In this issue
		Energy Services Bulletin home page
		Utility contest shows how energy-efficiency improvements pay
		California updates building standards to cut energy use
		Wyrulec loan program grows local business
		Efficient lighting takes off at California airports
		Nebraska's first digester produces energy, controls hog odor
		Granite Falls, Minn., offers customers first conservation incentive
		Utility's biodiesel fleet promotes New Mexico clean energy goal
		Arizona sun powers sustainable farming experiment
		Western governors map out region's renewable energy future
		Heating calculator helps utility promote electric heat systems
		Topics from the Power Line: Saving energy, maintenance with LED exit signs
		Energy shorts
		Technology Spotlight: Insulating Process Steam Systems
		Calendar of events

Nebraska's first digester produces energy, controls hog odor

Josie and Danny Kluthe (center) were joined by Nebraska state senators Arnie Stuthman (left) and Matt Connealy to cut the ribbon on the Kluthes' digester gas-powered generator, the first in the state. (Photo by Cuming County Public Power District)

A simple plan to expand his hog operation near Dodge, Neb., turned Danny Kluthe into the owner of the state's first methane-powered electrical generator.

"It was the best way to control the odor," Kluthe stated. "The odor issue was No. 1; electricity is just the byproduct."

The digester system may have been the best odor-control solution, but it certainly wasn't an easy one. It took years of planning, negotiating, raising money, building and learning to get OLean Energy online.

Kluthe's company, named for the church across the road from the farm and for his lean hogs, began feeding 59 kW to Cuming County Public Power District’s distribution system in September. Nebraska Public Power District built the interconnection to CCPPD’s distribution system and buys the electricity from OLean Energy, which it sells to its member CCPPD—Kluthe's utility.

Odor control makes generator viable

NPPD's power purchase closed the partnership circle that began more than three years ago with a methane recovery workshop hosted by the power wholesaler and the Nebraska Department of Environmental Quality. Kluthe attended in hopes of finding a way to double the size of his 4,000-head farm without offending his neighbors. Capturing the gas and turning it into power seemed to offer an answer.

"Selling electricity is only the tail of the dog," offered NPPD Senior Engineer Frank Thompson. "The dog is odor control and waste disposal."

In a state with low-cost power like Nebraska, the margin for selling electricity is small. The irony, Thompson added, is that the states with the most potential for methane generation—agricultural states—tend to have inexpensive coal- or nuclear-based power.

"There has to be some other business reason for building a generator," he said.

The reason for Kluthe was increasing his farm's profitability, and a methane digester would allow him to do that and still be a good neighbor. That being determined, the real work of being a pioneer began.

Funding, regulatory challenges

A combination of Kluthe's own investment and grants funded the project. CCPPD helped Kluthe conduct a feasibility study and submit grant applications. The Nebraska Environmental Trust gave the project a $200,000 grant and the USDA Natural Resources Conservation Service helped share the cost of lagoon piping.

Kluthe also received an $80,000 grant from the USDA Farm Bill Clean Energy program in 2003, but construction must be completed and design performance demonstrated before he can collect the grant. "The USDA has an appointment to come out and look at it soon," he said.

Raising money wasn't the only challenge facing Nebraska's first digester project. It wasn't until he decided to build his own generator that Kluthe learned that Nebraska is a public power state. "Any generation added to the power supply has to go through a power review board," he explained.

After the board tabled his first request for a review, the Nebraska Attorney General offered the opinion that a review wasn't necessary since the digester could be considered a PURPA Qualifying Facility. The Federal Public Utility Regulatory Policy Act of 1978 required a utility to purchase excess generation at its avoided cost from generators using renewable energy. (Note:The Energy Policy Act of 2005 required FERC to modify its rules for these purchases.)

There were also negotiations with the state Department of Environmental Quality. Kluthe had to convince the department that the digester would take care of the odor from the additional livestock.

Colorado Pork, OLean point the way

If he had any of his own doubts about the system's effectiveness in that area, they were put to rest when Kluthe visited Colorado Pork, LLC, in Lamar, Colo. "They had 5,000 sows and no offensive odor," he declared.

Colorado Amendment 14, which regulates odor emissions, has helped to drive the development of methane recovery projects in the state, but, "Nebraska doesn't have a lagoon law right now," said Kluthe. "We probably will soon and OLean is blazing the trail for that day."

Other livestock producers may be following his lead soon. In Omaha Public Power District's territory, a 20,000-head cattle feedlot is building a digester. Thompson said NPPD has heard proposals for a system to take the manure from several feedlots and another to dispose of paunch manure from cattle slaughter.

If those projects move forward, they will be looking to OLean Energy as a model. The first livestock producer in Nebraska to harness methane power insists he is still on a learning curve. But ready or not, Kluthe is now Nebraska 's leading livestock/energy producer, and OLean 's success doesn't have a smell at all.