How To Make Biodiesel

Mar. 11–reen means go, right? Not necessarily. The wave of enthusiasm for green energy has changed the rules for environmentally minded Minnesotans. With demand soaring, today green means wait. Want to erect a wind turbine? Get in line. Collect a rebate for buying solar panels? There’s a waiting list. Construct a biodiesel factory? Install solar heating panels? Build an ethanol plant? There are delays everywhere, as green-energy industries try to ramp up to meet the booming demand. Yet those delays also are a powerful signal, telling investors and green-energy firms that there’s a lot of business to be had in Minnesota. “Minnesota is putting in place a very large market, and they (manufacturers) need to be able to supply the market,” said Beth Soholt, director of Wind on the Wires, a St. Paul-based wind- advocacy group. Among major turbine makers, she said, “I’m sure 2007 is sold out, and 2008 is almost sold out, and I know they’re booking into 2009 and 2010.” A spokesman for Gov. Tim Pawlenty, Brian McClung, confirms that two or three turbine manufacturers have made inquiries about establishing operations in Minnesota. Small wonder. Minnesota’s new renewable energy law could bring as many as 3,000 new wind turbines here, which would be a sixfold wind-power increase. Nor is the surge limited to wind. Analysts describe a great green wave of investment, innovation and entrepreneurship. Tom Halvorson, an investment banker in clean technologies at Piper Jaffray, sees this as a rare moment when consumer demand, business interest, government support, environmental concern and technological possibility are all flowing together. “This is a very unique convergence of all sectors of the economy that is driving tremendous growth,” Halvorson said. “Just across the board, we are seeing just tons of ideas. … The investing environment is right for a lot of these things to really blossom.” The reasons why are no secret: high oil prices, concern about global warming, continuing chaos in the Middle East, a public hunger for cleaner alternatives and a receptive political climate. Closer to home, there’s also a belief that states like Minnesota that produce no fossil fuels could be winners in a green-energy economy. “The governor feels that renewable energy can be an economic engine, and particularly so in parts of the state that could use the boost,” McClung said. Today the green engine has started in Minnesota, but it’s only inching along at 1 or 2 mph — a long, long way from meeting the fuel, electricity and heating demands of an entire state. So a frenzied ramp-up has begun, a period when supply and demand won’t necessarily match. The waiting lists have many causes. Solar electricity has faced material shortages and a wave of European demand. High oil prices turned biofuels into liquid gold, setting off a land-rush-style boom. Wind hasn’t yet developed the U.S. factories or transmission capacity to meet its improving fortunes. Solar heating systems are coping with local inspection and engineering delays. In the solar energy industry, “the installers we talk to right now are completely swamped with orders, and they want to hire more people,” said Noah Kay of the Solar Energy Industries Association, the trade group for solar electric firms. But some bottlenecks are improving. Last year’s solar-panel shortage has eased, which means Minnesota solar-installation firms, like Innovative Power Systems, can again buy them. If you want a state rebate on your solar-electricity system, however, there’s another line. A big wave of 2006 solar installations emptied the fund, said Lisa Trudeau of the Minnesota Department of Commerce. Officials are keeping a waiting list, in case the Legislature adds more money, which seems likely. Solar panels for water heating haven’t been as scarce, and back in 2005, a group of 17 homeowners in Minneapolis and St. Paul decided to band together to bulk-purchase solar systems. The group faced minor delays on equipment and installation, and six- to eight- week delays when they applied to Minneapolis for permits, said Justin Eibenholzl of the Southeast Como Improvement Association, which initiated the project. “When they saw a big group of people coming through, the city definitely wanted to err on the side of caution,” requiring that the panels be able to withstand 90 mph winds, Eibenholzl said. By the time the St. Paul homeowners applied for permits to install solar panels, the group had figured out ways to streamline the process. Now that the panels are mostly installed, the homeowners feel it was worthwhile, Eibenholzl said. But the experience showed him that if green technologies are to be widely adopted, “there’s still a lot of learning that has to happen.” Tim Gerlach, with the regional American Lung Association, ran into a similar learning curve when he began urging gas stations to install E-85 pumps that dispense an 85 percent ethanol fuel. He still occasionally hears of “a local fire marshal who’s never dealt with the fuel saying, ‘Wait a minute.’ ” But as E-85 grows more common, the initial skepticism wanes. And Gerlach tries to take the long view. “From our perspective, we’re not aiming at today, we’re aiming at five or 10 years from now,” said Gerlach, who has seen E-85 stations increase from 250 to 1,100 in two years. “It’s easy to get frustrated when you’re in the trenches every day … but you take a step back, and realize this is how things progress.” The ethanol boom began in 2005 when Hurricane Katrina sent oil prices soaring and Congress set nationwide production goals. Almost overnight, the industry became a hot commodity for Wall Street investors, hedge funds and global players. Construction firms were booked solid a year in advance, sometimes two years. The biodiesel industry also is booming, although the soybean- based fuel is earlier in its build-out. In 2004, the U.S. industry produced just 25 million gallons. By late next year, industry capacity could hit 2.5 billion gallons — a hundredfold increase. Analysts say that has spawned waiting lists at the premier design firms, a shortage of steel tanks, scarcity of qualified installers and other bottlenecks. “Everyone sees the opportunity at the same time, and they all jump in, and then things settle out for a while,” said Leland Tong, a biodiesel industry analyst with Marc-IV, an agriculture advisory firm. There are profound risks as these new technologies expand, including one that torpedoed renewable fuels back in the 1980s: oil prices could plummet and take down the entire sector. Or, concern about global climate change could ease, for technological or scientific reasons. Or, green energy could prove unreliable. Or there could be unexpected price shocks — as has happened to corn prices because of ethanol. But entrepreneurs big and small are plunging in nonetheless, seizing the opportunity to fill the gaps. Randy Hagen, a Minnesota turkey breeder and inventor, has just opened a plant near Alexandria that will manufacture solar-heating panels. His company is called Solar Skies. “There’s a supply problem that’s not going to match up with our anticipated demand,” Hagen said. “We’re trying to get ahead of the curve — literally betting the farm on it.” Hagen envisions apartment buildings, warehouses and office buildings using solar panels to heat their water. He concedes it’s not as glitzy as installing solar-electricity panels, but it’s much, much cheaper. “I fly into Minneapolis and look at all the flat roof space, and think, nobody’s got them (roof panels),” Hagen said. “That’s all potential.” The hybrid-car market offers some insight about the supply-and- demand tensions. Hybrid cars were once dismissed by Detroit automakers, but in 2000 Toyota introduced the Prius hybrid. It was so successful that, for years, buyers endured long waiting lists to snare a high-mileage car that also qualified for government incentives. Jon Lewis, a Minneapolis arts administrator, was interested in buying a Prius last summer, but was told he’d have to wait six to eight months. Then he found a dealership in Duluth where he could get a new Prius without much of a wait, if he didn’t mind going there to pick it up. Over the years, Toyota was eventually able to ramp up production, and other carmakers raced to get in the game. Today, there are a dozen models of hybrid cars, trucks or SUVs on the market, with more to come. More than a quarter-million hybrid vehicles were sold in the United States last year. And those hybrid-car waiting lists? They’re almost gone, even as sales of hybrid cars keep climbing. Tom Webb can be reached at twebb@pioneerpress.com or 651-228- 5428. Credit: Pioneer Press, St. Paul, Minn.

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