Prince Edward Island farms have been producing food for generations but more of them could soon be generating a new commodity in years to come — renewable energy.

The provincial and federal governments unveiled a $10 million program Monday that will help Island producers explore new sources of renewable energy on the farm.

"Renewable sources like solar, wind power and biomass," said federal Fisheries Minister Gail Shea, who is also the MP for Egmont.

The program will also test P.E.I. crops that could be used as fuel, including fall rye and perennial grasses. It's the first of 40 steps the province outlined in its rural action plan last week.

"The evaluation of these crops as a source of energy will open up new production and marketing opportunities for the agricultural industry," P.E.I. Agriculture Minister George Webster said.

A greenhouse can be expensive to heat during the winter but farmer Willem van Nieuwenhuyzen has drastically reduced his energy bill by replacing his oil furnace with a specially designed furnace that runs on straw.

"I would say the cost of the fuel is about one-third, but of course there's some overhead to pay off on the expensive straw machine," he said.

The straw-burning furnace at van Nieuwenhuyzen's greenhouse produces about three times more heat than the greenhouse actually uses, and he is now looking for ways to sell the extra heat. Van Nieuwenhuyzen said the local hockey rink is one potential customer.

That's the kind of energy-saving technology the government wants to see on more farms.

The grant program will run for four years, starting in April.

The provincial agriculture department is still working out the details but the program will start with a farm energy audit, similar to energy audits done in homes.

But auditors won't just be looking for ways to save energy. Instead, they'll be looking for ways for farms to produce energy.

The P.E.I. Federation of Agriculture applauds the bio-energy grants but officials say there is a problem — if farmers start producing energy on their farms, they'll need access to energy markets to sell it. Farms that produce electricity from wind turbines are already having trouble doing that, federation executive director Mike Nabuurs said.

"Right now, if they're producing excess energy, it goes back into the grid and they're not able to get a credit on their bill," he said. "Those are the kinds of changes that we need to see."