Last Updated May 21, 2010 11:17 AM EDT
It's a solution that has received a fair amount of buzz because, let's be honest, the media loves poop stories. But there are also some real financial opportunities for both dairy farmers and companies like HP, Google (GOOG) and Microsoft (MSFT) that are constantly adding data centers to power all of our Internet searches and cloud-computing activities.
The crux For now, this would only benefit big dairy operations in specific areas like California, Texas and Wisconsin that could afford the hefty $5 million start-up cost. And it's not like there are a lot of these. The average dairy farm has grown in the past decade, but the vast majority still have far fewer than 10,000 head of cattle. Less than one percent of dairy farms had more than 2,000 cows in 2006.
This means data centers would either locate in California, where even farmland doesn't come cheap. The other option is to build biogas plants in areas with a high concentration of small and mid-sized dairy operations, where farmers could then sell their manure.
The three big benefits Power capacity: Here's where we all could benefit. Data centers use a lot of energy and are demanding more supply from the grid every year. It's one of the reasons companies like Google, Yahoo (YHOO), and Microsoft are trying to simultaneously boost energy efficiency in the data centers and locate them in areas, like central Oregon and Iowa, that have lots of land and an abundant energy supply. A data center using electricity sourced from methane would theoretically lessen or eliminate its dependence on traditional sources of energy. That's a big deal, considering the average data center consumes as much energy as 25,000 households. By 2010, data centers in the U.S. are expected to consume as much energy as 10 new major power plants, according to a McKinsey report.
Money saved and earned: First the savings. Google and Microsoft would be locating data centers in rural areas, where land is typically cheaper. Farmers, who spend a lot managing manure, would see their costs reduced.
There's money to be made as well. HP researchers suggest that farmers would recoup the cost of building the biogas plant and related infrastructure in two years and be profitable after that. There are other ways farmers could turn a profit. The biogas process leaves the manure essentially intact, meaning it could still be sold off as fertilizer.
But the big unknown, and possible moneymaker, can be found in the climate-change bill. The bill includes a carbon offsets program, which provides incentives to farmers who reduce greenhouse gas emissions. If a farmer reduces their methane emissions, for example, or plants trees, they can turn around and sell those carbon offsets to polluters. The EPA predicted last year that a carbon offsets program could generate up to $2 billion a year income for farmers between 2012 and 2018. By 2050, U.S. could have annual net returns of $20 billion.
Environmental: Data centers generate a lot of heat, which is usually channeled through heat exchanges to an external cooling tower and then ejected outside. But the HP researchers propose funneling the heat directly to the biogas plant, where it could be turned into steam and help produce the methane gas.
Sure, companies would benefit from the warm and fuzzy feeling they'd get for reducing emissions. They'd be saving money as well. If a climate-change bill passes, these companies would have to reduce emissions or eventually pay for pollution allowances.
Photo of cow from Wikimedia commons.