Nebraska’s current conditions and forecast even before Wednesday’s blizzard warnings and prospects of a foot or more of snow have slowed harvest for many of the state’s farmers. Monday’s 18% harvest completion rate statewide compared poorly with 42% for the same date last year and a 40% average.
The slowed harvest is more than a matter of inconvenience. That’s a $5 billion asset ou t there exposed to the elements, said Don Hutchens of the Nebraska Corn Board. In order to get to a 15% moisture level, considered safe for long-term storage, farmers must either wait for the crop to dry down in the field or turn on their bin dryers and burn expensive propane to get the job done. The other option is to take it to grain elevators, where their prices are typically docked 5 cents a bushel for every percentage point above the storage threshold.
Under more normal circumstances, farmers could take some comfort from the uplifting effect the poor harvest weather was having on prices. But the price of corn targeted for December delivery dropped 26 cents a bushel Wednesday on the Chicago Board of Trade. Soybeans were down 49 cents. McCook farmer Peters said the weather calamities that could have been expected to move prices in major ways in previous years don’t seem to matter much anymore.
Texas oilman-turned-wind power advocate T. Boone Pickens brought his alternative energy campaign to Lincoln Tuesday. (Editor’s note: Pickens has invested $10 billion in his own wind power project in the Texas panhandle.) Nebraska ranks sixth nationally in wind potential but only 20th in using wind to generate electricity. Gov. Dave Heineman and others involved in the development of wind energy said Nebraska is beginning to overcome some of the hurdles that have kept it out of the top 10.
In fact, the governor said Nebraska could climb into the top 10 within the next decade — an ambitious goal that would require more than a seven-fold increase in the state’s wind-generating capacity. Representatives from the state’s two largest utilities, OPPD and the Nebraska Public Power District, said there are substantial obstacles to wind power — including the fact that the ideal sites for wind farms are in north-central and western areas of Nebraska, far from the state’s population centers.
Also, they said, the need for electricity peaks in summer, when winds are calmest in Nebraska. There also are reliability concerns — NPPD’s 60 megawatt wind farm at Ainsworth, which went online in 2005, has been troubled by cracked blades and turbine problems in recent months. Other obstacles are building enough transmission lines to transfer electricity to customers and adapting the nation’s energy grid to handle the unstable stream of power generated by the wind.
Not everyone likes the big transmission lines, the represenatives noted, and more and more people are beginning to dislike the wind towers. Because Nebraska’s utilities are publicly owned and pay no taxes, federal tax incentives provided to develop wind farms are not available to them. Other federal incentive programs for public utilities are underfunded, those interviewed said. Under the Community Based Energy Act passed by the Nebraska Legislature last spring, private utility firms may develop wind farms with local farmers and farm groups and qualify for tax credits.
Driving south out of the agricultural town of Ainsworth, Neb., you can’t miss its newest crop: wind turbines, three dozen of them, with steel stalks 230 feet high and petal-like blades 131 feet long, sprouting improbably from the sand hills of north-central Nebraska, beside ruminating cattle. Six renewable energy technicians share in tending this strange garden, including Jered Saar and Devin Painter, neither of whom could be described as chatty.
Wearing sunglasses and hard hats, they drive the undulating hills in a white pickup truck emblazoned with the name of their employer, the Nebraska Public Power District, often stopping to check a turbine’s control panel, or to climb dozens of feet up its spine to the gear box. Years ago, after setting up wind monitors at nine spots around the state, energy officials discovered that Ainsworth and its surrounding areas had wonderful prevailing winds flowing down from Canada and up from Mexico: winds that carried the Goldilocks charm of being neither too hard nor too soft, but just right.
By the fall of 2005, the $81.3 million project was complete. Nebraska Public created a viewing area near the main road, where visitors could consider the larger meaning of these gargantuan, color-changing flowers of steel. They soon became a source of state pride, as did the very wind. In its first two years of operation, the Ainsworth wind project has sent enough energy to a national grid to power about 19,000 homes a year — or about 1% of the state’s needs, which are satisfied mostly by coal-burning and nuclear plants. NPPD hopes that within a decade or so, 10% of its energy will be produced by wind.
Sid Salzman counts himself among the lucky ones. After spending more than a year studying wind patterns, NPPD offered the group a 20-year contract to erect 36 wind turbines across about 11,000 acres, the majority of which Salzman owns. The Ainsworth Wind Energy Facility, which began operation in September 2005, has been a boon for the north-central Nebraska community, Salzman said.
The turbines have sparked tourism interest, providing some business for local hotels and restaurants. On an average year, the facility produces enough to power about 19,000 homes. Turbine towers are also rising on a wind farm under construction near Bloomfield, Neb. Rich Walters, general manager of KBR Rural Public Power District, said the wind facility has also presented a new set of challenges. “The problem is, as a utility person, we want to supply power all the time and our customers demand it,” Walters said.
“With wind, you don’t have that.” In an eight-minute span on a normal July morning, production dipped from 30.4 megawatts to 12 at the Ainsworth site, according to NPPD. The fickle nature of wind coupled with the inability to store its energy for later use limits it as a source of energy, Walters said. “(P)ower providers better have another coal plant sitting around somewhere that they can turn off and on pretty quick.”
