Against the Grain

Jeff Tolbert

[Editor's note: A correction ran concerning this story; see end of article.]

Chris Hanson was skeptical. Max DeLong, a senior engineer at Northern States Power Company, and a cadre of DeLong's colleagues had come to him inquiring about various crops being grown around the state--and the possibilities of pinpointing one that could be developed for purposes that sounded more like science fiction than farming. They wanted to take plants and turn them into electricity. Hanson's sense of the ideas presented by NSP at that spring 1993 meeting was simple: "I thought they were goofy."

On this late summer day six years later, Hanson sits in his office high on a hill at the University of Minnesota's College of Agricultural, Food, and Environmental Sciences, remembering that first discussion. His job for the past decade as head of the Center for Alternative Plant and Animal Products has been to devote school funds to developing projects that might help Minnesota's farmers delve into new markets. Pulling out a map, he points to the southern west and central regions where NSP--the state's electric company--first proposed to cultivate this kinetic crop.

"What could you grow in Minnesota that you can turn into energy that would make sense?" Hanson poses the question he debated at length with a handful of professors and agronomists at the U of M during the summer and fall of 1993. "The answer was, there was nothing you could grow in Minnesota that you could turn into energy that would make economic sense for farmers." Unless, the group had concluded, there was a co-product, another element of the crop that could be utilized just for the purpose in mind. "What crop can you use that would have multiple uses? That led us pretty quickly to alfalfa.

"The valuable part of alfalfa is the leaf," Hanson explains. "That's where the protein is, by and large." But if there were a way to separate the leaf--grind it up and use it as feed for dairy and beef cows--and then turn the stem into a power source, well, using alfalfa to generate electricity would be more than possible; it would be ideal.

Hanson gazes into the distance beyond his office window, at the university's experimental fields near the state fairgrounds in St. Paul, where tall corn, short corn, and every kind of soybean laze along dusty pathways in the summer sun. There are probably a couple of varieties of alfalfa popping up out there, he muses. With the patience of a hobby gardener and the methodical vision of a would-be landscape artist, Hanson describes how the idea of alfalfa-electricity came together.

With the financial backing of NSP and the U of M, Hanson and his colleagues set about studying the plant's prospects. Where would it grow? How would it be harvested? Would farmers be interested in growing it as a big commercial crop? Could the stems be converted easily into a gas able to power turbines and make electricity?

As part of their study, in 1994 Hanson's team took a truck filled with finely chopped alfalfa stems to a testing site at the Institute of Gas Technology on the outskirts of Chicago. To save money they were piggybacking on a similar test being conducted on sugar cane. The alfalfa, it turned out, was the superior fuel source. Popped into a heated, pressurized "giant thermos bottle" called a gasifier, 98 percent of the alfalfa turned readily into gas form, ready to make electricity. It had worked.

By then Hanson was determined to bolster the effort. The university was prepared to invest more than $1 million, and Hanson himself was toiling long hours to get the project on its feet. "We were obviously pretty big believers it could be done," he recalls. "Alfalfa is a great plant."

As a biomass project (one that develops energy from crops and organic material) the alfalfa plan was quickly turning into the darling of renewable-energy consortia around the nation, and even the U.S. Department of Energy had come aboard with enthusiasm. "They said, 'We love you, you're the best project we've seen.' We were widely viewed as the number one project for renewables in the country," Hanson remembers, a bit wistfully.

The concept, backed by the results of the gasifier tests, was catching fire. Early on, the U of M and NSP had managed to cobble together a group of interested farmers from around Granite Falls who were willing to grow enough alfalfa to power a plant--the first of its kind in the world. Months later these growers had formed a cooperative and invested millions of dollars in exploring alfalfa-electricity as a new market. Local environmentalists, too, seemed thrilled; after years of lobbying state and private agencies, they believed they'd finally come across a biomass scheme that would light a fuse under the renewable-energy industry in Minnesota--one capable of providing power without pollution or reliance on fossil fuels. The idea was exciting businesses and government agencies as well, which professed their eagerness to help get an alfalfa plant up and running. And, NSP believed, alfalfa power would solve a pressing problem: In 1994 the utility had been handed a legislative mandate to provide electricity from renewable sources.  

