Energy cropping is good business for German farmers

Tuesday, August 5, 2014

Biogas production is not without its critics and comes with a cost to taxpayers. But it is creating new rural jobs and stabilizing countryside population, while contributing to 'green' electricity production

by NORMAN DUNN


On-farm biogas production from energy crops only pays its way with the help of subsidies, but electricity produced from the biogas earns some European farmers a price guaranteed for 20 years. Too good to be true? There's growing unease that many farms now depend on this "artificial" income for economic survival.

The Spiegel family are typical traditional European estate owners. Karl-Friedrich, wife Adelheid and daughter Isabelle see themselves as the guardians of family land and buildings linked to their name for centuries. For over 500 years, there have been Spiegels in Helmern Manor Farm, a stately home steeped in knightly tradition, surrounded by 1,160 acres of rolling fields and woods in the Egge Hills on the edges of central Germany's huge Teutoburg Forest.

The ancient estates surviving throughout Europe are the ones that have always changed with the times, just like Helmern, where one barn is reserved for a line-up of vintage tractors 60 years old and more. Mechanization was introduced early here. After that, the continuing search for more efficiency brought an all-arable regime and a tight rotation based on winter wheat and canola.

Plowing was given up 25 years ago, another way of cutting inputs and increasing efficiency. "Moves like these have helped us survive as a business," explains Adelheid Spiegel. "Our land is pretty heavy in parts and has its fair share of stones. Yields are only average. Cultivations have to be carried out at the right time because there's plenty of rain in spring and fall with very limited weather windows. To leave a worthwhile margin from wheat, we adopted the minimum-till approach." As a matter of fact, yields did not really suffer, especially as the family stayed with a healthy rotation including canola.

But rising input costs, even with this streamlined system, have meant that margins got thinner. That's when biogas production from corn silage started to look attractive. "We built a biogas plant and started production in 2005," says Adelheid Spiegel. "A sound rotation is still a priority, so we have gas production based on a third of the farm growing corn, with winter wheat and winter canola as the other crops." The biogas fuels a 380 kW capacity generator supplying the local electricity network.  

The German Renewable Energy Act and its amendments (2000-2012) offer a great deal for farmers, especially the businesses that moved early into biogas production. Just look at the current figures: building a plant costs around the equivalent of €2,500/kW capacity, equivalent to C$3,700/kW.

Nowadays, there's a 60 per cent limit on the amount of forage corn fed into biogas fermenters. This is because the original deal was so good for farm incomes that massive areas of the countryside changed to continuous corn growing for biogas. But the rules were more generous when the Spiegel family started their biogas enterprise. The utility companies are bound by law to accept electricity offered by such producers, and prices are guaranteed for 20 years. The current basic price paid to farmers for electricity from a 380 kWh plant is the equivalent of 18.35 Canadian cents/kWh. Various bonuses – for instance, if the heat generated can be utilized as well – can take this up to as much as 24 cents/kWh. An average household in Germany this year pays an average of around 39 cents/kWh for its electricity.

On the other hand, the carbon footprint of decentralized biogas production on farms, especially when heat produced is also used for the fermenter and for nearby buildings, is much smaller per kilowatt produced than that from coal-fired power stations. On top of this, the system has also created extra jobs in the countryside.

German farmers were quick off the mark when offered this sort of golden promise under the original Renewable Energy Act in 2000 and, since then, numbers have soared from a few hundred biogas units to around 7,600. Now, one in every 38 German farms produces electricity from biogas. Total installed capacity: 2,850 MW, producing enough electricity for about five million households.

Elsewhere in Europe, progress of on-farm biogas and electricity production has been mostly slower, with neighbouring Austria probably in second place with 368 countryside plants, which is only one in every 500 farms. Britain, for instance, plans around 1,000 on-farm biogas/electricity plants by 2020 with farmers promised around 15.60 cents/kWh, again with guaranteed uptake by the utility services and a 20-year contract.

Biogas brings a secure income from energy crops and/or farm manure, as well as plenty of useful organic fertilizer from the fermented residues. But the concept is not without its critics, many of whom question the real environmental cost of growing, harvesting and ensiling the crops – not to mention the taxpayers' bill for supporting the high prices paid to the new generation of energy farmers.

Still, there's no denying that energy cropping is creating new rural jobs and stabilizing countryside population. The Spiegel family of Helmern is one of many proud to contribute to Europe's growing "green electricity" production, while at the same time establishing longer-term security for their farming businesses. BF

Norman Dunn writes about European agriculture from Germany.