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Digester Offers Green for Environment, Investors by Cookson Beecher Capital Press, October 3, 2009

Manure digester offers dairies a 'second cash crop,' governor says

The ribbon-cutting for Farm Power's new anaerobic manure digester celebrated a proven green-power technology that proponents say can help dairy farms survive.

During the Western Washington event, the crowd of about 250, many of them farmers, fell silent in anticipation as Gov. Chris Gregoire stroked some keys on a laptop computer to start the digester.

Within moments, the digester roared into action to the cheers of the crowd.

"The idea of having a second cash crop -- and this is what it is, a second cash crop -- is exactly what it's going to take to make it possible for these dairy farmers to survive these tough economic times and into the future," Gregoire told the crowd.

Built by Ferndale, Wash.-based Andgar Corp., the digester turns manure into methane, which fuels an electric generator that produces up to 750 kilowatts of energy -- enough electricity to power 500 homes.

The electricity is sold to Puget Sound Energy for 8 cents per kilowatt-hour.

What sets Farm Power's project apart from other manure digesters is its business model, which relies on manure from several farms instead of just one large farm, thus allowing smaller dairies to get into the game.

Founded by brothers Kevin Maas, 33, and Daryl Maas, 31, in 2007, Farm Power funded and operates this new manure digester on 3 acres leased from Skagit County dairy farmer Garritt Kuipers Jr.

Under this arrangement with Kuipers dairy and the nearby VanderKooy dairy, both dairies will supply the digester with manure.

In exchange, the dairies will be able to use the nutrient-rich, environmentally friendly liquid fertilizer extracted from the manure on their fields. Because it is quick acting, they expect to get better crop yields.

They'll also be able to use a sterile fiber by-product for bedding -- a savings in bedding costs of about $150,000 per year between the two dairies.

The digester cost $3.5 million, which Farm Power expects to be able to pay off in six or seven years.

Dairyman Eric VanderKooy told the crowd that his family decided to be part of the project because it wanted "to be proactive on environmental issues today."

"This will make us more sustainable," he said.

In Washington state, manure digesters that generate electricity must get a permit from the Northwest Clean Air Agency. Participating dairies should have state-approved farm plans. And digesters that accept approved agricultural waste must also get a solid-waste exemption from the state.

Funding for Farm Power's digester came from a $500,000 grant from the state, a $500,000 grant from the USD, a $2.14 million loan from Shorebank Pacific backed by USDA loan guarantees and $400,000 in cash from investors.

Farm Power's digester also benefited from the federal stimulus package's Renewable Energy Investment Tax Credit. If Farm Power gives up all other federal tax credits, it can get 30 percent of the construction cost back as either a tax credit or cash.

It also got a six-year exemption from property taxes.

Kevin Maas said the project will produce an average of $500,000 cash flow from operations per year, most of which will go into servicing the debt. Even with no incentives, the project is expected to break even financially.

To watch a video of the digester and scenes from the ribbon-cutting, go to Mountain States Transmission Intertie Project: link.brightcove.com/services/player/bcpid28907200001?bclid=10100856001&bctid=43182016001