But a short four years later, the promise began to unravel. In 1998 the Public Utilities Commission--the body that regulates the energy and communications utilities in Minnesota and that was charged with implementing the mandate--balked in its approval of a contract between NSP and the farmers' co-op designed to produce alfalfa-based power at a plant in Granite Falls. As a result, in April of this year Enron Corp., the Texas-based firm that had come in as a major partner in the deal, pulled out--a move that prompted the Department of Energy to withdraw its sizable grant allocation for the plant.

What had started as a flourishing enterprise, Hanson says, seemed suddenly choked by a weedy bureaucracy and parched by a drought in funding. That impasse has left the farmers who'd collectively geared up to grow alfalfa in limbo, wondering if their risk would ever reap returns. The irony is that NSP, the company that had first planted the notion of cultivating alfalfa for electricity, may well come out a winner even if the project fails.

The conversation lags for a moment, and Hanson changes the subject. "Do you know what kind of tree that is?" he asks, nodding toward the branches that arc across his office window--adorned by emerald, fan-shaped leaves that flutter like pinwheels in the breeze. "It's a ginkgo tree. It's a very ancient tree. A simple tree." Simple, yes, and green, and thriving. Everything, it seems, biomass isn't.


Along with other renewable power sources such as wind and sun, biomass is in its infancy in Minnesota. Two points are generally cited as the main reasons to promote renewable energy. One is that it is less destructive to the environment, because compared with traditional fossil fuels, its production gives off fewer emissions that pollute the air. As initially proposed, back in the early 1990s, the alfalfa power-plant project represented a complete cycle, or what's known as a "closed loop"; simply put, alfalfa grown specifically as a fuel, when burned to create electricity, would give off only as much carbon dioxide as it had consumed while it grew. The other reason is that in the event of international unrest or a slump in foreign oil production, alternative sources would be able to fulfill the nation's power demands should fossil fuels become too expensive or unavailable.

Biomass is the least mature of all renewable energy industries. Although the organic-energy concept has been around for decades, the U.S. Department of Energy began actively soliciting potential biomass projects only in 1993, spurring NSP to look into developing it as a power source. But for as long as biomass has been debated, questions have lingered about the feasibility of the technology used to convert plant matter into a gas, and concerns abound as to whether the best use for plant resources is, in fact, to burn them to create electricity, when they might serve better as paper or lumber products.

Despite those reservations the biomass industry graduated into a legitimate prospect five years ago in Minnesota, when the state Legislature imposed a mandate on NSP to produce a small amount of its electricity from biomass sources. The legislation was passed as part of what's known as the Prairie Island agreement, which resulted from the vitriolic battle between environmentalists and the utility over the storage of nuclear waste at NSP's Prairie Island nuclear plant on the banks of the Mississippi near Red Wing. NSP would be allowed to store its toxic casks there in return for supplying a 7.6 percent share of its power to customers from wind and biomass sources.

Ask Bill Grant about the Prairie Island deal and he shuts his eyes for a moment, remembering. "It was the most contentious issue the Minnesota Legislature has ever had to deal with," says Grant, who directs the Midwest office of the Izaak Walton League of America, a Maryland-based environmental think tank. "It mobilized the environmental community in ways never before seen. We really realized how powerful we could be if we were all acting together and committed to one purpose."

That purpose was to stop--or at least slap strict conditions on--NSP's ability to stash nuclear waste at its plant, which is located on company-owned land. By 1994 NSP was running out of storage space in the pools inside the facility. If the company couldn't transfer that waste to outside areas, the utility told the Legislature, the plant, which produces about 20 percent of the electricity for NSP's 1.5 million customers, would have to shut down, causing job losses to its 450 employees and potentially forcing electricity rates to spike.  

