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Colorado is embarking on a federally backed $3.2 million experiment to transform the flood irrigation farmers use to grow crops: using diverted water more efficiently and generating electricity.

Agriculture Secretary Tom Vilsack was in Denver on Monday to kick off the “small hydropower” project and announced $235 million in federal grants in all 50 states to spur innovation in dealing with water, soil and drought.

The Colorado experiment aims to pressurize flows of agricultural water, producing hydro-power, and then deliver water more precisely to crops using sprinklers. If successful, this is envisioned as a way to help reduce the 85 percent share of water required to sustain agriculture in semi-arid Colorado and other western states.

“This is not only possible. It is going to happen,” Vilsack said in an interview. “It is going to provide for more efficient irrigation, which is important as we deal with increased scarcity. It also is going to deliver hydropower, a renewable energy resource.”

The federal Regional Conservation Partnership Program grants, building on $394 million announced in January, are designed to spur local agriculture leaders to work with innovators at private companies, universities, non-profit groups and government agencies to solve environmental challenges. Congress created the program last year and funds it under the Farm Bill.

In Colorado, state agriculture officials are coordinating the Pressurized Small Hydropower project, which will receive $1.8 million in federal funds and assistance through the Natural Resources Conservation Service, in addition to funding from a dozen or so local participants.

“As water drops downhill, there’s a lot of energy in it,” Colorado Agriculture Commissioner Don Brown said at a signing ceremony. “We’re going to capture some of that energy.”

Circular sprinkler systems will be installed on land around western Colorado that formerly was flooded, Brown said. “We will get a lot of water conservation out of this.”

It is too early to assess how much water can be conserved, Brown said.

Vilsack said more than 650 groups applied for conservation grants since last year. Teaming with the private sector enables impact beyond what the government could do, he said.

“We need to figure out ways to use water more creatively and more efficiently,” Vilsack said.

Small hydropower systems, typically generating 2 megawatts or less, have emerged as a way to supply electricity for power grid without emitting heat-trapping greenhouse gases, which scientists link to climate change. They rely on diversion of a small portion of a river or are constructed at dams.

Nationwide, hydropower generates about two-thirds of all renewable energy. Colorado has 62 operating facilities, with a combined installed capacity of 1,162 megawatts. Those existing plants generate from 5 kilowatts to 300 megawatts, according to the state energy office.

Colorado officials said the state has huge potential to generate much more hydropower and that projects can be done without hurting waterways and habitat for wildlife.

Bruce Finley: 303-954-1700, bfinley@denverpost.com or twitter.com/finleybruce