike Z---why does everything have to have a "source"? People have their own ideas---they don't need a source to an original idea. That is why there are patents and copyrights.

The article says "benefits"-----not all benefits are defined by numbers.

Freedom is a benefit---but it is not defined by a number.

Security is a benefit---but it is not defined by a number.

Non-monopolistic ownership is a social benefit--but it is not defined by numbers.

Systems set up to serve people need numbers to define mechanical efficiency--but the most efficient system by numbers may NOT be the BEST system to serve the social, and environmental needs of the people it is being set up to serve.

THIS is basically the cause of most of the problems that the world is facing now. The system that we have is set up pretty much to exploit people to serve a few. Whatever we need to replace the current system should be set up to serve people---in a social, economic, environmental AND mechanical sense.

Comment
14 of 14

fred-linn-151968

October 19, 2008

------------"Frederick Gralenski

Date Posted:
October 17, 2008
"The boom in corn ethanol and soy diesel has provided many farmers with a market price..." The subsidies to farmers and ethanol distilleries has provided this ridiculous and feelgood boom. The rest of us poor schmucks have to finance these subsidies".----------

Corn is not only one commodity from which ethanol can be made. The ethanol produced from corn is only a by product of the manufacture of DDG, high protien animal feed. This is used as a replacement for soy meal in animal feeds because DDG from corn contains about the same amount of protien produced by the yeast in the fermentation process, and it is cheaper and more efficient to produce that soy beans because corn produces about 2-3 times the yields in bushels per acre that soy beans do. The ethanol must be removed from the DDG so that you don't have herds of drunk cattle or pigs on your hands.
Ethanol can also be produced in commercial quantities from cellulose and lignin plant materials(wood and straw---any plant cell wall material), using either thermal, chemical or enzymatic processes and has been for over 120 years.
Ethanol can also be made from sugar producing plants such as sugar cane, sugar beets, and agave cactus at about 8X the yield per acre of corn.

Biodiesel can be produced directly from saltwater algae at about 1000X(or more) the yield of corn or soy per acre and is in production now. Biodiesel can also be produced from cellulose and lignin using the Ficher-Tropsch process.
The more markets for farm products there are, the more dependable and secure farming is as a business---and the more dependable and secure your food supply is. If farmers can not farm profitably---there are NO farm products for anyone. Remember, the food you eat to stay alive is a biofuel also.

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