While on the road in project areas, I often find myself posed with the question, “Why would anyone be against a wind/solar development in their county? It’s a no-brainer!” Well, for many of us it is a ‘no-brainer’ because it injects opportunity within areas struggling to find a viable path forward for tax income (at the County level) and income diversification (at the landowner level). But to others not familiar with the ins-and-outs of agricultural life and risk, it can seem confusing. This is where misinformation and misunderstanding cloud the conversation. In this blog series, I’ll review some of the most common myths of renewable energy and share with you my responses from the field.
MYTH #1… all the energy goes to California.
Whether a wind project or a solar project, inevitably someone in the area will state their disagreement with the land use to produce power ‘for people in California’. There is a misconception that all utility-scale renewable energy projects are producing energy in the Midwest for East/West Coast energy consumers. The number of times I’ve been asked why ‘we’ must host renewable energy farms to ‘feed energy to California’ is overwhelming.
After years of having these conversations, I’ve found the easiest way to relay the concept of energy production/use is to boil it down to the basic concept of commodity markets. Most farm families understand commodity market principles – supply/demand, contracts, guarantees, diversification of risk, etc. Energy is a commodity... yes, just like corn, soybeans, hogs, wheat, and so forth. When someone asks where the energy goes, the best response I can give is, “Where did the last 100 bushels of your corn go?” The energy produced within utility-scale solar farms is bought and sold by contract. Just like our traditional row crops are bought and sold by contract with the local grain elevator. The energy market has buy/sell agreements, market rates, and terms for delivery like we do as agricultural producers. The difference is the crop.
Like me, I’m sure you’ve noticed an increase in the number of farm operations installing solar arrays for energy to power homes, outbuildings, and livestock barns. This is very different than a wind/solar farm (typically 100-350+ megawatts of power). The markets are distinctly different between a small homestead array and a large utility-scale wind/solar farm. Homestead solar is direct-use. I equate this to sweetcorn. We don’t involve a larger market in the sale of small-scale production, such as setting aside a 2-acre section of sweetcorn which we grow to sell directly to local buyers... typically from the backend of a pickup in the parking lot of a local grocery store. We know the wants and needs of our neighbors (genetics, timing, and price) and we grow our crop accordingly. This is like homestead solar – we know what we need, timing, and the breakeven price for it.
But, what about the bulk of our farm acres? What are we growing on that and why? We grow what the market demands and what our land can best produce. And, oftentimes, we sell it as a commodity through contracts at the grain elevator. And even if we don’t contract it, we still deliver it for market price. The keyword being ‘market’. In general, we don’t know exactly where our bushels go after we deliver them. Our crop gets mixed with other bushels and then delivered to larger elevators, then delivered to consumers for use in producing something else. We don’t know which loaf of bread at the store came from which farmer’s yield; we just know someone grew and supplied wheat to the bread company.
I realize I’m simplifying this concept quite a bit, and there are several intricacies involved. But, overall, the energy market is very similar to our ag commodity markets. Electrons go onto the grid and move to where they are needed based on the transmission lines (paths) available. We don’t tag each electron and watch it move down the line, just as producers of corn don’t tag each harvested kernel and watch it move through the elevator (path). Transmission grid operators control the ‘path’ of electricity by calling for and moving energy throughout the grid. And, much like water, electricity takes the path of least resistance, so chances are pretty high that the wind farm or solar farm closest to your home is providing a portion of energy to your home or business – regardless of if your energy company owns it.
The market today is demanding renewable energy production and many landowners here in the heartland are leasing land to utility companies to participate in this new ‘crop’ for their operations. Utility-scale renewable energy project owners can produce and deliver energy to the market while providing landowners with limited risk and long-term income diversification.
So, where does the energy go? It goes on the grid (delivered to the market) and the transmission grid operators move it to where it’s needed.