The Nebraska Public Power District plans to add more than 400 megawatts of wind power — roughly equal to a mid-sized coal-fired plant — to its energy portfolio over the coming decade. NPPD, the state’s largest electric utility, would not own the turbines but would work with private developers on a number of projects, said Dave Rich, the utility’s renewable energy development manager.
The investment in wind energy could exceed $1 billion, Rich said, and would take place over the next 12 years. NPPD wants to add the wind turbines as part of a long-term goal to generate 10% of its electricity from renewable energy resources, such as wind, solar, biomass and methane.
These days corn-based ethanol is being blamed for worldwide food shortages, inflation and environmental problems. But Nebraska Ethanol Board officials say much of the criticisms of ethanol are based on flawed information, and the industry needs to do more to defend itself. Nebraska Ethanol Board officials meeting Friday in Kearney said their industry had been slow to defend itself.
“The ethanol industry, frankly, didn’t do as good a job being proactive,” said Ethanol Board Administrator Todd Sneller. The federal Renewable Fuels Standard is being challenged on several fronts, plus tax incentives and related tariffs are set to expire at the end of 2010. Nebraska ranks second nationally in ethanol production. The state’s Ethanol Board says Nebraska’s 21 ethanol plants annually produce more than 1.3 billion gallons of ethanol, using nearly a half billion bushels of corn.
As corn prices soar near the $8 mark, owners and managers at Nebraska’s 21 ethanol plants are focusing on risk management techniques with their ultimate success hinging on the ability to anticipate the cyclical nature of the commodities business. Most of the companies already up and running in the state “are on pretty solid ground” in that respect, according to Todd Sneller, administrator of the Nebraska Ethanol Board.
These days, however, there is little room for error. “While we hear a lot about $7 and $8 corn, I suspect most Nebraska plants are not operating with costs at that level,” Sneller said. “Many of the managers I’ve talked to have been through these cycles before and have been managing risk and building up capital reserves. Because of that foresight they will be better able to weather these challenging economic times.” Debt is another significant variable in the health of individual plants, Sneller noted. Many of Nebraska’s plants have been in operation for a period of time, allowing them to amortize much of that debt.
As high feed costs put the financial sting on livestock producers, the National Cattlemen’s Beef Association (NCBA) is supporting a petition filed by the State of Texas to reduce federal mandates on the production of grain-based fuels. According to NCBA, the petition requests that the EPA use its statutory authority to reduce the Renewable Fuels Standard (RFS) mandate for 2008 by 50% — trimming the mandate to 4.5 billion gallons of feed grain-based ethanol, from the current 9 billion gallons.
This mandate is scheduled to expand to 15 billion gallons by 2015. But Don Hutchens, executive director of the Nebraska Corn Board, disputes that the high cost of corn is due to ethanol. Any impact a waiver would have on Nebraska’s ethanol industry would depend on the degree of the waiver. “The biggest impact on the ethanol industry today obviously is the price of their inputs, the cost of their operation and what they recover from the products that they can sell,” Hutchens said. The American Farm Bureau Federation said that the request for exemption from the Renewable Fuels Standard should be denied.
AFBF said that ethanol contributed $46.7 billion to the nation’s gross domestic product and created 238,541 new jobs in 2007. The RFS target of 36 billion gallons, according to the Farm Bureau, can only be achieved if EPA’s implementation ensures continued incentives for investment in ethanol plants — plants that may be utilizing corn ethanol now but that have the capability to produce biomass-based and cellulosic ethanol in the future. In 2007, 25% of the record corn crop was processed to produce ethanol.
Nebraska’s largest wind farm must be generating electricity by the end of the year if private developers are to be assured of receiving federal production tax credits, a Nebraska Public Power District spokesman says. The tax credits are scheduled to expire at the end of the year unless Congress renews legislation that provides incentives to wind energy developers, NPPD’s Mark Becker said.
Developers can write off their taxes about 2 cents per kilowatt hour, which, in turn, keeps electrical rates down, Becker said. NPPD announced last month that it has entered into a 20-year contract to purchase wind-generated power from private development partners Midwest Energy and Elkhorn Ridge Wind.
The partnership plans to build an 80 megawatt wind farm that will produce enough energy to power 25,000 residences per year. Becker said Nebraska residents won’t see an immediate reduction in electricity rates from the wind farms even though wind, unlike coal, is free. “Wind energy generation is very sporadic and we have maintenance issues,” Becker said, adding that mechanical problems with turbines are common.
Nebraska lawmakers have passed a bill that could make it harder for thieves to sell stolen metal to scrap dealers. The Legislature on Monday gave final-round approval to a bill (LB766) that supporters also believe could make it easier to catch thieves. The bill from Senator Abbie Cornett of Bellevue would require those who sell metal to scrap dealers provide their names, fingerprints and driver’s license numbers. Manufacturers and commercial vendors would be exempt. The bill was prompted by thefts of items by thieves who want to cash in on the high price of scrap metal.