Iwasaki Brothers Is Energized & Dollar Wise
Iwasaki Brothers has taken control of its energy costs by investing in alternative systems that pay for themselves.
January 25, 2011
Oregon growers are lucky they have a state government that makes it attractive to invest in alternative energy systems, essentially cutting the time to recoup the investment in half. An energy project that pays for itself in less than three years is a no-brainer.
Iwasaki Brothers in Hillsboro used Energy Trust Oregon (ETO) incentives to reimburse the costs of energy curtains in its newest greenhouse a few years ago and to install a 665-panel solar electric system in 2009. Leaving no stone unturned, the company also explores options with utility companies. Just switching from a firm natural gas rate to an interruptible rate saved enough to pay for a machine that converts propane to behave like natural gas in a backup situation.
The fourth-generation family business owned by Jim Iwasaki is one of the leading bedding plant growers in the Northwest. He and Operations Manager Steve Ussery are always looking at ways to proactively address costs and drive revenue.
While Blooming Nursery's solar system (page 14) is thermal for heating, Iwasaki's is solar electric. The 665 photovoltaic panels on three of Iwasaki's metal-roofed buildings supply a portion of the 15-acre operation's electrical needs. The panels are in two arrays - 280 panels producing 49 kilowatts and 385 panels producing 67 kilowatts. Each panel is 63 ½ by 32 inches and weighs 33 pounds. The current is converted from DC to AC.
Surplus energy is sold back to the public electric grid at the same price Iwasaki is paying. Credits can be banked during the sunnier months, June through August. But even on cloudy days, the system still produces power.
Costs were offset by ETO dollars and tax credits. ETO paid $1.50/watt of project output. Oregon's Energy Tax Credit issues a tax credit equal to 50 percent of the project cost over five years. The Federal Investment Tax credit is a federal tax credit of 30 percent of the project costs. There also is an accelerated depreciation allowance for renewable energy equipment. "Obviously, you need to have a tax liability to use tax credits," Ussery says. "The tax credits can be sold at a reduced value if the project owner cannot utilize all of the credits."
Sunergy Systems in Seattle, which designed and installed the solar-powered system, assisted Iwasaki with securing the incentives. The solar panels were manufactured four miles from the greenhouse by SolarWorld. Return on investment is expected to be 2.5 years and Iwasaki's 10-year annual rate of return is expected to be more than 10 percent.
Vaporizing Fuel Costs
Even before pursuing the solar system, Iwasaki installed a synthetic natural gas plant in 2007. The machine takes propane and heats, pressurizes and atomizes it to mix with air to simulate natural gas. Having this machine as a backup allowed Iwasaki to switch from firm to interruptible commercial gas rates. With savings of a little more than $65,000 a year, the company paid for the machinery in less than three years.
"Before, we had to pay a premium for constant supply. Now when natural gas gets shut off, we switch over to burn propane," Ussery says. "It will last five days. We keep it maintained. You never know when the weather will break. Two years ago, we had a lot of snow and cold temperatures and the utility companies could not get enough gas to Portland. They started shutting off interruptible customers. You definitely pay a premium for firm gas."
The next potential opportunity for energy savings and generation is tapping into methane gas from a nearby landfill owned by Waste Management. The plan would be to use the heat off generators for electricity and heat. "We're still waiting on Waste Management to agree to the project and tell us what price they want for their methane," Ussery says. "We'd need to build a structure and get an electrical generator and methane boiler, which would be a secondary heat source. Hopefully, the subsidies and incentives will hang in there."
Ussery advises growers to look for all the available incentives and funding sources for energy saving and renewable-energy projects. In addition to alternative fuels, examples include energy curtains, condensing boilers and floor/bottom heating. While some incentives are competitively awarded, others are automatically awarded if requirements are met.
"There seems to be quite a bit of money available for renewable energy projects," he says. "There can be a significant amount of paperwork necessary to receive these incentives. Allow plenty of time for the project. The paperwork is most tedious. Anticipate the future costs of energy and factor these in when evaluating a potential project."