That year's legislative session became wrapped in controversy over the matter, peppered with name-calling, protests, and ad campaigns that preyed on fears that a Chernobyl-like meltdown might happen right here at home, on the Mighty Miss. Lobbyists on both sides of the debate spent their waking hours at the capitol, and watched as the bill all but died in committee, only to be resuscitated on the Senate floor.

"There were those who wanted to draw a line in the sand: no storage at Prairie Island," Grant recalls. "Others were willing to accept some nuclear-waste storage in exchange for movement away from nuclear power. There was a strong sense that we need to protect the environment while generating cheap electricity."

In last-minute, late-night meetings, legislators compromised by crafting the Prairie Island mandate. NSP would be allowed 17 outside storage casks, and by 2002 the power company would be required to build or purchase 425 megawatts of electricity from wind sources and 125 megawatts from biomass, the latter of which was already in the fledgling stage of development with Chris Hanson's team at the U. "It was a phaseout plan," Grant says of the directive to gradually eliminate nuclear power in the state. "That was the way the deal was sold at the capitol. And in the meantime, we'd develop alternative energy."

That energy--whether wind, solar, or biomass--is more expensive than coal, oil, or natural gas. But finding the lowest-cost alternative to traditional sources was not the point of the legislation. The point was to sow the seeds for entire new industries, says David Morris, vice president of the Minneapolis-based Institute for Local Self-Reliance. Morris all but sleepwalked through the last few weeks of the 1994 session, trying to make sure the mandate included provisions that would lay the groundwork for a solid renewable-energy future. "I was there every minute I could be there," he remembers. "No one knew until the last few hours whether this thing was going to fly."

In the end the environmentalists walked away with the wind-biomass compromise that got the Legislature's green light. Still, Morris adds, "The day after, or two days later, people weren't sure whether we had won or lost."

The mystery cleared up quickly. As the congratulations were being passed around and lobbyists retreated to sleep, it was already becoming a shared wisdom that the Prairie Island agreement was an environmental triumph. "It had passed the Legislature," Morris says. As an edge of melancholy creeps into his voice, he adds, "Now the question was, how would it be implemented?"


Hollywood may have made alfalfa sprouts a power-lunch staple a decade ago, but the plant has been a high-protein mainstay for dairy and beef cows in Minnesota for more than a century. Theodore Blegen's history of the state describes a particularly strong and hardy strain of alfalfa exclusive to the Upper Midwest. It was 1857 when Wendelin Grimm arrived in Minnesota from his home in Kuelsheim, Germany, with a 20-pound bag of alfalfa seed. From 1858 on, every season Grimm planted his crop and watched as the "everlasting clover" weathered severely cold winters. He sold his alfalfa seed to covetous neighbors who'd noticed the immigrant's fat cows, and by the 1880s almost half of all the alfalfa raised in Minnesota came from Carver County, Grimm's home. Minnesota produced just two thousand tons of alfalfa in 1900, but three decades later that figure had jumped to one million. Today the state's farmers raise nearly six million tons of alfalfa each year.

Even before NSP hatched the idea of burning alfalfa--and seriously pursued it following the Prairie Island mandate--Minnesota farmers like Dick Jepson were growing the crop for feed. Jepson, who turned 46 this month, raises mainly corn and soybeans, but he also plants alfalfa in his crop rotations because the legume replenishes nitrogen in the soil.

Jepson remembers the night he first heard about the alfalfa-electricity notion. It was a summer evening in 1993, and Jepson was driving through his fields toward Granite Falls--a quick ride, as his farm is only three miles east of the little western Minnesota town. He pulled into the parking lot at the local technical college, headed into the cafeteria, and took a seat among about 75 others who'd turned out, all eager to hear more about the evening's topic: Some folks from the university and NSP were going to talk about turning alfalfa into power.

Though several of the attending farmers already grew limited alfalfa crops, this was the first they'd heard of what sounded like a harebrained electricity scheme. Jepson chuckles, recalling his reaction to the night's presentation. "I was just curious. I went into the meeting with an open mind," he says. "I left that meeting intrigued."  

