Pipeline Dreams California dairy entrepreneur creates methane-to-market model
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| David Albers (left) discusses his methane-to-market plan with Ben Goedhart at Goedhart's Shafter, Calif., dairy. |
If someone offered you a six-figure annual revenue stream from your dairy's manure—without any financial investment on your part—would you take it?
Dairy producer Ben Goedhart of Shafter, Calif., has. So has Charlie Van Der Kooi, who dairies 100 miles north in Fresno County. So have 37 other California dairies, in all representing 90,000 cows, or 6% of the state's herd.
All have signed 10-year contracts with BioEnergy Solutions to have their dairies' methane captured, converted to renewable natural gas and injected directly into the pipeline of Pacific Gas and Electric Company (PG&E), California's largest energy utility.
The dairies not only expect to receive annual income from the sale of their biogas to PG&E but also to earn revenue from carbon credit trading. Moreover, they'll reduce their dairies' carbon footprint by significantly lowering their greenhouse gas (GHG) emissions.
Another 140 California dairies have signed letters of intent to work with BioEnergy Solutions, which will finance, build and manage all parts of the methane-to-market system. The dairies will work in clusters around an upgrade facility, or "scrubber," that cleans the potent methane to utility standards before injecting it into PG&E's pipeline.
"This is a great idea," says Van Der Kooi, who milks 1,800 cows near Riverdale. "Environmentally, we'll capture some of the GHG emissions that would otherwise escape the dairies. If we can gain from the sale of natural gas and carbon credits too, that's good, since we're in the business to make money."
BioEnergy Solutions is the brainchild of California's David Albers, an attorney and longtime dairy producer who started the company in 2006.
Ben Goedhart's California dairy will be part of a large methane-gas pipeline system.
"Our approach is technology-neutral," Albers says. "We're focused on maximum revenue and minimum disruption for the dairy."
BioEnergy Solutions is the first and only California company to clean dairy methane to utility standards and inject it directly into a utility pipeline for sale, says Renee Rippchen, the company's vice president of sales and marketing.
Unlike other renewable energy projects, BioEnergy Solutions won't generate electricity on, or for, the dairies. That means there won't be any conversion loss or new pollution from on-site generators. Combustion gases from digester-connected generators have been a sticking point in California, where air-quality boards frown on the equipment's high emissions.
By creating clusters of dairies rather than a one dairy–one digester oper-ation, "we've changed the model," Rippchen says. "Dairies are working with their neighbors. They won't be generating electricity for their own dairy, but they'll be getting checks in the mail monthly from gas sales and once a year from carbon credits."
BioEnergy Solutions has five clusters in various stages of development. Each cluster involves a minimum of 20,000 cows. There are two clusters in Kern County, including Goedhart's dairy; one in Tulare County; another in Fresno County, where Albers' and Van Der Kooi's dairies are located; and a cluster that straddles Merced and Madera Counties.
"I'm excited about it," says Goedhart, who milks 2,800 cows in a freestall operation just north of Bakersfield. "It's a good way to get rid of methane and manure and to have a cleaner operation."
Goedhart appreciates that the project won't cost him anything. He's also motivated to adopt a methane-capturing plan since he thinks the state's dairy industry will continue to face more regulations and may one day be mandated to have digesters.
Albers is using his Vintage Dairy, which milks 2,600 cows, as the model for the methane-to-biogas project. The dairy's system became fully operational in October 2008, when it injected its first delivery of renewable natural gas into the PG&E pipeline, located just yards away.
That's just the start, since BioEnergy Solutions has a long-term agreement to provide 3 billion cubic feet of natural gas a year to PG&E.
Ken Brennan, a senior project manager for PG&E, says he is "intimately familiar" with Albers' efforts.
"BioEnergy Solutions has a solid business plan," Brennan says. "We entered into the process with dairy manure and the quality of the biomethane being an unknown. But it turns out that their cleanup system did a fantastic job, and there were no major issues."
BioEnergy Solutions has also earned accolades from the State of California, winning the 2009 Governor's Environmental and Economic Leadership Award (GEELA) for its dairy biomethane cluster projects. GEELA is California's highest environmental honor.
The dairies' agreements with BioEnergy Solutions represent a leap of faith. So far, only Albers' Vintage Dairy is actually injecting methane into the pipeline for the journey to PG&E's electricity-making plant in northern California. 
Charlie Van Der Kooi's dairy will be one of several that will provide biomethane to California's largest energy utility.
Albers is still negotiating to raise capital to build out the operations for the other dairies that have contracted with his company. He won't say how much he needs but acknowledges it's more than $10 million.
"It's been a tough year to raise equity," he admits. "We've been getting rave reviews, but the market has been frozen for months. It's starting to open now."
Albers is confident he'll raise the equity needed to move forward. Biogas demand is greater than the supply, he says. "We get calls every week from private companies wanting to buy our biogas. They want to do a better job of being green."
California's climate change legislation, AB32, is also spurring interest in biogas. "Many companies see biogas purchases as a way to get ahead of the curve and lock in their energy costs," Albers says.
Biomethane is "a very big part" of PG&E's renewable energy portfolio, Brennan says. The utility needs to secure more biomethane to meet the state's renewable energy goals, and dairies have a plentiful supply. "We can both move forward with common interests," he adds.
Goedhart is not worried about the plan. "Several companies have approached me about getting rid of my dairy's methane," he says. "I know David [Albers], and I trust him."
Bonus content:
Pipeline Details
Video interview with David Albers and Ben Goedhart
BioEnergy Solutions - The natural choice for natural gas
BioEnergy Solutions YouTube channel
