WORDS BY RICHARD RENNIE
Market situation
As Canterbury irrigators settle in for one of the longest irrigation seasons ever, prospects for electricity prices to fall are not looking promising. Tracey Gordon and Glenn McWhinnie of Ruralco Energy closely track electricity prices for Ruralco clients, and caution that they see little decrease in prices for the coming year.
“It is fair to say the consensus is the electricity market is only heading upwards, but there are also a number of unknowns in the big picture into the future,” says Glenn.
“That includes the future of the Tiwai Point aluminium smelter, the significant amount of solar and wind projects in the pipeline, and also prospects for whether the government goes ahead with the Onslow battery project.”
Glenn says markets also remain volatile, and the Ruralco Energy team have been able to save clients considerable sums by communicating with them when they have seen some dips in market pricing.
“What we have been doing for our time-of-use customers in particular is negotiating their contracts early. We recently saw a drop in market pricing, and we jumped straight on it.
Anyone that was coming up for renewal in the near future was priced even though their contract had not come to an end yet. It resulted in some really significant savings for them.”
Tracey says expectations are that pricing will take another surge upwards in April next year as the new transmission pricing methodology comes into play.
Transmission Pricing Methodology (TPM) aims to distribute the cost of building, maintaining, and operating the country’s electricity network fairly among market participants. All parties must align with the new pricing regime over the next five years.
“It is really more about network price costing than it is about energy pricing,” says Tracey.
Glenn notes interest in owner-operator solar schemes is also on the rise, particularly ones focused on dairy farm supply.
“Again though, it is all about making sure the dollars stack up, and that you are getting the best return for your investment.”
Venture Energy helps target energy cost losses
High lines charges, the wrong tariff, illegible accounts, and poor advice can all be a recipe for electricity overcharging, a recipe that energy consultant Yvonne Gilmore will often untangle for her clients.
With farm electricity irrigation costs now surging past the 30¢/kg milk solids mark for Canterbury dairy units, many farmers are taking a longer, harder look at how to hold back what appears to be a never-ending upwards march in energy costs on farm.
Yvonne’s company, Venture Energy is founded on her many years working with a wide variety of energy users, helping them identify where and how their costs can be minimised.
Yvonne has multiple examples of clients who have had their electricity accounts reviewed by her and she has yet to find an operation where some tweaking will not result in even moderate reductions in energy and carbon emissions.
“Our audits may include power, LP Gas, stationary fuel use, water, and waste costs,” says Yvonne. “It is up to the client what they want to include. We can also undertake carbon audits to start them on that journey.”
For irrigating dairy farms, there can be some particular charging issues that may demand attention to ensure farmer clients are not being overcharged.
Yvonne points to the pitfalls of capacity and lines charges, both of which can be difficult to understand, and represent a heavy, ongoing expense, regardless of usage patterns on farm.
“This year it is more important than ever to have a good handle of where your energy costs are going, it’s a long irrigation season, costs are up and revenue is down, so every dollar that can be saved is even more important.”
With future electricity prices continuing to point one way, and with the likelihood of double-digit increases, Yvonne is urging her rural clients to take a close look at their bills before the full demands of summer irrigation kick in.
Summer is also a suitable time to discuss ensuring farm cottages are up to Healthy Homes standards for next winter. Yvonne can help farm owning clients to assess their staff accommodation and determine what is needed in terms of insulation, heating equipment, and ventilation to meet compliance.
“Healthy Homes compliance is a requirement, not an option, even though the house may be part of your staff’s remuneration you still have to ensure it is up to standard.”
The regulations include standards around all aspects of a “healthy home”, namely heating, insulation, ventilation, draughts, and moisture.
For farm owners preparing to provide cottages and accommodation for staff, Yvonne recommends a close assessment of the facilities to determine what needs to be improved to meet the regulations.
“But getting your accommodation up to standard is a good move regardless of having to meet regulations. In terms of staff wellbeing, a healthy home reduces the number of sick days for both staff and family, keeping your farm business more productive and a happier place to work and live.”
Platinum Energy draws solar value
Platinum Energy founders Liam Brown and Nick Donkers are cautiously eyeing the upswing in dairy commodity prices as a signal for igniting more interest in on-farm solar projects that can help lower a farm’s increasingly significant electricity costs. For the 2021–22 season dairy farms in Canterbury faced irrigation costs of about 31¢/kg milk solids, and a further 9¢/kg milk solids for additional electricity use—a cost that continues to push upwards.
Platinum specialises in solar energy installations for farm and commercial operators, with Canterbury’s larger scale dairy operations providing a good base for business, particularly given the usage patterns for dairy farms well fitted to solar charging daylight hours. Seasonality also fits well, with the high demand summer months also matching the optimal solar period, while quiet winters fit with shorter, cloudier, low charge days.
Prospects are that the cost of electricity to farmers will only continue to increase, and an improvement in dairy farm revenues is likely to be the tipping point for dairy farmers, with its return on investment of 12-15% looking appealing. But Platinum Energy’s co-founders stress that, unlike some urban focused operators, they will not put the hard sell on potential clients and only propose a system that makes economic sense.
They are also buoyed by a recent Our Land and Water report that highlighted how pastoral farming and solar panel use can be successfully integrated, rather than being mutually exclusive activities. Dry stock farms were shown to experience particularly strong gains in profitability as a result of combining some of the farm area into panels.
Typically, a Platinum installation will consist of a photo voltaic solar array, inverter and potentially also a “battery” bank for energy storage, if the use case is ideal. Every system is different, but most 40kW systems required for Canterbury dairy units will require about 500 square metres of area to be set up in, depending on how many rows are required to face the array north, and the shape or layout of the land available.
“As the technology continues to evolve and energy density of panels continues to improve, we expect to see more of those awkward pieces of marginal/unproductive land on farms provide the opportunity for panels, areas like the centre of the tanker loop, for example,” says Liam. LEFT: As Canterbury irrigators settle in for one of the longest irrigation seasons ever, prospects for electricity prices to fall are not looking promising IMAGE: Yvonne Gilmore, Venture Energy, conducting an exterior inspection
Ruralco Energy are here to help your business
To find out more about how we can help your farming system, whether it be reviewing your energy consumption, incorporating solar for your business or simply understanding your energy bill, contact the Ruralco Energy team on 0800 787 256 or ruralcoenergy@ruralco.co.nz.
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