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Utility co-op connection: NRCO helping rural electrics pursue renewable energy.

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Many electric cooperatives have (embarked upon significant changes in (the way they provide electricity to rural members. One of the more significant changes is the growing use of renewable fuel to produce electric power.

To assist with the development of renewable energy, rural electric cooperative utilities across the country have joined forces to form a new cooperative: The National Renewables Cooperative Organization (N RC O). This new co-op for cooperatives was established in 2008 to find ways for rural electric cooperatives to access a diversified, renewable-power portfolio. Because renewable resources are not evenly distributed throughout the country, gaining access to wind, solar, geothermal and biomass fuel resources is much harder for co-ops in some regions.

Most states now require electric utilities to establish renewable portfolio standards and supply electricity from renewable-energy resources by a specific date, so many rural electric cooperatives are looking for reliable and affordable sources of "green energy." This is where NRCO plays a role.

Cooperative members of NRCO can either purchase power from, or invest in, renewable energy projects. This helps cooperatives without access to renewable resources to tap into renewable energy. As the rate of development of renewable resources increases, NRCO can help cooperatives meet government requirements.

Initial agreement delivers wind power

NRCO recently announced its first agreement to provide wind power to two member-systems: Southern Maryland Electric Cooperative Inc. (SMECO) and Old Dominion Electric Cooperative (ODEC) in Virginia. NRCO is making this happen through an agreement with E.ON Climate & Renewables North America, a subsidiary of E.ON AG, one of the world's largest energy companies.

Under the purchased-power agreements, the two cooperatives (SMECO and ODEC) will purchase wind power from the Stony Creek Wind Project for the next 18 years. Located in Somerset County, Pa., on a surface mine that once produced coal, the 35 Stony Creek wind turbines have a total possible output of 52.5 megawatts.

"The Stony Creek Wind project will help SMECO meet Maryland's renewable portfolio standard," says Joe Slater, SMECO's chief executive officer. "This agreement will provide a longterm source of renewable power at a competitive cost. It is an innovative way to use the cooperative business model--which has been successful in delivering electric power to rural areas for nearly 75 years--to help rural electric cooperative utilities participate in renewable energy projects, benefitting rural communities."

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In addition to benefitting the environment, increased use of renewable resources represents a major economic opportunity for rural areas, adds Jonathan Adelstein, administrator of the Rural Utilities Service of USDA Rural Development. "Rural America has the ability to supply this nation's growing energy requirements," Adelstein says. "By 2025, rural America is likely to provide 25 percent of our total energy needs. Renewable energy development promotes energy independence and creates jobs in rural communities. It is no surprise that rural electric cooperatives are leading the way."

According to data from the National Rural Electric Cooperative Association (NRECA), nearly 90 percent of the nation 's cooperatives offer renewable energy options to consumers. About 11 percent of the electricity that cooperatives distribute is generated from renewable fuel sources, including hydropower.

Aggregating demand

The idea for a renewable energy cooperative originated with discussions on how to address a fairly new, but quickly growing, industry issue.

"NRCO is the result of discussions among generating and transmission cooperative utilities that wanted more access to renewable projects. This has grown as an issue--driven both by consumer requests and, more recently, renewable energy and (potential) carbon legislation," explains Todd Bartling, NRCO director of renewables development. "As a cooperative entity, we are promoting the use of renewable projects and facilitating their development. Our role is to aggregate demand.

"You need critical mass for financing these projects and to get them built," Bartling continues. "Ultimately, we look for projects that make sense for our members. The long-term benefit is the potential for us to own and develop projects to meet member needs." Bartling says that wind projects are popular because they can be constructed within a year, while woody biomass projects take several years to build.

In addition to developing renewable power, SMECO's goal is to offer a diversified energy portfolio, which can help reduce the volatility of power prices by offsetting fluctuations in fuels such as natural gas. The cost of power represents the biggest portion of rural electric cooperative utilities operating expenses.

Power-purchase contracts that expire at the same time traditional fuel costs increase can pose affordability issues for both business and residential consumers. "We look for ways to diversify our energy portfolio in keeping with our risk-management policy and keeping our rates affordable," Slater says. "The Stony Creek Wind agreement does that."

By Anne Mayberry

Public Affairs

USDA Rural Development

e-mail: anne.mayberry@wdc.usda.gov
COPYRIGHT 2010 U.S. Department of Agriculture, Rural Business - Cooperative Service
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Author:Mayberry, Anne
Publication:Rural Cooperatives
Geographic Code:100NA
Date:Sep 1, 2010
Words:790
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