Golden Grain pursues project to lower carbon intensity score

By Holly Jessen | July 11, 2012

Thanks to some legislative maneuvering in Iowa, Golden Grain Energy LLC is on a pathway that could lead to getting a premium price for ethanol sold in the California marketplace. State legislation passed in 2011, and tweaked in 2012, opens the way for building a power plant on the site of the Mason City, Iowa, ethanol plant. “We’re actually helping to develop a company that would build this project,” said Walt Wendland, CEO of the 105 MMgy facility. “Then Golden Grain would recover the heat from the project and lower our carbon intensity score, so we can qualify for the California low carbon fuel standard.”

The $10 million facility would use natural gas to generate electricity and Golden Grain would use the waste heat to cut its natural gas use. The ethanol plant could also potentially increase its ethanol production capacity with the added 15 percent steam for process heat, he said. The plant is limited to its current production size by the amount of steam it can produce and re-using steam from a co-located power plant would be cheaper than installing a larger boiler.

The bill, which was drafted by Sen. Merlin Bartz, R-Grafton, Iowa, and Rep. Brian Quirk, D-New Hampton, Iowa, provides environmental tax credits for several renewable energy companies, including Golden Grain, according to a press release from the senator’s office. The bill specifies that a company would be eligible to receive tax credits for 10 megawatts of nameplate generating capacity from a natural gas cogeneration facility co-located with an ethanol plant for the purpose of helping the ethanol plant meet the low carbon fuel standard. The tax credits could bring in up to $12 million.

The way the law is written, Golden Grain doesn’t qualify as a small business and cannot build the power generation plant, nor would it receive the tax credits, Wendland said. The benefit to Golden Grain would come in the form of increased steam capacity, lowered natural gas use and an advantage in the California marketplace. Currently, Golden Grain’s carbon intensity score is at 91 megajoules while ethanol with a carbon intensity of 90.1 megajoules commands a premium. Although California will continue to lower the carbon intensity number over time and the outcome of a lawsuit against the state’s low carbon fuel standard isn’t yet known, if Golden Grain can reach that 90.1 number at least for a while, it will give the company an advantage. “We’re just trying to stay in the game a little longer than the next guy,” he said.

Golden Grain has been actively assisting in the development process of the power generation company. A lot of the groundwork has already been laid in terms of the company structure but more negotiations and, ultimately, investors are needed before the project becomes a reality. “We’re looking to hand this off with someone that we can have a good relationship with,” Wendland said.

For right now, Golden Grain is the only ethanol plant in Iowa that will be able to take advantage of this bill, Bartz said. The first order of business is to get steel in the ground at Golden Grain. “No. 1, we need to get this facility up and going and show that these tax credits are good for jobs and the economy and the state of Iowa,” he told EPM. After that, he’d like to see a cost-benefit analysis completed and—if the results are positive—the lawmaker would be willing to go back to the state legislature and expand the program so more ethanol plants could benefit.