Economic Evaluation of Wind Energy as an Alternative to Natural Gas Powered Irrigation
Guerrero, Bridget L., Amosson, Stephen H., Marek, Thomas H., Johnson, Jeffrey W., Journal of Agricultural and Applied Economics
High natural gas prices have agricultural producers searching for alternative energy sources for irrigation. The economic feasibility of electric and hybrid (electric/wind) systems are evaluated as alternatives to natural gas powered irrigation. Texas Panhandle and Southern Kansas farms are assessed with a quarter-mile sprinkler system, three crops, and two pumping lifts. Breakeven points identify the price at which conversion from a natural gas irrigation system to an electric or hybrid system is cost effective. Results indicate electricity is a more feasible energy source for irrigation and policy changes such as net metering are necessary to make hybrid systems viable.
Key Words: electricity, irrigation, natural gas, wind energy
JEL Classifications: Q12, Q20, Q42
Increasing natural gas prices have put a strain on the profitability of agriculture in states that have a significant number of natural gas powered irrigation systems. The price of natural gas was relatively stable at around $2 per thousand cubic feet (Mcf) during the 1990s. Since the summer of 2000, however, prices have been volatile and have averaged about $6.46 per Mcf. The average price in 2007 was $7.34, while the average price in 2008 was 22.6% higher at $9.00 (New York Mercantile Exchange, 2008). The increase in natural gas prices has caused many farmers to alter their cropping patterns by changing crop mix, abandoning irrigated acreage, and lowering the amount of irrigation water applied to crops (Guerrero et al.. 2006).
Wind energy is an alternative energy source for powering irrigation wells, which producers can consider to mitigate the impact of increasing natural gas costs. Its popularity is increasing due to its renewable nature that increases energy security while reducing pollution. In addition, the cost of wind power has decreased approximately 90% over the past 20 years (American Wind Energy Association, 2005). Wind energy is expanding rapidly in the United States with 45% growth and more than 5,200 megawatts of wind energy generation capacity installed in 2007. The newly installed capacity alone is enough to provide annual power needs of 1.5 million American homes (American Wind Energy Association, 2008).
Farmland in the plains states has some of the best wind resources in the country (Union of Concerned Scientists, 2003). Thus, the thought of using wind energy for irrigation is natural for agricultural producers (Crummett, 2009). Texas Comptroller Susan Combs stated, "Investing in our communities through improved energy efficiency in farming operations is a win-win opportunity for state agriculture" (Texas State Energy Conservation Office, 2009). She recently premiered the Texas Agricultural Technical Assistance Program, which was formed to assist agricultural producers in making cost effective, energy efficient choices. Montana State University Extension developed a spreadsheet to help agricultural producers decide if wind energy is financially and economically feasible for their operation (Crummett, 2009). There is interest in wind energy among agricultural producers, however, because of substantial upfront investment costs, producers want to know if it will be economically feasible before making the conversion.
The objective of this study is to evaluate the feasibility of replacing natural gas powered irrigation systems with either electric or hybrid (electric/wind) systems in states that have significant natural gas powered irrigation systems, and furthermore, areas of those states that have sufficient wind to make wind energy possible. In this study, electric systems are powered only by electricity from the grid, while hybrid systems are powered from a combination of electricity generated from a wind turbine and electricity from the grid when wind generated electricity is not available. A feasibility analysis was conducted in order to compare the cost of implementing and maintaining electric and hybrid systems to existing natural gas powered systems. …