The rear ends of Dan DeRuyter’s 4,500 dairy cows are powering hundreds of homes in Central Washington. At George DeRuyter & Sons’ 2,000-acre farm in Outlook, in the Yakima Valley, 150,000 gallons a day of cow manure from the corrals flow downhill in chutes and are collected in a large underground concrete tank. There, the waste is heated to 100 degrees by two big generating engines manufactured in Spain and installed by Ferndale-based Andgar Corp., which sets up anaerobic manure digesters. Bacteria in the tank decompose the waste, producing methane, which fuels the two nearby engines that crank 1.2 megawatts of electricity directly into Pacific Power’s grid.

That juice, enough to power 600 to 800 homes, nets DeRuyter up to $35,000 a month. The dairy also makes money selling credits for reducing carbon emissions on the new Chicago Climate Exchange. DeRuyter sells the solid byproduct, which has lost its stink and looks like soil, as cattle bedding or as a peat moss replacement for nurseries. The liquid byproducts, nitrogen and phosphorus, will be sold as fertilizer if researchers can figure out how to concentrate it to save on transportation costs.

DeRuyter’s digester is one of four at dairy farms across the state. There are digesters in Lynden and Monroe, and one under construction in Skagit County; more than 100 dairies around the country are participating. DeRuyter installed the system in late 2006 using a $1.9 million state loan and a $500,000 federal grant; the total cost was $3.8 million.

Some manure-digester operators in Washington also feed in industrial food waste, such as skins from juice and vegetable processors. Dairy farmers earn additional revenue from the “tipping fees” paid by these processors for handling their organic waste.

If the manure of half the state’s 250,000 dairy cows were run through digesters, up to 25 megawatts of electricity would be produced, serving 25,000 households, according to Washington State University research. Experts see the digesters as a money-making way to address the problems of odor and groundwater contamination at large dairies, while providing electrical power from a renewable, non-fossil fuel source.

“Our neighbors have commented on how this reduces the smell,” says DeRuyter, a no-nonsense farmer who doesn’t fit the usual image of an environmentalist. “The digester is a technology that’s good for everyone, for the dairy farmer and for the environment,” adds Todd Kunzman, general manager of Andgar. “It takes a waste product and creates electricity, it mitigates odor hazards, it creates a great bedding source for cattle, and it reduces greenhouse gases.”

Green energy projects like manure digesters offer particular appeal in the agricultural communities east of the Cascades. For instance, in the wheat-growing Odessa area, “these green technologies fit beautifully into an agricultural community that is being forced to diversify its economy,” comments Pam Kelley, executive director of the Lincoln County Economic Development Council. “Green businesses are the key to future prosperity.”

A recent report, “Carbon-Free Prosperity 2025,” agreed that Washington and Oregon have clear regional advantages for green economic growth, such as a strong natural resource base. But they lack adequate venture capital, a modern electrical grid for transporting green energy from east of the Cascades, and a coordinated regional strategy.

State bioenergy coordinator Peter Moulton sees surging interest around Washington in launching renewable energy projects. His office recently did an online survey of interest in applying for $6 million in new Energy Freedom loans offered by his office, and received 70 responses. “There’s huge interest,” he says, “ranging from modest pilots to over $100 million plants.” But he acknowledges that the $6 million available for state loans “is a small amount given the hopes for green energy.”

A big problem for DeRuyter is that Washington’s abundant hydropower keeps electricity rates too low to make his sale of power very profitable. He receives just 5 cents per kilowatt hour. On the west side of the Cascades, he would receive about 7 cents per kilowatt hour, and in California he would get a lot more. “It’s not a big moneymaker,” concedes DeRuyter, who complains that he’s losing hundreds of thousands of dollars a month on his dairy operation overall due to low milk prices.

DeRuyter hopes he’ll soon be able to sell the liquid byproducts, nitrogen and phosphorus, as fertilizer. The liquid fertilizer is more than 99 percent pathogen-free, and, unlike standard fertilizer coming from petroleum, it’s renewable. But there remains a perception problem since the fertilizer comes from cattle waste, and local tree fruit farmers currently don’t want to use it on their orchards. Transporting it to other markets is too expensive until he can figure out how to concentrate it.

One other advantage of the digester is that it helps keep those nutrients out of the groundwater. “Every dairy farmer has to have a plan for managing the manure,” Kunzman said. “The ground can only take so much nitrogen and phosphorus. These digesters are a tool that can help that.”