So intrigued, in fact, that he got to be a regular at subsequent gatherings with other farmers interested in alfalfa power. But late summer was approaching, and the harvest came first. Once the corn was threshed and the soybeans plucked, the farmers got together again. Their number had dwindled to ten, but by the time a proposition had been laid out in detail they were anxious to work with NSP. They each threw $50 into a pot, and the Granite Falls Chamber of Commerce added another $500. With that $1,000, the committee sent out mailings to other local farmers, with the aim of gauging interest in the project. As summer ripened into fall in 1993, excitement was catching on around the county--a new crop, a steady income, a strong partner in NSP.

That was how Minnesota Valley Alfalfa Producers got started. Today more than 400 farmers have invested between $4 million and $5 million in the cooperative, whose mission it is to make real the dream of turning alfalfa into power. Back in 1993 Jepson didn't know he'd become chairman of MnVAP's board and be burdened with steering the group through years of acrimonious debates and endless obstacles; that fall biomass was just a prospect that sounded pretty good. The farmers set about planting more alfalfa the following spring.

On Jepson's 1,800-acre farm, the lush alfalfa spreads out like a verdant carpet across nearly 125 acres. With knowledge that has come from 25 years of working these fields--part intuition, part familiarity--he knows that out there, among the alfalfa stalks, pheasants and larks are nesting, hidden from the fox and coyote that range these reaches. He knows that if he would let them grow (though he rarely does) pretty purple flowers would bloom atop the greenery, filling the air with a redolent scent.

Part of the appeal of the MnVAP alliance with NSP, which had always been a good neighbor to Granite Falls, was that it seemed capable of developing a new market for alfalfa, which Jepson says is a low-maintenance, loyal crop. It's a perennial, so it doesn't need to be replanted every year. It doesn't get terribly weedy, and only once in a great while does it suffer infestation by bugs. Starting in June, Jepson cuts the alfalfa every 28 days, just before it starts to bloom and the plant's proteins go to feeding the flower. He leaves the plants to cure in the sun for a week before baling and shipping the hay out.

By Jepson's recollection NSP had originally proposed a joint venture to MnVAP: The power company would take on the responsibility of building a local biomass power plant, and the co-op would provide the alfalfa fuel. "One of the things that seduced me, if you will," he recalls, "was the fact that NSP was involved in this. If this outfit was behind this, it must be okay." Although no formal partnering agreement was ever signed, it was MnVAP's understanding, Jepson says, that the utility's interest was in full union with that of the co-op.

By 1994 farmers around Granite Falls were producing some 20,000 tons of alfalfa, and soon increased yields to 100,000 tons--all on the assumption that NSP and its corporate partners would construct the facility by the target date of late 2001. The farmers aimed to eventually produce the 700,000 tons of alfalfa needed to fuel the plant at full capacity.

But, as it turned out, the utility had no intention of building the plant. Rather, says NSP's Max DeLong, the engineer who had spearheaded the alfalfa research back in 1993, the company considered its preliminary research--which went to great lengths to prove that an alfalfa-powered plant could make electricity at just a few cents more than a traditional one--to be only a conceptual exercise. By this account, NSP's purpose all along had simply been to sketch out how such a plant might operate, then turn to an independent developer that would construct it and rely on the farmers for combustible plant material.

DeLong adds that the Public Utilities Commission confirmed this arrangement: Months after the mandate was put into place, the PUC directed NSP to position itself as a potential customer rather than as a developer, and to invite competitive bids for supplying the utility with biomass energy.

Still, NSP's revised role in the project was disappointing to the farmers, Jepson recalls. "Before someone put a gun to their head, they had interest. And as soon as they raised the gun, they got cold feet. It took us a long time to get over it," he says, more weary than bitter. He says he understands, however, that NSP may have opted not to take on the financial gamble of building the plant.  

And so, he reasons, NSP opted to let the farmers' cooperative assume the burden. "They dropped us like a hot potato," Jepson says. "Isn't that what corporations do? They're going to invest their money where they feel they'll get the best return. Something like this is kind of risky."

The university's Hanson concurs, saying that such an ambitious scheme really needed the support of NSP and its resources. This kind of innovation "has to project economic viability" in order to survive, he says.

