A big lesson from a small town
In southeastern Iowa, an electric cooperative is bringing the power of solar energy to rural America
Heading southwest on Route 1, once Iowa City has disappeared from the rearview mirror, the expansiveness of cornfields seems unbounded. Then, after nearly 30 miles, it finally appears.
Nestled between acres of farmland, the dark blue solar panels at the brand-new Eagle Point 2 installation stand in sharp contrast to the surrounding environment.
Farmers Electric Cooperative — a 600-member nonprofit electricity provider — recently started producing energy on this 4.2-acre solar farm, signaling what could become the Heartland’s next cash crop.
This solar installation, the largest in Iowa, is the latest move by Farmers Electric to develop homegrown, renewable energy. The farm will produce enough energy to power about 120 homes.
Unlike big, privately owned electric utilities like Duke Energy or American Electric Power, Farmers Electric is owned by the customers it serves. And, as a cooperative, Farmers Electric has a dual mission. It aims to provide reliable electric service and spur local economic development.
The Eagle Point solar farm is mission-aligned.
“This is about investing locally,” said Warren McKenna, the humble but visionary CEO and general manager of Farmers Electric. “Just as buying produce from nearby farmers supports our community, so does buying energy from our neighbors and friends.”
McKenna, who has been general manager since 1992, remembers when the cooperative relied completely on coal for electricity. Now, as a national solar leader, McKenna and Farmers Electric have important lessons to share.
The answer isn’t blowing in the wind
Farmers Electric began its journey towards renewable energy in 2008, as a way to combat rising energy bills.
By then, large-scale wind farms were already meeting nearly 8% of Iowa’s demand for electricity. And the growth of wind power made clear the economic benefits of clean energy. Utilizing renewables technologies was driving private investment in the state. Moreover, because the wind is free,electricity production from wind farms stabilized the wholesale cost of power by minimizing the impact of volatile fossil fuel costs.
Iowa’s wind resources are not evenly dispersed throughout the state however. Frytown — an unincorporated community in Johnson County and home of Farmers Electric Cooperative — sits in southeastern Iowa. The wind here isn’t nearly as strong or consistent as the in central and northwestern regions of the state, where the bulk of Iowa’s large wind farms are located.
For Farmers Electric, Iowa’s wind farms were as distant as its coal-fired power plants, and both sources required sending energy over long-distances, which is not a cheap proposition.
“Even though Iowa’s wind farms were churning out low-cost power, we weren’t feeling the benefits because we were paying so much to get the energy to where we needed it,” said McKenna.
The increasing costs of transmission were driving up energy bills.
To reduce these “shipping and handling” costs, Farmers Electric decided to generate renewable energy locally. The co-op began by installing solar projects at two schools — Township Elementary and Iowa Mennonite School.
Although small, these highly visible installations sparked greater interest in solar, according to McKenna. “After the schools had solar, we saw huge potential for homegrown power.”
Next, Farmers Electric offered to buy power that its members produced. By guarantying a fixed price at which it would buy electricity, the cooperative simplified the economics for those wanting to install their own solar panels.
Ken Bender, a commercial airline pilot and co-op member, was happy to take Farmers Electric up on the offer.
“I wanted to enter retirement with no house payment and a very small electric bill.” So, he invested in his own solar array. “The payback time is less than 10 years now. Most people can swallow that,” said Bender, who is currently adding second, larger array.
But McKenna and the co-op were not content. They wanted to provide different ways for its members to invest in local energy. So in fitting agreement with southeastern Iowa’s agrarian roots, rolled out the garden.
The community solar garden, which is located behind Farmers Electric’s headquarters, gave members another way to invest in local energy. Families, businesses and nonprofits, like churches, could buy a single panel — for just $250 — and deduct the power it produced from their monthly bill.
“Not everyone has the right space for their own solar installation or the desire to own an entire system, so we put an array outside of our headquarters and let people buy a panel,” said McKenna.
The initial offering of 20 panels sold out within a week, and a second allocation quickly filled. Today, there is a waiting list.
Looking ahead
Back in 2008, Farmers Electric set a goal to reduce energy purchases from distant sources 25% by 2025 — through a combination of local generation, energy efficiency and conservation.
It will get 10% of its total power from local renewables over the next year. And on sunny Sundays, when demand for electricity tends to be lower, almost half of the co-op’s power is homegrown.
Although renewables are often thought of as too unreliable and too expense, this hasn’t been the case for Farmers Electric. Energy rates remain highly competitive, and the cooperative has more reliable service than nearly any electricity provider in the state.
By the time of Farmers Electric’s 100th anniversary, in 2016, the co-op will generate 15% of its energy from local renewables, furthering a solar boon that has already brought around $3.6 million to the community.
Despite its success, the vast majority of Americans have never heard of Farmers Electric Cooperative. Yet, players in the energy industry are paying attention. The Solar Electric Power Association, a group that helps utilities adopt solar, recently named McKenna Utility CEO of the Year.
McKenna, soft-spoken and modest, doesn’t claim credit for Farmers Electric’s achievements, even though he is instrumental in charting the cooperative’s course. “All these programs just started as experiments. They grew by word-of-mouth.” He did concede that receiving the award was “pretty cool” though.
Whatever the catalyst for the co-op’s success, other electricity providers are using its secret sauce.
A number of utilities across the country have adopted similar programs to purchase local solar power at a set price. These include large municipal — aka publicly owned — power providers in Los Angeles and Long Island.
However, privately owned utilities, which serve roughly 70% of American energy consumers, have been slower to embrace homegrown energy. Unlike municipal utilities and cooperatives, privately owned utilities serve both customers and shareholders.
A customer who installs his or her own solar panels no longer buys as much — if any — power from the utility. And this is not good for businesses that make money by selling energy.
Change is in the air, though. Regulators in Georgia recently forced Georgia Power — an investor-owned utility serving more than two million customers — to buy enough solar energy to power more than 65,000 homes because it made economic sense.
But McKenna doesn’t even need to look beyond Iowa’s borders to understand the impact Farmers Electric is having. Just recently, Heartland Power Cooperative — another nonprofit electricity provider in north central Iowa — began construction on their own community solar garden. Once complete, Heartland’s garden will power 125 homes and seize the title as state’s largest solar installation.
McKenna doesn’t mind the competition though. “It’s great to see a movement towards producing energy locally. Everyone should be asking, is my energy local? And if not, why not?”
