| Biofuels partnership powers city water bureau fleet |
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Kent Madison’s canola crushing operation made big headlines in the Portland metro area in 2007, when he collaborated with SeQuential Biofuels to supply biodiesel to the City of Portland Water Bureau’s fleet.
“The City’s commitment to buying renewable fuel from an Oregon source helped make this project work,” says Madison. The City and a variety of leaders in the renewable energy field have also been quick to praise Madison for identifying a unique opportunity for a crop he has grown as part of his rotation for several years.
Madison first began growing canola several years ago in rotation with wheat, potatoes, and other crops. All new crops come with a learning curve, and the challenge with canola was figuring out how to harvest the seed without losing large amounts to shattering, and without having to swath the canola plants first.
“The best way is to push it over before combining it,” Madison explains. “Once it’s pushed over, it’s protected from the wind and less prone to shatter.”
The harvested canola seed is brought into the processing room and fed into a crusher to extract the oil. The resulting oil is purified, and the leftover material, canola meal, is sold to local livestock producers for feed.
Once the canola is harvested and crushed, the oil is shipped to SeQuential, which manufactures the biodiesel. Although Madison owns biodiesel processing equipment and had originally planned to manufacture the diesel himself and generate enough diesel on-farm to supply fuel for his own equipment, “it’s cheaper for me right now to buy conventional diesel for my own equipment and sell the canola oil,” he explains. But the rapidly changing price of petroleum fuels may change this in the near future.
In addition to the SeQuential and the City of Portland, several other partners have contributed to the success of the operation. In 2006, Madison worked with the U.S. Department of Agriculture Rural Development agency and a grantwriter to submit a proposal to purchase inventory for the canola crushing and biodiesel processing operation.
Madison also reports that the Oregon Business Energy Tax Credit has been an excellent incentive for the biofuels project. At the time Madison’s facility was built, he received a 35% tax credit for the eligible costs of growing and processing the canola seed. The credit has since been raised to 50%.
“The BETC has been by far the easiest source of funding,” he explains. “I had a little trouble finding pass-through partners at first, but then I developed a great relationship with Umpqua Bank.” He is referring to the pass-through option on the tax credit that is available for renewable energy developers with no tax liability. With approval from the Oregon Department of Energy, the project developer can sell the credit to a “pass-through partner” at a rate of approximately 33%.
Madison has contracted with several neighbors to produce enough canola to supply the City of Portland Water Bureau’s fleet for next year.
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