Local Wineries Using Sustainable Business Practices (published in March of 2010 in the SB News Press)

Much has been written in the last few years, especially with the concerns over global warming and the rising cost of energy, about sustainability.  Many local businesses, including some of our local wineries, are finding innovative ways to use sustainable business practices.  In this week’s column, I will explore some of those practices, reviewing the economics involved, and exploring some of the problems our wineries face when considering adopting these practices.

There are a multitude of attractive, sustainable business practices that our local wineries can use, that come as a direct result of the operations of their businesses.  From water conservation, to organic fertilizers, to solar power, wineries have myriad options in this arena.  The problem they face is that, for the most part, many of these options involved added costs.  In today’s economy, with so much competition and consumer spending falling off a cliff, wineries are struggling to stay afloat, so the idea of adding to their cost structure is not only unappealing, it may be financially impossible.
According to the Wine Institute (www.wineinstitute.org) some of the potential benefits of sustainable winegrowing practices are:

Economic Benefits

  • Long-term viability of land and business
  • Long-term cost savings
  • Improve wine quality
  • Prepare for potential future International Trade Certification needs such as ISO14001
  • Enhance value of real estate
  • Maintain and improve market value of wine produced in California
  • Enhance relations with specific demographics such as European markets and domestic Green consumers

Environmental Benefits

  • Long-term viability of land
  • Stewardship of unique and specific land
  • Conservation of natural resources

Social Equity Benefits

  • Health and well-being of farm and winery employees and neighbors
  • Enhance relations with neighbors and communities
  • Enhance relations with consumers and tourists
  • Enhance relations with regulators and public policy institutions (Government, Media and Educators)
Water Conservation
For grape growers, continuing research is demonstrating the advantages of controlled deficit irrigation, allowing growers to tune irrigation systems for optimum quality and yield. Water usage for wineries can range from as little as 1.5 gallons of water to produce a gallon of wine, all the way to 20 gallons of water per gallon of wine. A general rule of thumb is 6 gallons, although the trend and target is to get to 2 to 3 gallons.  Water usage, especially for larger wineries, can be a big expense item, giving them great incentive to reduce consumption.  Cleaning and sanitation account for the bulk of water usage at wineries (not irrigation).

Reducing water use often reduces energy consumption, too, but interestingly, improved procedures, rather than new equipment, are sometimes more important in saving water than equipment, which is often not the case with energy.  Still, equipment can make a big difference. Improved barrel washers that use high pressure and low flow can help. The type of nozzles used for tank cleaning and other purposes can be important, too.  Replacing older types of filters with newer technology can help as well.

One innovative land conservation measure is placing winery lands into a land trust.  Through conservation agreements between landowners and a land trust, certain uses of the land are permanently preserved in order to protect its conservation or agricultural value.  For example, a landowner may give up the right to subdivide or build additional residences, while retaining the right to grow grapes. Future owners will be bound by the agreement’s terms, and the land trust is responsible for making sure the terms are complied with in the future.  An agreement allows the landowner to continue to own and use his or her land, and to sell it or pass it on to heirs.

Other sustainable land management practices include: reducing certain chemical inputs in production practices; becoming carbon neutral by using more renewable energy sources, or using alternative seed stocks and cultivation practices.
One of the key ways that wineries are becoming carbon-neutral is with the use of sustainable energy sources such as wind and solar.  With our sunny climate, solar is an effective alternative to traditional energy sources, and some of our local wineries have already begun using solar panels to get much of their power. 
Unfortunately, our local utility does not allow solar panel owners to push power back into the grid on an unlimited basis and get paid for it, reducing the potential benefits of owning a solar system.  (The correct term for this is a “feed-in tariff.” Feed-in tariffs are used in Europe and other places, and require the utility to purchase power from small producers.) 
Additionally, as Bryan Babcock relates, growers are not incentivized to build larger systems capable of higher output.  Babcock, who has a complete solar system at Babcock Winery, supply a significant portion of his total power needs, states that he would have built a much larger system if the utility would allow him to sell power back to the grid.  He sees this as a missed opportunity to motivate growers and many other businesses to buy larger systems and to produce more power from sustainable, eco-friendly sources. 
Babcock asks the question: “When is our local utility going to start paying a guy like me for the creation of power above and beyond what I need to run my operations?  I think most people agree that what we are going to need in the long-run are non-fossil fuel sources of energy. You need the incentive to build a larger system that will produce more power than you can consume.  As it now stands, the power company won’t pay us for any surplus. Thus, there is only the incentive to build smaller systems.”
Babcock also warns that we are starting to see more solar panel thefts at wineries and at rural solar developments. Babcock states; “This is very disheartening. From an environmentalist point of view, not only are the thieves stealing from the property owner, they are stealing from the community the opportunity for it to develop its energy in a clean, sustainable way.”
Bruce Allen, author of “Reaching the Solar Tipping Point,” advises that, although there is no unlimited feed-in tariff requirement locally, solar producers can feed excess power back into the grid, and can draw on that power when they need more than their systems generate during peak times of the day or during peak seasons, etc., rather than buying power from the utility.  The excess power fed back into the grid is typically tracked on a calendar year basis, so any balance remaining at the end of the year is lost.  Some good news on this front is that Governor Schwarzenegger just signed legislation that doubled the cap from 2.5% to 5% of a utility’s total power that can come from solar system owners.
Southern California Edison (SCE), Pacific Gas & Electric and others have been offering some contracts to buy energy from small producers, but with limits as to the amount they are willing to purchase.  There are a variety of programs offered, and most depend on the size of total energy production capability.  The SCE program was oversubscribed in 2009, and so far, they have not announced the conditions for the new program for 2010.  There is an application process, and their website (www.sce.com) advises that they are still accepting applications, but are not processing them at present.
While most sustainable business practices, (at least without incentives, credits, etc.) are more expensive than traditional sources and methods, there are some economic reasons for wineries and other businesses to pursue them.  For example, many consumers are willing to pay-up for organically grown products, and wineries that are organically certified, or that use organically grown grapes are finding that they can effectively market their products with organic labeling.  Water conservation and proper land management, in the long-run, can actually save wineries significant money, and recycling and new equipment can also contribute to the winery’s bottom line.
All in all, the trend towards sustainability and organic growing seems to have legs, and should increase, especially if utilities open their feed-in tariff programs to unlimited access.  For our part, we can support local wineries that are making the commitment, financial and otherwise, to follow sustainable business practices, which not only help the environment and the land, but also announce the commitment of our community to doing our part to conserve and to pursue sustainability.

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