An entry from our colleague Jake Storms:
While wineries and vineyards have long been moving toward being “green,” several have taken the next step by installing renewable energy generation onsite. One of the most recent is August Cellars, just outside Newberg, Oregon. The winery recently installed a 150-foot-tall, 50-kilowatt wind turbine. August Cellars maneuvered around the somewhat prohibitive cost of the project (between $70,000 and $100,000) by not actually owning the turbine, but instead leases the turbine from a third party with an option to buy.
August Cellars is following in the footsteps of such giants as Constellation Wines, which, in September 2010, announced it would increase its solar photovoltaic (PV) usage to nearly 4MW with new installations at its Estancia, Ravenswood, and Clos du Bois wineries in California. These systems would expand on the company’s already existing use of solar PV at its Gonzales winery. Constellation will own the systems and take advantage of the tax credits. Once completed, the installations will cover nearly 100% of the energy needs of Estancia and Ravenswood, 75% of Clos du Bois, and 60% of Gonzales and is projected to save the wine giant nearly $1 million annually from reduced energy costs.
The move by wineries toward renewables is not merely a “West Coast thing” either. Red Caboose Winery, a 10,000-case rural winery located in Meridian, Texas, recently released a statement that it would be using a USDA Rural Energy for America Program (REAP) grant of $15,617 to help install a solar PV system. According to the owners, the new system will allow the winery to have a net annual energy consumption of zero.
If structured properly, installation of renewables can make economic sense for a winery/vineyard, creating significant financial savings from reduced energy costs. In addition, for a wine business, there is substantial public relations value to going “green.” When combined with other energy efficiencies, installing renewables can substantially reduce a winery/vineyard’s carbon footprint. This can, in turn, generate substantial brand goodwill from a public that is becoming increasingly aware of environmental consequences. This is especially true among the wine-drinking demographic.
Wineries and vineyards looking to install renewable energy often encounter a host of obstacles. Two of the largest are variability and cost.
Simply put, the wind doesn’t always blow and the sun doesn’t always shine. Nor does power always cost the same or do governmental entities offer the same incentives. A winery or vineyard contemplating installation of a wind turbine or solar array should look closely at the available resource. This may mean paying for ancillary costs, such as scientific studies. It will assuredly mean a closer look at long-term planning to establish acceptable rates of return given the attendant risk and variability.
In 2009 and the first part of 2010, installation of a commercial solar PV system in the United States with a capacity of 250-500kWDC averaged around $7.10 per installed watt before incentives and tax credits (click here for a more in-depth look). That price can drop to $4.00 per watt or lower after incentives and tax credits, with some larger projects (>2MW) seeing prices as little as $2.50 per watt. While this cost is projected to decline further, it still creates a significant initial capital outlay that may require many years to recoup. It therefore becomes important to view renewable installation in the long term.
With this in mind, wineries and vineyards have several ways of making the use of renewables cost-effective and attractive. These include using tax credits and grants, third-party ownership as in the August Cellars example, and taking advantage of such programs as Net Metering or Feed In Tariffs, where such programs are available.
- Net Metering – This uses a special metering system that credits you for the excess power you generate. Net Metering allows a winery to avoid the full retail cost of electricity and pay only for its “net” use in each billing or truing up period.
- Feed In Tariff (FIT) – A Feed In Tariff allows smaller renewable generators to sell their generation at set rates back to the utility. FIT contracts can be very restrictive and often run from five to 20 years. They also have modest, yet very predictable, rates of return. However, installations being used under a FIT program are generally not eligible for other programs, such as Net Metering.
While the obstacles can be daunting, installing renewable energy at your winery or vineyard can have substantial economic and marketing benefits. An owner contemplating installing a renewable energy system would best be served by having a good understanding of the local resources and looking into all avenues of funding. With proper planning, renewable energy can make your “reds” and “whites” feel green.