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Take control of costs by improving energy efficiency

Kyle Clark Published on 06 November 2014

Dairies know that by keeping a close eye on the expenses, you can set up a lean operation that is well insulated against changes in the market. It used to be that many of us would see energy costs as a standard monthly expense we couldn’t do much to alter.

Today, however, more and more dairies recognize that energy costs are within the control of the farm, and upgrading to more energy-efficient equipment makes good business sense.

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While most dairy producers recognize the importance of energy efficiency, it is not always easy to know how to prioritize equipment upgrades. Fortunately, there are several federal financial assistance programs available to dairies wishing to reduce their energy costs.

These programs can assist with the cost of a farm energy audit, which typically identifies opportunities to reduce dairy energy costs by 10 to 35 percent. The audit also prioritizes these opportunities based on their payback period.

Farmers can also tap into funding to help offset the initial cost of the energy-efficiency equipment, making the investment all the more attractive. If your dairy farm is considering an energy audit, the following questions will help you determine if it is an appropriate investment:

  • Do you have a vacuum pump variable-speed drive in your milking system?
  • Do you have a plate cooler in your cooling system?
  • If yes, do you have a milk transfer pump variable speed drive?
  • Do you have a compressor heat recovery unit (also known as a fre-heater?)

For each “no” answer to those questions, give yourself one point.

  • Do you have any milk cooling compressors older than five years?
  • Are any of your circulation fans more than five years old?
  • Do you have any motors greater than 5 horsepower that run more than five hours per day?
  • Are you using any incandescent, standard metal halide, mercury vapor, halogen, T-12 or high-pressure sodium lighting?

Give yourself one point for every “yes” answer on these.

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If you scored three points or greater, you will likely benefit from an energy audit. An energy audit will quantify the energy savings for each opportunity specific to your dairy operation as well as provide you with information about the costs to implement and the return on investment.

Before getting started with the audit, here are some other considerations you’ll want to ask any potential vendor. A good place to find an energy auditor is to ask your local USDA Natural Resources Conservation Service (USDA-NRCS) office for a list of technical service providers who have met NRCS qualifications for performing on-farm energy audits.

1. How long have you been auditing?
Longevity in the field is a good indication of whether the firm has been able to succeed at energy auditing and if they have a roster of satisfied customers.

2. How many dairy energy audits has your firm completed?
You don’t want to be the test case for an auditor that has never been on a dairy. Look for firms that specialize in agricultural energy efficiency.

3. What standard do you use to develop the audit?
Audits should be developed with engineering expertise, preferably meeting the on-farm energy audit standard from the American Society of Agricultural and Biological Engineers. Audits required for federal financial assistance programs typically need to meet this standard.

Once you have received an energy audit or otherwise determined which technologies you want to install, it’s time to take a look at local, state and federal funding opportunities that can help pay for some of the cost of your equipment.

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The USDA has several initiatives to help producers with funding their energy-efficiency upgrades. Since the USDA has a vested interest in reducing the greenhouse gas emissions associated with energy use on the farm, they are able to pay producers to capture these savings.

Federal assistance programs
The two most popular federal financial assistance programs for dairy energy efficiency and renewable energy projects are as follows:

  • The Rural Energy for America Program (REAP) through USDA Rural Development offers grants and loans to producers who install energy-efficient equipment on the farm. An energy audit is required for any project of more than $50,000, but it is also recommended for smaller projects since it adds points in the evaluation process. REAP provides funding of up to 25 percent of the cost of an energy-efficiency or renewable-energy technology.
  • The Environmental Quality Incentives Program (EQIP) through USDA-NRCS provides financial assistance to pay for both energy audits and the subsequent installation of an energy-efficiency project. Producers must receive an energy audit first to determine the need for improvements and the energy savings associated with them, and they can then apply for funding to pay for the cost of the energy-efficient equipment. NRCS provides a set payment for an energy audit or implementation and typically pays around 75 percent of the cost.

Your utility company may also have incentives available to help with some of your costs, and some states also have specialized grant programs. Make sure to ask about requirements for these programs to see if you can combine funding.

Thousands of dairies across the country have been able to benefit from energy efficiency and receive financial assistance to do so. One recent success story is that of Gary Kline of Y-Run Farms in Troy, Pennsylvania. Kline hired national agricultural energy-efficiency firm EnSave Inc. to conduct an energy audit of his 435-cow dairy through EQIP.

The audit uncovered the opportunity to save about $12,000 per year in energy costs by upgrading existing lighting to LED lighting. Kline was able to use his audit as part of his REAP application, and he won the grant to upgrade his lighting.

The grant brought the payback period down from an already attractive 3.8 years to just 2.9 years. Considering LEDs have an estimated useful life of around 15 to 20 years, Kline will be reaping the benefits of his energy-efficiency investment long into the future.

Not only is Y-Run Farms saving money with energy efficiency, but they’re also better positioned to handle an increase in utility costs that might occur in the future. Every dairy should have the peace of mind that comes from knowing they’ve done everything possible to minimize costs on the farm, and a farm energy audit is one easy and cost-effective step in this direction. PD

kyle clark

Kyle Clark
Program Manager Agricultural Sustainability
EnSave Inc.

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