The Future of Nebraska Energy: Off-grid systems and public power

Editor's note: This is the second in a two-part Signature Story report on "The Future of Nebraska Energy." You can find part one here.

Robert Byrnes' small farm near Lyons in northeastern Nebraska is like a renewable energy wonderland.

The farm is off the grid, meaning Byrnes doesn't use any energy except what he generates himself using solar, wind and biodiesel. Two wind turbines sprout from his front lawn; solar panels line the roof of the chicken coop; and the chicken manure helps make fuel for his tractor.

A large garden toward the back is guarded by wily goats adept at escaping their pen.

As owner of Nebraska Renewable Energy Systems, Byrnes makes a living out of promoting renewable energy production in the state. He said building a local economy for green technology is vital.

"It's really neat to partner with the local guys and see how, you know, that stuff trickles down within the economy, when you use local folks," Byrnes said. "We built a local biodiesel plant years ago in Scribner, Nebraska. Locally owned, and local contractors, and local markets, and local feedstocks. And that's always the best way to go. When you have that vertical integration, all the money stays here, and lot of times within the local community."

Lagging behind

When it comes to renewable energy, Nebraska has the natural resources available to be a national leader. According to the National Renewable Energy Laboratory, we're ranked third for wind energy potential and 12th for solar energy potential. But our production of both falls far short of that.

One of the major reasons why? Public power. Nebraska is the only state with all public power utilities, and their primary mandate is to keep prices low. While coal costs about two cents per kilowatt hour and wind energy costs about four, solar energy is at least 20 cents per kilowatt hour.

"We kind of call it the pace of value," said Dean Mueller, who oversees sustainable energy for the Omaha Public Power District. "We're adopting it at a pace where we don't have rate shock to bring in this new resource into our generation portfolio."

Mueller has been with OPPD for almost 40 years.

"For the largest part of the time that I was here, we didn't (even) have green policy," he said.

Mueller said 29 states have renewable energy standards - some require 15 percent, some 20 percent - but Nebraska isn't one of them. Instead, OPPD and fellow utility Nebraska Public Power District, which cover part or all of each county in the state, set their own standard. They're aiming to supply 10 percent of their output with solar and wind energy by the year 2020.

Byrnes said voluntary goals aren't enough.

"OK we've got all this training, all this know-how, this worker force - how do we build a green economy?" he said. "First step is policy."

A federal production credit knocks about two cents off the cost of wind energy, from six cents to four cents. Some states offer additional financial incentives - Oklahoma gives a tax credit of 1/2 cent per kilowatt hour, and Kansas offers reduced sales tax on construction of wind farms.

David Rich, sustainable energy manager at NPPD, said those incentives make a difference: while Nebraska's adding an additional 120 megawatts of wind production facilities this year, Kansas is adding more than 1,200.

"We lag behind in passing the financial incentives that the neighbors to our south have," he said. "Until we make some changes there, it's likely we will continue to fall short."

Despite the cost difference, Mueller with OPPD said he expects they'll continue to increase their reliance on wind energy, even after meeting that 10 percent goal. He said current coal plants should be able to meet demand till 2020 or so, but then, the cost of building a new coal plant would be on par with building a new wind farm. Still, there is a limit.

"There's plenty of wind capacity to supply all of the load in Nebraska," he said. "But we could never go past about 30 percent. Because the wind is intermittent, you have stability problems with it so you can only mix in so much."

Which is why a system can't rely on just wind or just solar - instead, they have to work in tandem.

DIY off-grid

Chris Nerud runs a ranch about six miles south of Chadron in northwestern Nebraska. One sunny morning this spring, his ranch was swarming with workers, like ants on a popsicle - mechanics, carpenters, farmers; all energy enthusiasts, looking to learn about going off-grid.

Their instructors were the two Dans - Dan Bartmann and Dan Fink - who both get their energy via off-grid systems in Colorado and teach workshops all over the world on how to set them up.

"And tell me again what this does?" "This will generate electricity to charge the batteries - it's a back-up generator." "And it runs on canola oil from canola that Chris is going to be growing right here." "Yeah. So if there's no sun or no wind for a couple of days, he'll want to run this to keep his lights on."

The farm has two wind turbines and two solar arrays, as well as a work-in-progress backup generator that runs on oil created from plants grown on-site.

Unlike many who dig into renewable energy, Nerud doesn't seem driven by environmental concerns. In fact, for his "day job" he's an oil geologist. Instead, he said the science of it piqued his interest.

Nerud said he's spent roughly $30,000 so far on his system. Despite the cost, however, Nerud said he doesn't think the state should provide financial incentives.

"Don't pay for anything but power," he said. "If it's alternative, or if it's sun or wind energy, pay a decent price for it, and that will certainly spark the installation. But don't pay for anything but the power."

Incentives or no incentives, both OPPD and NPPD said the real money to be made is in exporting any extra wind energy produced beyond that 30 or 40 percent mark that Nebraska can use.

But NPPD's Rich said there are several realities that push against exporting wind energy to potential customers - say, on the East Coast - despite how much more cheaply the Midwest could produce it.

"One, no one is usually too excited about having transmission lines built through their area, and two, those states on the shore want economic development there, so they're pushing the federal government to support offshore wind."

Nebraskans are increasingly interested in renewable energy sources. But for now, the changeover is expensive, and progress is slow. And without changes to state and national policy or public willingness to swallow higher energy costs, it's likely to stay that way.