By late 1994 MnVAP's hope that NSP would act as its joint-venture partner in the plant was dead. But by then the co-op members were believers, impassioned about fueling renewable energy and longing for the boost such an enterprise might bring the local economy. NSP had ignited the farmers' interest in the project, then left them on their own to win the bid.


Early in 1995 Minnesota Valley Alfalfa Producers began ironing out the details of their proposal to NSP. MnVAP's 16-member board--"which is too many people on a board, let me tell you," declares Jepson, who served as chairman until last year--met once or twice a month, sometimes once a week. During the summers, after the farmers had spent 14 hours in the fields, they'd gather in a classroom at the technical college and debate electricity, sometimes until 2:00 in the morning. In the winter, those meetings lasted all day and half the night. For the better part of three years, "there wasn't a day that went by I wasn't on the phone or thinking about it," Jepson remembers. "It got pretty intense. A lot of stuff needed to get done."

The group was intent on working out the logistics of building and supplying with fuel a alfalfa-electricity plant in Granite Falls. It would have to prove both feasible for the utility and lucrative for farmers--something MnVAP believed it could accomplish based in part on the research done at the University of Minnesota and by NSP since 1993. The roughest discussion came when talk turned to compensation for co-op growers: "If you set it too high, you can't get the bid. If you set it too low, you can't make any money," Jepson says of the board's rationale. "That was a real knockdown-dragout fight."

After an arduous bidding process, MnVAP emerged in mid-1996 as the winner, with the most economical biomass project of the three that had competed. Now the co-op had to forge a contract with NSP to nail down the business specifics.

As complicated as the bidding process was, Jepson says that negotiating the contract was even worse. Throughout the discussions the farmers and NSP regularly consulted with the Public Utilities Commission's five-member panel, which was shepherding the process. All parties realized that settling on a viable contract was essential to the continued development of the alfalfa-powered plant. With guaranteed annual revenue coming from NSP to the farmers, the co-op itself could afford to build the plant, which was projected to cost between $180 million and $240 million. Above and beyond that, individual farmers would be assured a steady income from their alfalfa crop for the life of the contract. Jepson is quick to point out its benefits for MnVAP members, who usually live at the mercy of annual fluctuations in the price of corn and soybeans: "You knew what you'd get every year for 20 years for this type of product. It was rock solid. That's just something that doesn't happen in the agriculture world."

At the end of 1997, MnVAP and NSP had wrapped up negotiations. They'd settled on a 12-year contract instead of a 20-year one, with MnVAP providing a constant supply of 75 megawatts of biomass electricity to NSP's approximately 7,200-megawatt power grid. More specific financial terms of the deal that finally emerged, including the expected costs for the alfalfa-energy, remain undisclosed. (In response to requests by City Pages for information, the PUC has repeatedly cited its legal prerogative to protect NSP and MnVAP's trade secrets.)

By July 1998 Enron, the massive Texas-based energy concern, boosted the project's profile by signing on as a co-owner and co-developer of the Granite Falls plant. The Department of Energy, which had been involved in the project since 1996, promised funds totaling $44 million. It looked as though the project would come on-line in time to meet the first phase of NSP's biomass mandate, by 2001.

All MnVAP needed was the stamp of approval from the Public Utilities Commission. Because MnVAP and NSP had followed the PUC's directives throughout the bidding process and contract negotiations, and because the project was designed to conform to the law enacted in the Prairie Island mandate, the farmers had good reason to believe approval would come easily.  

They were wrong.


"We erred in assuming that legislative support at the state level would turn into regulatory support at the state level," says Ken Campbell, the consultant who joined MnVAP in 1995. "That was not the case."

MnVAP and NSP approached the commission for approval in February 1998. They got it a long 14 months later--but with strict conditions attached. That unusual delay, say those tracking the PUC's deliberations, damaged the project severely, perhaps irreparably.

