Renewable Electricity and Wine - A Perfect Pairing
While wineries and vineyards have long been moving toward being “green,” several have taken the next step by installing renewable energy generation onsite. One of the most recent is August Cellars, just outside Newberg, Oregon. The winery recently installed a 150-foot-tall, 50-kilowatt wind turbine. August Cellars maneuvered around the somewhat prohibitive cost of the project (between $70,000 and $100,000) by not actually owning the turbine, but instead leases the turbine from a third party with an option to buy.
August Cellars is following in the footsteps of such giants as Constellation Wines, which, in September 2010, announced it would increase its solar photovoltaic (PV) usage to nearly 4MW with new installations at its Estancia, Ravenswood, and Clos du Bois wineries in California. These systems would expand on the company’s already existing use of solar PV at its Gonzales winery. Constellation will own the systems and take advantage of the tax credits. Once completed, the installations will cover nearly 100% of the energy needs of Estancia and Ravenswood, 75% of Clos du Bois, and 60% of Gonzales and is projected to save the wine giant nearly $1 million annually from reduced energy costs.
The move by wineries toward renewables is not merely a “West Coast thing” either. Red Caboose Winery, a 10,000-case rural winery located in Meridian, Texas, recently released a statement that it would be using a USDA Rural Energy for America Program (REAP) grant of $15,617 to help install a solar PV system. According to the owners, the new system will allow the winery to have a net annual energy consumption of zero.
Benefits
If structured properly, installation of renewables can make economic sense for a winery/vineyard, creating significant financial savings from reduced energy costs. In addition, for a wine business, there is substantial public relations value to going “green.” When combined with other energy efficiencies, installing renewables can substantially reduce a winery/vineyard’s carbon footprint. This can, in turn, generate substantial brand goodwill from a public that is becoming increasingly aware of environmental consequences. This is especially true among the wine-drinking demographic.
Issues
Wineries and vineyards looking to install renewable energy often encounter a host of obstacles. Two of the largest are variability and cost.
Variability
Simply put, the wind doesn’t always blow and the sun doesn’t always shine. Nor does power always cost the same or do governmental entities offer the same incentives. A winery or vineyard contemplating installation of a wind turbine or solar array should look closely at the available resource. This may mean paying for ancillary costs, such as scientific studies. It will assuredly mean a closer look at long-term planning to establish acceptable rates of return given the attendant risk and variability.
Cost
In 2009 and the first part of 2010, installation of a commercial solar PV system in the United States with a capacity of 250-500kWDC averaged around $7.10 per installed watt before incentives and tax credits (click here for a more in-depth look). That price can drop to $4.00 per watt or lower after incentives and tax credits, with some larger projects (>2MW) seeing prices as little as $2.50 per watt. While this cost is projected to decline further, it still creates a significant initial capital outlay that may require many years to recoup. It therefore becomes important to view renewable installation in the long term.
With this in mind, wineries and vineyards have several ways of making the use of renewables cost-effective and attractive. These include using tax credits and grants, third-party ownership as in the August Cellars example, and taking advantage of such programs as Net Metering or Feed In Tariffs, where such programs are available.
- Net Metering – This uses a special metering system that credits you for the excess power you generate. Net Metering allows a winery to avoid the full retail cost of electricity and pay only for its “net” use in each billing or truing up period.
- Feed In Tariff (FIT) – A Feed In Tariff allows smaller renewable generators to sell their generation at set rates back to the utility. FIT contracts can be very restrictive and often run from five to 20 years. They also have modest, yet very predictable, rates of return. However, installations being used under a FIT program are generally not eligible for other programs, such as Net Metering.
While the obstacles can be daunting, installing renewable energy at your winery or vineyard can have substantial economic and marketing benefits. An owner contemplating installing a renewable energy system would best be served by having a good understanding of the local resources and looking into all avenues of funding. With proper planning, renewable energy can make your “reds” and “whites” feel green.
OPB Think Outloud
What a great way to spend a Wednesday morning. I joined Portland's thought leaders on all-thing-alcohol this morning at St. Jack restaurant, where we broadcasted live on OPB. A lively 
discussion of Oregon's alcohol industry was lead by On Air Host Emily Harris. Reasons behind Oregon's alcohol industry boom, the State's history with alcohol, and some tasty holiday cocktails were all topics for discussion.
