Diversified Power Portfolios

Food companies aren't immune from price elasticity for energy, but they can seize new energy opportunities to better control cost and availability.

By Kevin T. Higgins, Managing Editor

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Napoleon Biogas

Gas, Wind and Solar sounds like a bad R&B group, but in fact they are the raw materials of a distributed energy portfolio that will help power food plants in the future.

Sustainable manufacturing and public image aside, financial self-interest drives American business, and mainstream companies embrace alternative energy options when they make economic sense. That principle is playing out at food and beverage projects across the country, most of them involving renewable sources but also with other technologies.

Manufacturers use these options not because they are new and exciting but because they solve a need and allow the business to continue to grow, points out Corey Wendt, senior manager in the Madison, Wis., office of Baker & Tilly, a management consulting firm that has served as an advisor on renewable energy projects geared toward the food industry. “Unless you find a way to manage waste, you can’t continue to grow on a site,” Wendt emphasizes. That reality helps explain the current boom in both gas and electrical generation from alternative sources.

Harry Pettit, manager of systems and infrastructure engineering at Pepperidge Farm, agrees. The firm’s Bloomfield, Conn., bakery is approaching self-sufficiency in electric generation, but the transition never would have occurred if it did not serve core needs. Positive experience with a 250 kW fuel cell -- a clean-burning electric generator using an electrochemical process -- installed in 2006 led to installation of a 1200 kW system two years later. Engineers are in the preliminary design phase for a second fuel cell that could start up next year.

Those types of projects bring intangible benefits like positive publicity and improved staff morale, but the projects never would have been undertaken if they didn’t serve solid business purposes. “It can’t detract from what we do, which is put out quality products,” Pettit emphasizes.

That said, forward-thinking organizations like Pepperidge also are hedging their bets against an energy market subject to volatile price swings and uncertain availability. Rather than being subject to the capabilities or caprice of their local utilities, firms are exploring options to lock in supplies and tame prices for the long term. What they often find is that regulations and rules imposed on other industries can work to the advantage of food and beverage manufacturers.

Motives for exploring energy alternatives vary, of course, and some initiatives are independent of hard-headed business needs. An example is Mars Inc.’s purchase of renewable energy certificates (REC) generated by a 200 MW wind farm under development in central Texas. Mars will use the REC to support a carbon-neutrality claim for its factories in support of its sustainability goals. “Mars is creating financial security for the project developers,” according to a company statement, while also locking in a 20-year fixed price for an amount of electricity equivalent to what the wind farm generates.

CH4 Biogas

Biogas systems like the CH4 Biogas plant at Campbell Soup’s Napoleon, Ohio, facility address both energy needs and waste disposal for food processors. Photo: CH4 Biogas LLC

A more production-oriented project is the biogas system that came on line in late 2013 at Campbell Soup Co.’s Napoleon, Ohio, plant (our 2014 Green Plant of the Year). Engineers from Hull & Associates, a Dublin, Ohio, firm active in alternative energy projects, identified the feasibility of a waste-to-energy system as an alternative to an anaerobic-digester upgrade.

Napoleon’s system was built, financed and is operated by CH4 Biogas LLC in Atlantic Beach, Fla. The anaerobic digester takes in 300 tons of waste a day, capturing the resulting methane and using it to drive a combined heat and power (CHP) electric generator. Campbell has a 15-year contract to purchase all of the generated electricity at a favorable rate. Its capital cost: a whopping $0.

Capital angels

RECs are the lubricant for many of the energy projects taking place. According to Hull’s Steve Giles, vice president-alternative energy, 38 states have REC programs that can make renewable energy projects financially attractive to investors and relieve food companies of making a capital investment. Ohio passed legislation requiring investor-owned utility companies to either generate renewable energy or purchase REC from approved sources, kickstarting projects involving wind, solar, landfill gas and biogas.

Northwest Ohio is fertile ground for wind turbines, and multiple projects have taken root. Among the developers is Cooper Farms, a vertically integrated turkey processor based in Oakwood, Ohio. Developers of the Blue Creek Wind Farm, a 304 MW installation with 152 turbines, approached Cooper Farms about installing turbines on Cooper’s 280-acre parcel near Van Wert, Ohio. That prompted Cooper managers to investigate the feasibility of undertaking a project on their own.

“Each year customers ask us about our (sustainability) programs in terms of machine efficiency, recycling and other metrics,” says Eric Ludwig, director-corporate development. A wind project was viewed as a statement that would distinguish Cooper Farms from other suppliers.

The project had to make economic sense, and REC, along with the 30 percent federal Investment Tax Credit and the state’s net-metering program that lets distributed power generators sell electricity to the grid, added up to a five-year payback on a $5 million-plus investment that grew to include three 1.5 MW turbines.

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