Two Different Approaches to Funding Farm-Based Biogas Projects in Wisconsin and California

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Case Study

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California and Wisconsin are the two leading dairy producing states in the nation. Both states are interested in developing biogas projects from livestock manure, but have targeted this renewable energy application differently. California has allocated nearly $10 million in incentives and buy-down grants to demonstrate the energy, economic, and environmental benefits of biogas systems and act as a catalyst for the development of further dairy biogas systems in the state. In contrast, Wisconsin has a more modest financial incentive and is relying more extensively on education and outreach and other regulatory mechanisms to encourage biogas facilities. Some of the differences between the two states' approaches can be attributed to different philosophies about the best way to deploy biogas technologies. However, the two states have distinctly different climates (which dictate different biogas system designs), dissimilar dairy sizes, disparate histories with biogas systems, and very different electricity markets. Consequently, conclusions regarding the appropriateness of either approach should take into account these differences. Innovative Features Despite numerous past technical failures, some states are beginning to take an increased interest in dairy biogas projects. The programs in Wisconsin and California can be classified as innovative if for no other reason than they focus on a technology that has not received much attention for a number of years. While these programs have not been in operation long, several specific features of each state's biogas activities may be of relevance:

  • The California Energy Commission's (CEC) approach is to demonstrate the energy, economic, and environmental benefits of biogas projects on California dairies by co-funding biogas projects on a representative set of dairies. The CEC engaged a dairy producers' trade association—Western United Resource Development, Inc. (WURD)—to administer a grant program, and empowered an advisory group to help select projects and provide assistance in program direction.
  • WURD put a list of qualified biogas vendors on its web site to help incentive applicants with project development.
  • Wisconsin has more modest financial incentives than California, but has held two biogas-related conferences, and is working with Wisconsin utilities to offer higher avoided cost rates and streamlined interconnection requirements for biogas facilities.

Results California is negotiating terms with projects selected in its first biogas solicitation, whereas Wisconsin's program is not even six months old. Therefore, results are relatively sparse.

  • WURD received over 30 applications for incentives and has approved nine projects for total funding of nearly $2.5 million. Because biogas system costs turned out to be higher than anticipated, the buy-down grant and production incentive levels were increased from the levels initially offered (from $1250/kW to $2000/kW). The nine selected projects are expected to amount to about 1.5 MW of total capacity.
  • In Wisconsin, one utility—Wisconsin Power & Light—received approval by the Wisconsin Public Service Commission to offer higher buy-back rates for up to 10 MW of biogas facilities. Another Wisconsin utility is considering a similar proposal. The system-benefits charge administrator has funded a couple of dairy biogas projects with limited grant monies, with more applications expected as the state's outreach and education activities continue. In July 2002, a digester gas developer announced an agreement with six Wisconsin farms to install and operate anaerobic digesters that will fuel up to 10 MW of generation capacity.


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