To say the panel took a while to finalize its approval is, according to the U of M's Chris Hanson, "a real understatement. The approval process by the PUC killed the project." After a pause, Hanson backpedals a bit: "No, I don't want to say that. I don't think it's killed...." What the drawn-out discussion did, he continues, was to cause the project's financiers to openly wonder, "Whoa, why are they doing this?"

In April of this year, Enron pulled out of the project. Although the company issued statements to the effect that the alfalfa project no longer fit with its current goals, those close to the deal say Enron abandoned the plant after it got tired of wading through the regulatory mires and waiting for PUC support that looked, as the months wore on, less than solid.

Steve Minn, the state's commerce commissioner, doesn't hesitate in airing his opinion on the situation. "The MnVAP proposal was killed," he says, "because of the PUC's decision to delay implementation of the plan and Enron's unwillingness to wait for the final approval." As a result of the uncertainty raised by the commission and Enron's withdrawal, the Department of Energy froze its funding. Bottom line? The project had gotten a provisional green light from the PUC, but it no longer had the ability to move forward.

The problem was cost. The PUC was lobbied heavily by Minnesota Energy Consumers, a group of NSP's largest industrial-energy customers (which includes IBM, Honeywell, Inc., General Mills, and 3M) who objected to the plan; partly in response to that opposition, the PUC spent months delving into the cost of alfalfa-based electricity. It would be high, very high. Electricity today costs between 3 and 3.5 cents per kilowatt-hour, and is the standard against which innovative sources are measured. An NSP study for the alfalfa plant authored in 1995 projected costs of 6.5 cents per kilowatt-hour.

Although the PUC refuses to release data about the costs ultimately laid out in the proposed MnVAP-NSP contract, the buzz among energy experts is that the biomass electricity would cost at least 50 percent more than NSP's early research had indicated. Environmentalist Grant says it was entirely possible that the cost might have soared to as high as four times that of electricity from a coal-burning or natural-gas plant. "That's a big bite to ask the energy consumer to pay," he says, "even if the goal is a laudable one."

No cost constraints were put on the biomass projects in the Prairie Island mandate. The reason, Grant explains, is because at the time the law passed, the technology for producing renewable energy, and alfalfa-based power in particular, was so new that no one could accurately calculate its price. After the hard-fought battle to get renewable energy riders attached to the approval for NSP's nuclear-waste storage, he adds, the environmental lobby was not about to allow arbitrary cost limitations to strangle the potential of biomass power.

Despite the open-ended mandate, the PUC did express strong concern that the costs outlined in the contract were out of hand. Part of the PUC's mission is to protect the consumer from unwarranted cost increases by the phone and energy utilities. And while the commission has no authority to supersede state law, including the Prairie Island mandate, it must weigh that law--and the projects designed to fulfill it--against consumer interests. In the case of the alfalfa project, those two camps were completely at odds.

"You can't make electricity cheaper by having a legislative mandate," declares Eilon Amit, the principal rate analyst with the Department of Commerce who reviewed the biomass proposal and submitted recommendations to the PUC. Because the PUC is supposed to protect Minnesota's ratepayers, he says, it was empowered to raise questions about the expense of biomass electricity and to impose cost caps that legislators hadn't prescribed.

Still, Amit goes on, the skyrocketing costs could have and should have been foreseen during the research stage; the technology for biomass electricity was new, and because of that there weren't many competitors around who could drive the price down. Moreover, by legally requiring NSP to use biomass technology--which is just plain pricey--the Prairie Island mandate itself may well have given the upper hand to the biomass bidders. "They all know NSP is in a bind," he says. "When you try and make it happen and it's not economically feasible, it doesn't make sense."  

And that, he concludes, is what happened: "The PUC can't break the legislative mandate, and it can't look like it's not protecting the consumer interest. Hence, they can't decide. They keep postponing." The commission, torn between the law and energy users during its deliberations, did nothing for more than a year.

In the end that long delay, along with the cost anxieties, proved enough to derail the MnVAP-NSP contract for the Granite Falls plant.