Thanks to Steve Pharo, Executive Director of the Oregon Liquor Control Commission; Brian Butenschoen, Executive Director of the Oregon Brewers Guild; Kyle Jansson, Coordinator of the Oregon Heritage Commission; Karen Foley, Publisher of Imbibe Magazine; and of course Tommy Klus, Bartender at St. Jack restaurant and Teardrop Longe in Portland. That was fun.
If you missed it, please listen here.
Exploring the Option of Liquor Licenses for Food Cart Owners
Portland-area food cart owners are innovative, creative, and continue to contribute to Portland’s food and beverage culture. The range of food options varies greatly, but it is easy to find what you are looking for, or get updated on the recent cart happenings, with the likes of Food Carts Portland. Portland’s food cart culture has even been featured in Sunset Magazine and the New York Times.
Recently food cart owners have been exploring the possibility of serving alcoholic beverages to complement your burrito, panuchos, grilled peanut butter and jelly sandwich, falafel, or whatever 
else you may be enjoying. A limited few are already serving up beer and wine. For example, Pizza Depokos at North Station has a limited on-premises license to serve beer and wine, and Captured by Porches Brewing Co. appears to be serving beer out of a mobile bus under its existing brewery license, as described in an OregonLive.com article. However, whether we will see more food carts serving up beer or wine depends on whether a cart owner can convince the Oregon Liquor Control Commission (OLCC) that it qualifies for a license under the current regulatory scheme.
The first, and probably biggest, hurdle a food cart owner has is the issue of defining the licensed premises. State law prohibits the OLCC from issuing a license to a location that does not have defined boundaries. While a licensed premises does not need to be enclosed by a wall, fence or other structure, it must have defined boundaries that are discernable. Further, state law prohibits the OLCC from licensing premises that are “mobile” unless the premises is a licensed public passenger carrier (like an airline, a railroad, or a tour boat operator). What constitutes “mobile” is up for interpretation at this point and may likely be the subject of the OLCC’s upcoming request to the Oregon Attorney General for an opinion.
Other likely licensing issues include, but of course are not limited to, minor posting, premises control, and local endorsement. These issues exist whether a food cart owner pursues a limited on-premises license, a temporary sales license, or some other privilege like a second or temporary location under another license type (i.e., brewery or winery license). In addition to these license-specific issues that an applicant must address, food cart owners must also be aware of the potential for increased site liability as well as increased regulatory scrutiny through the local endorsement process, which will trigger a compliance review of all applicable zoning, building, and health codes.
Oregon Temporarily Bans "Alcopop"
Following actions by the FDA, the TTB, as well as several states, the Oregon Liquor Control Commission (OLCC) recently announced a temporary ban on the sale of caffeinated alcoholic beverages within the state's borders. The action, taken during a November 20th special meeting on the issue, will last until May 18, 2011, during which time the OLCC will move to make the ban permanent. The ban requires sales of "Alcopop" cease immediately and all merchandise be removed from store shelves. According to the OLCC press release, failure to comply would constitute a "category two" violation, punishment being a mandatory 30-day suspension of the offenders liquor license.
The move was applauded by Oregon Gov. Ted Kulongoski, who stated he "...applaud[ed] the OLCC for taking the very necessary step of halting access to these dangerous beverages."
FDA May Issue Warning on Alcoholic Energy Drinks; States Move to Ban "Blackout in a Can"
Amidst rising incidences of hospitalizations in college and teenage drinkers linked to consumption of alcoholic energy drinks, the Washington State Liquor Control Board banned their sale effective tomorrow, November 18, 2010. The move came on the heels of a request by Washington Governor Christine Gregoire, whose office stated in a November 10 press release that they were “…particularly concerned that these drinks tend to target young people.”
