Connell: Well, you know, it's nice to see the finished result after three years of a lot of work and I can't tell you how many thousands of hours. But we had an ethanol plant. We could take a 56 pound bushel of corn and distill it. A third of it becomes ethanol, a third of it becomes distillers grain and a third of it CO2. We looked at it like you've got two revenue streams, why not a third. So we did a lot of work – background work, read the aquatic species study that was done from 1970 to 1996, realized that algae was that source of biofuel feed stock that we needed to develop, realized we had 148,000 tons of CO2 a year. We have 272,000 gallons of water coming back each day from the coolers at 81 degrees. We had the perfect environment, the perfect set up. We know that the future of algae is going to be in coal fired power plants. Another domino that has fallen as we've moved forward is the cap and trade legislation. So, the project seems almost to have a life of its own. We're proud that it's going to originate here in Shenandoah. And, again, we think that, as the Governor said, not the Silicon Valley but the Silicon Plain of Algae. And it's great that it can be here in Shenandoah.
Pearson: Gregg, you've got about 15 more seconds. Tell me what's next for Shenandoah after this project.
Connell: Well, I think the next thing that we're going to look at is other synergies off of the algae. Tremendous potential with algae. Algae stores its energy either in lipids or carbohydrates. There are thousands of different types of natural algae we don't use, GMO algae. So we think that there's a world of opportunities that are going to develop simply because it all started here in Shenandoah.
Pearson: Gregg Connell, thank you so much. Kim Greenland, you're a banker. When you look at a project like this, what's your reaction?
Greenland: Great. I mean to bring diversification, job creation, community involvement, the support that they get, great. Equity, raising equity for it. Couldn't be a better match here in southern Iowa with the work force that we have, the thought process of bringing in renewable energy, cap and trade, as he mentioned. The timing couldn't be better for bringing a project to southern Iowa. Lenders, we look highly at ways we can diversify and help projects of this nature.
Pearson: Ag bankers here in this state in this area have been strong economic development backers. Usually they are THE backers. When you look around right now, what do you see next? What do you see beyond biofuels? What other projects do you think are out there?
Greenland: Well, as Gregg mentioned, the diversification, the spinoffs that these bring. These projects have to start somewhere. We have to come up with the capital, the equity to do that, the manpower and things. And we believe the future is bright here in southern Iowa for the resources that we have, certainly biomass, energy, the corn that we have, the farmers' ability to bring that energy to market and things. So we think the future is bright for them from both a lending perspective and economic. We all sit on economic boards and couldn't be prouder of the progress that's being made here and throughout Iowa and southern Iowa.
Pearson: All right. Let's talk to our economist about this deal. Tim, how is this going to impact you in the work that you do with producers?
Eggers: Well, specifically with algae production, it's one of those things where as farmers are looking at ways to diversify with their off farm investments, opportunities like ethanol plants, like expansions of ethanol plants are one of those things that they evaluate. So as far as Iowa State University Extension's role, we have people like David Swenson on campus who does a really good job at helping people to evaluate these types of investments and look down the road at their expected returns. So that would be our role, I believe.
Pearson: 50 million gallon ethanol plant is pretty substantial too in terms of cash product demand for corn.
Eggers: Oh, amazing. As we were talking earlier with regard to the margins that were out there, if we were thinking about what was happening in 2006 before we went into harvest, we were looking at another year of okay returns historically. And since then we've just had prices that have been tremendous in comparison, and we've gotten quite used to these very high prices so that we think corn hitting about $4 on Thursday was a pretty significant thing but it wasn't $6 like it was just a little bit ago. But to think that just a few years ago we would think that $4 was an okay price is just amazing.
Pearson: It is. And we sit here now – we're going to talk with Sue Martin about where these prices are going. But real quick, just impact on livestock locally with the DDGs and the concentrated livestock feedings, are you seeing much reaction there?
Eggers: It seems to be positive, of course, because there's that other feed source there as far as the fed cattle market, because we do have quite a bit of cattle feeding here in southwest Iowa. So that corn is being replaced with those DDGs. And it's one of those things where when we have meetings about DDG use, the house is packed. At extension, that is great whenever we can put on a program and we fill the room. So it's been very positive for us, because people are hungry for information about how to use those DDGs and they seem to be working for our cattle feeders very well.
Todd Becker, CEO Green Plains Renewable Energy: "…overall I think the Iowa Power Fund was hugely instrumental in making this happen. Without it would we have moved forward? I think we would have had to think twice a little bit about it, but because of the public demand and the public need for something like this -- we feel very confident. Maybe we would have moved forward slower. You know so maybe these wouldn't be here today."
The Iowa Power Fund is the fruition of Gov. Chet Culver's campaign promise to promote renewable energy projects across the state. A $25 million annual appropriation from the state legislature is overseen by an 18-member board. Two years into the grant process, the Power Fund board has already chosen a series of recipients including:
- Nearly $15 million to biofuel producer POET and their Emmetsburg cellulosic ethanol plant's Project Liberty.
Nearly $3 million for wind turbine construction at Newton, Iowa's TPI.
And $1.7 million for advanced solar panel development at Iowa State University.
Outside of the recipients themselves, the Iowa Power Fund's largest supporter is the man who signed the program into state law.
Gov. Chet Culver, D-Iowa: "And we are doing about 30 of these projects now across the state thanks to the Iowa Power Fund. We are changing the way that we use energy, we consume it, we're making it a more efficient in terms of this plant, for example, not only reducing emissions, but using the by-products of this algae technology with feedstock and in other important areas. So, it's a great day for Iowa."
Despite the Governor's enthusiasm, critics argue programs like the Iowa Power Fund waste taxpayer dollars, bypass the free-market system, and artificially pick winners and losers in the energy sector.
Further complicating the program's future is a widespread economic recession that has hit state governments with heavy budget shortfalls. In Iowa alone, state officials must trim hundreds of millions from the current year's budget. Early projections for the following year's deficit have crested as high as $1 billion. Legislators may be forced to defund many programs leaving initiatives like the Iowa Power Fund vulnerable.
The program's future remains less than certain.