Which is a shame, says Hanson, who after fostering the idea in academic circles became one of the most vocal advocates of the Granite Falls plant. "There was a serious lack of understanding of the cost of the project," he says--a conclusion that causes his hands to fist up as his restrained manner melts into agitation. "It's viewed as being very expensive. I don't happen to believe that. When we started this project, we knew it wouldn't be the lowest-cost power on the block."

Alfalfa-based power would be expensive at first, true; but it was the right direction to go in--both for the farmers and for the environment--Hanson argues. Once the plant was actually built, his team had reasoned, greater efficiencies would come over time. The technology would improve, and the farmers would experiment with hybrid alfalfa stock that could produce stems with denser energy content. "Within ten years you'd see an impact on the price," he says. "You never get there if you don't try it."

Another frustration during the PUC's cost discussions, says MnVAP consultant Campbell, was that the panel seemed to ignore the original intent of the Prairie Island mandate. "The purpose of the project, according to the Legislature, was not to bring on-line in the near term the least-cost electricity resources. The purpose of the Prairie Island mandate was to advance renewable technologies to foster economic development in rural Minnesota.

"Of course biomass technologies and fuel supplies today are not market competitive. But that's not to say they won't be market competitive in the future. It has to be seen as a long-term investment," Campbell continues. "The Legislature understood that. For the objective of the mandate now to be turned 180 degrees and put in this context--how does biomass power compare to the least-cost alternative?--is really a sabotage of the legislative intent."

Perhaps, Grant muses, the alfalfa project was conceived by visionaries who took on too much, too soon.

With Enron and the Department of Energy out of the picture, MnVAP scrambling to secure another co-developer for the plant, and the PUC's cost caps making it unlikely that NSP will fulfill its biomass obligations by 2002, Grant says, "the only thing that's certain is the original project as proposed is no longer viable. There is uncertainty about whether the project could be built, whether the technology was ready for application at that size level. It was at least two to three times larger than anything that had been built before. Vendors were really pushing the project manager to go large--to supersize it, if you will." Only 25 cents more, but who can really eat that many fries?

That conclusion is, in a sense, the optimistic one; the current situation, according to such an analysis, could be remedied by simply limiting the scope of the project and building a smaller debut plant than the one proposed to the PUC. The more bleak view, Grant suggests, is that biomass just isn't a wise choice for renewable energy, nor will it be in the foreseeable future.

In the five years since the Prairie Island mandate, wind energy, for instance, has taken off worldwide. As a result the technology has improved and, in turn, the cost has diminished, Grant says. Biomass, on the other hand, hasn't advanced much at all, and its future as an energy source is in question. "Biomass projects, at least the ones we've seen so far," he figures, "may not be ready for prime time."

That grim estimation, which is partially reflected in the PUC's conditional approval, leaves MnVAP's farmers in a bind with the clock ticking. If the co-op is unable to meet specific milestones laid out in its contract with NSP (the PUC, NSP, and MnVAP all refuse to divulge exactly what those entail or what the timelines spelled out in the agreement are), its contract will be voided. The utility says it is awaiting "further guidance" from the PUC and has been allowing MnVAP leeway in finding a new developer since Enron pulled out. "We've given them some time to try to remedy these problems," says Allen Krug, a development consultant who works on biomass projects for NSP. "If they can't, there's a contract termination."  

Which would be another shame, for the farmers who during the past six years have tailored their crops in anticipation of a profitable alfalfa power plant in Granite Falls.

Who is to blame for the debacle? The answer varies, depending on whom you ask. Some denounce the Legislature and its lack of foresight in not spelling out price specifics in the Prairie Island mandate. Some point the finger at NSP and its decision not to partner with MnVAP on plant construction. Most agree that the PUC's yearlong stall and untenable cost limitations dealt biomass the final blow.

But as the tug-of-war winds down, it appears that the party on the losing end is the farmers in western Minnesota who have invested millions of dollars and more than six years in a dream that never bloomed.