The Liquor Control Board placed the ban in an emergency ruling which will last for 120 days. During that time, the Liquor Control Board will move to make the ban permanent. Liquor Control Board Chairperson Sharon Foster stated, “[t]he Board is acting in the public safety…the Board is acting now to ensure these products do not contribute to a tragedy before the Food and Drug Administration or Legislature can act.” Earlier this year, the Liquor Control Board had lobbied for State legislative action to ban the sale of caffeinated malt beverages in Washington but those efforts were unsuccessful. A list of particular products affected by the Liquor Control Board’s ruling can be seen here.
Washington’s ban is merely the most recent action in an ever increasing movement by states to control the sale of caffeinated alcoholic beverages. The Oregon Liquor Control Commission Chairman stated in an October press release that, “…alcoholic energy drinks should be removed from the market until further research isdone.” The OLCC also stated that it is currently looking into possible regulatory efforts with the state legislature and is reaching out to community organizations to warn them of the dangers of the beverages.
While California’s Department of Alcoholic Beverage Control has not yet made a statement regarding the drinks, Connecticut announced Monday that it had reached agreements with state distributors to voluntarily stop shipments of caffeinated alcoholic beverages starting December 10, 2010. Michigan has banned one particular brand of caffeinated alcoholic beverage, Four Loko. New York has reached an agreement with Phusion Projects LLC, the manufacturer of Four Loko, to stop sales in the state until “…emerging science, regulatory developments or other relevant changes in circumstances arise." Utah and Oklahoma have followed Washington’s lead in banning the sale of any brands altogether. Massachusetts’ Alcoholic Beverage Control Commission stated that it will file an emergency ruling, similar to Washington’s, on Monday, November 22, 2010.
At the federal level, the Food and Drug Administration (“FDA”) is currently reviewing whether caffeine is a safe additive to alcoholic beverages. A negative finding would essentially ban the sale of caffeinated alcoholic beverages nationwide. It is widely assumed the FDA will, in fact, reach a negative finding. NY Senator Chuck Schumer, who has been lobbying for a ban on the drinks, stated that the FDA decision “…should be the nail in the coffin of these dangerous and toxic drinks.” The FDA decision is expected within the week.
Oregon Homebrewers Stymied by New Interpretation of Law
By Guest Blogger, Summer Associate
The Oregon Liquor Control Commission and the Oregon Department of Justice recently opined that, under a post-prohibition-era law, homebrewed beer and homemade wine must be consumed at home. This opinion, reportedly in response to a question regarding the permissibility of public competitions involving homebrewed beer, is in effect a reversal of the OLCC’s previous policy permitting public competitions and understandably has caused great concern within the Oregon home brewing community. One immediate effect has been the cancellation of the amateur beer and wine competitions at the Oregon State Fair after more than 20 years of such contests.
The law in question, ORS § 471.403(1), reads
No person shall brew, ferment, distill, blend or rectify any alcoholic liquor unless licensed so to do by the Oregon Liquor Control Commission. However, the Liquor Control Act does not apply to the making or keeping of naturally fermented wines and fruit juices or beer in the home, for home consumption and not for sale.
Apparently, the OLCC and DOJ determined that “for home consumption” does not include public tastings and competitions, and therefore any out-of-home consumption is subject to OLCC control.
However, a few questions remain. First, what will the Oregon courts say that the statute means? The OLCC and DOJ have changed their view of the law and may therefore choose to enforce its provisions more broadly, but in the absence of a new administrative rule codifying the revised interpretation, the courts may not come to the same conclusion as OLCC. Second, specifically which provision of the Act would a homebrewer violate by participating in a competition? Arguably, a homebrewer would violate ORS § 471.405(2), which reads
No person shall purchase, possess, transport or import, except for sacramental purposes, an alcoholic beverage unless it is procured from or through the Oregon Liquor Control Commission, except as provided otherwise in the Liquor Control Act.
That said, because ORS § 471.403(1) permits the “keeping” of homebrewed beer in connection with home consumption, it is not clear that participating in a public competition amounts to more than this.
In the meantime, some homebrewers have organized the Oregon Homebrewers Alliance to urge the Oregon Legislature to update the law during its next session in January 2011. Reportedly, Rep. Mike Schaufler, D-Happy Valley, and Sen. Floyd Prozanski, D-Eugene are working on a draft bill that would change the law to explicitly allow home brewers and winemakers to take their products outside their homes. Stay tuned.
