Whether commodity prices are high or low, it’s always a good time to lower your operating costs. While feed and labor costs can be difficult to reduce, dairy farms often have opportunities to reduce utility costs by 10 to 35 percent. In our experience, this savings equates to anywhere from 2 to 30 cents per hundredweight in avoided costs.

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Kyle Clark

By far, the most expensive utility cost on dairy farms is energy – typically electricity, diesel fuel and natural gas or propane. Reducing these inputs can pay dividends in the short term and long term, both in terms of avoided costs and the non-energy benefits some technologies provide.

There are many types of energy efficiency and renewable energy projects that can help your dairy save money. The most common opportunities we see are lighting retrofits, variable speed drives for milk and transfer pumps, compressor heat recovery, scroll compressors and milk precoolers.

There are also more cutting-edge energy and water-efficiency technologies such as conductive cow cooling, ozone laundry and ventilation controllers that are increasingly popular on dairy farms. Renewable technologies, particularly solar photovoltaic systems and anaerobic digesters, can also be an excellent way to reduce overhead costs once efficiency opportunities are exhausted.

While energy efficiency and renewable energy technologies can make financial sense for your dairy, it can be difficult to find the money for the initial purchase, particularly when milk prices are low. Fortunately, there are several programs available that offer financing and grants for energy-saving projects, helping reduce your out-of-pocket investment and substantially reducing the payback period.

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Even if you are not in a position to spend money on these upgrades right now, it’s good to know what funding opportunities are available for when you are ready to invest in some new projects for your dairy.

Your local utility company

First, look at your local utility company’s website or give them a call to ask about energy rebates for your farm. Yes, these are the same people who make money selling you electricity, but many utilities also offer programs to reduce your energy costs because saving energy is cheaper for them in the long run, rather than building a new power plant or purchasing extra capacity from the grid to meet their demand.

Utility rebates are often available for lighting projects and sometimes items like variable speed drives, fans, scroll compressors and more. Utility offerings vary widely based on your location, but it’s worth checking to see if funding is available. Most of the time, utility rebates can be combined with other incentives, such as those available through federal or state government programs.

The USDA

The USDA has two programs that provide funding for energy projects:

  • The Environmental Quality Incentives Program (EQIP) through the USDA Natural Resources Conservation Service (NRCS) provides financial assistance for both energy audits and the installation of energy efficiency projects.

    NRCS requires you to receive an energy audit before you can apply for technology funding in order to determine the opportunities on your farm and the energy savings and payback period associated with each opportunity. NRCS provides a fixed payment for an energy audit or energy efficiency technologies, typically covering between 50 and 75 percent of the costs.

To apply for EQIP, call your local NRCS service center and ask about signing up for an Agricultural Energy Management Plan (AgEMP)–this is the energy audit that will enable you to apply for financial assistance through EQIP.

After you are approved, you will receive an EQIP contract for the energy audit. You will be provided with a list of Technical Service Providers (TSPs) – farm energy professionals whose qualifications have been vetted by the USDA to provide energy audits. The TSP you select will deliver an energy audit to you that can then be used to apply for energy efficient equipment funding.

Because contracts are typically only written a few times each year, you may have to wait a while for funding depending on when you apply. For that reason, call NRCS now to find out when the next application period opens so that you can be prepared.

  • USDA Rural Development’s Rural Energy for America Program (REAP) also has a program that offers grants and loans for energy efficiency projects, as well as renewable energy projects like solar, wind and methane digesters.

REAP offers competitive grants and guaranteed loans covering up to 25 percent of an eligible project’s costs, up to $250,000 for energy efficiency projects and up to $500,000 for renewable energy projects. Grant deadlines occur a few times each year, typically near the end of October and the end of April. REAP grant applications for under $20,000 have a set-aside pool of funding for the fall deadline and can have a better chance of being funded.

The application process is lengthy, so many applicants utilize a professional grant writer to put together their application. REAP applications will require either an energy audit, energy assessment or feasibility study depending on the size of the project. Your local Rural Development office can provide a list of energy auditors as well as consultants who can help prepare your grant or loan application.

State funding

Your state’s department of agriculture or energy office may offer energy efficiency or renewable energy funding for agriculture. As of September 2016, several states including Delaware, Maryland, Florida, Massachusetts and Kentucky have some form of statewide funding available for dairy farm energy projects. Call your state representative, the Farm Bureau or your state’s department of agriculture to find out what may be available.

Before you install

Some programs allow you to receive funding after you have applied or after you have installed. Other programs require you to wait for approval first, so make sure you check and find out the rules before you begin the process of installing.

Also, some programs only fund certain types of equipment, so ensure your project meets any eligibility requirements of the program. In some instances, you may be able to combine several sources of funding which will increase the total amount of funding for your project.

Any time you are planning to upgrade your equipment or install a renewable energy system, make sure to check around and make sure you are not leaving any money on the table.  end mark

Kyle Clark