What will be the fate of NSP's biomass mandate? "That is the $500 million question a lot of people have been scratching their heads about," Grant says. Since the Granite Falls plant was first proposed, two other biomass projects have gone before the PUC. Those proposals--one to burn waste wood, and the other to burn whole, fast-growing trees--have been selected by NSP to supply the remaining biomass energy the utility is legally required to provide by 2002. After determining that both would be too costly, the PUC this summer sent the plans back to the drawing board for revision by early fall. (Another project that has been discussed, possibly to replace the alfalfa proposal, is to burn turkey manure as a fuel source. That plan has yet to be presented to the commission.)

Until any of those come to fruition, all bets are off. What is clear is that, with the two advanced plans back at square one and MnVAP's plant in limbo, NSP will have serious difficulty fulfilling the mandate's first deadline of 50 megawatts of biomass energy in 2001, let alone the remaining 75 megawatts by 2002.

Recognizing the predicament it's in, the utility says it plans to file updates with the PUC on all three commission-reviewed projects by the end of this month and, from there, to let the commission sort out the biomass mess. "At this point we've made every effort to meet deadlines," says consultant Krug. By no fault of its own--"The projects were scheduled to be on-line at the appropriate times"--he adds, NSP now faces the likelihood of not making its mandate deadline.

That probability, Grant says, means that NSP will probably go before the Legislature next session and ask to have the biomass mandate changed--to loosen the qualifications so that more conservative projects with proven track records could be considered to fulfill its obligations. The law has already been revised considerably over the years, to allow energy to come from such products as waste wood, which under the original law would not have counted as biomass. "I would frankly hope we retool the mandate to place the emphasis on smaller demonstration projects," Grant offers--and if that doesn't meet the 125-megawatt requirement, devote funding to wind power, or energy efficiency, or transforming coal plants into natural-gas ones. "There are probably better uses to which this money might be put than large-scale biomass projects," he admits.

Such a scenario would mean that the foundering of the alfalfa project would actually help NSP escape part of the Prairie Island mandate it fought so hard against five years ago. It would also leave the farmers out to dry at a time when corn and soybean prices are already low and a much-touted agricultural crisis is having a disastrous impact in the state.

MnVAP, according to Campbell, is still negotiating with other potential partners to see if the power-plant idea might start humming once more. If that doesn't happen, he says the co-op is looking at alternatives that could still bring the farmers a solid revenue stream, such as simply processing alfalfa for feed. "It's preposterous to say it is not an investment setback if the project is abandoned," he says. Still, Campbell adds, "That does not mean MnVAP as a co-op will go bankrupt. We're working on strategies to make the farmers far better than whole."

Jepson seconds the hope that an alfalfa-electricity plant will one day open its doors in Granite Falls. "To me it's still the best idea that's come along in a long time," he says. "If we ever do get this thing up and running, 20 to 30 years from now there's going to be tons of these plants around the world."  

Even so Jepson has a pragmatic streak that comes from season after season of hard farming. Balancing business plans and partners is just as tricky as weighing which strain of corn to plant or when to spray for bugs. That said, he quietly acknowledges that, as far as the risks and yields go, the situation doesn't look promising. Without full support from the PUC, NSP, and the Minnesota Legislature, will the plant ever get built? "I don't know. I'm asked that all the time, and I don't know anymore."

Looking back, Jepson considers the lessons he has learned since 1993. "We knew this was a little bit of a long shot. We were essentially a bunch of farmers trying to get into the business world. Not that farmers aren't businessmen--I'm the corner grocery store. We're talking about a huge undertaking, and 16 guys who know how to run a small business," Jepson says. Then, posing the question more to himself than anyone else, "Do we know how to run a big business?"

The world of big business, as Jepson and his MnVAP allies learned, is not so far from the farm. A season's devastation can come from skeptical regulators and corporate shenanigans as readily as it comes from too little rain or too many bugs. "This is a good idea," he says with a weary sigh. "It's just that there are a lot of forces beyond our control."

Correction published 10/6/1999:
Owing to a reporting error, this story incorrectly stated that Northern States Power's plant at Prairie Island sits on tribal-owned land; the property is company-owned. Also, owing to an editing error, the story indicated that nuclear-waste casks are buried there; the casks are stored aboveground. The above version of the story reflects the corrected text. City Pages regrets the errors.

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