Australian farms are dealing with high energy expenses, from increasing electricity costs to diesel costs, impacting profitability. This article discusses energy costs and outlines clean energy options to help farmers lower costs, improve resilience, and contribute to Australia’s sustainability goals.
Understanding Energy Costs on Farms
1. Increasingly High Electricity and Diesel Costs
- Dairy farms register an annual expense of about A$26,000 for electricity to the dairy shed, not including irrigation, making it clear that energy is a sizable expense in the operational budget.
- One organic dairy farm in Gippsland had energy bills of around A$80,000 in 2021 and A$12,000 in 2022 after installing solar, upgrading irrigation, and adding an energy management system. The investment was over A$1,000,000, but with a payback period of around six years.
2. Impacts in Other Sectors
Besides dairy, the horticulture, orchards, and cold storage operations have exceedingly high electricity costs. In South Australia, the electricity cost to regional agri-business has increased by more than 100% (for example, Nippy’s went from A$51,600 in May 2022 to A$109,580 in May 2023) despite some investments in renewable energy.
Clean Energy Alternatives for Farms
1. Solar PV and On-Farm Renewables
- Farms are now investing in solar energy to save money and decouple from the ups and downs of the grid.
- For example, a 25 kW solar system allows an 18kW bore pump to use around A$8000 per year of savings, and up to an additional A$5000 of revenue from exporting to the grid- total investment including tax incentives was A$37,600.
- Australia’s Small-scale Renewable Energy Scheme (SRES) reduces solar system installation costs by 25–30%, sometimes down to about A$1 per watt.
2. Energy Efficiency Upgrades
- Cold storage facilities can greatly reduce energy consumption. One example reduced energy consumption by 15–40% by switching to an ammonia water-cooled system, smart controls, and financing through CEFC-backed loans.
- Energy audits identify opportunities to save money notably. An audit of a fruit farm revealed an average savings of A$16,300 per year (and under six years to break even), after upgrading lighting, cooling, and automation systems.
3. Agrivoltaics (Dual Use of Solar Farming)
Agrivoltaic systems combine solar panels and crop production or livestock grazing, providing two sources of income, offering up to 20 percent land savings over traditional agriculture, allowing for livestock grazing under solar arrays, or to grow fruits, vegetables, or nuts in orchards with solar panels above. While agrivoltaic systems have higher start-up costs and design components than traditional systems, the productivity and revenue potential in suitable climates is compelling for innovative farms.
4. Electric Low-Emission Machines
- Agricultural machinery is already slowly moving to electric instead of diesel, especially for wineries and orchards, particularly with cherry pickers. New Zealand published that a fully electric cherry orchard demonstrated A$5000 savings per month for a fully electric cherry orchard.
- In large-scale grain operations, semi-electric machines may provide some fuel savings. For example, a semi-electric combine harvester can result in an overall fuel savings of up to one-third for an overall electric grain system.
5. Battery Storage and Peer-to-Peer Energy Trading
- At the Global Food Forum, producers, consultants, and corporations indicated that the case for battery storage supports incentives to reduce costs and emissions while increasing energy resilience during extreme weather events.
- Peer-to-peer energy trading platforms for agriculture demonstrated energy cost (electricity cost) reductions of ~30–43 % (AI algorithms make it difficult to define specific savings/cost), reducing peak demand by ~24–42% while increasing energy sales by up to 43%.
Policy Environment and Support Mechanisms
- The Renewable Energy Target (RET) supports the adoption of large-scale and small-scale renewables and provides certificates that help offset system costs.
- In addition to RET, programs such as CEFC financing, state rebates, and interest-free loans help make investment choices in renewables more feasible.
- Both Farmers for Climate Action and industry voices want more targeted support. This includes removing regulatory challenges and promoting battery storage and peer-to-peer energy systems, among other areas.
Action Steps for Farmers: A Roadmap
- Conduct an Energy Audit: Gain an understanding of your current usage before going after low-hanging efficiency opportunities.
- Implement Upgrades: Some options may include LED lighting, efficient cooling, power factor correction, and automated systems.
- Invest in Solar and Batteries: Start with rooftop or bore-mounted PV, efficiency incentives, and battery augmentations.
- Consider Agrivoltaics: Explore opportunities where dual-use can allow traditional agricultural operations alongside solar generation.
- Use Low-Emissions Equipment: Where feasible, switch to electric or semi-electric tractors and harvesters for lower fuel costs.
- Become a part of Energy Trading: Connect with peer-to-peer energy trading markets to maximise your energy use and revenue.
- Utilise Incentives and Policy: Utilise SRES, RET certificates, CEFC funding, and seek assistance in navigating the regulatory barriers.
Conclusion
Australia’s farmers are contending with rising energy costs; however, there are tools and incentives to create a cleaner, more economical energy future. There are many ways to success- whether it is through solar, efficiency upgrades, agrivoltaics, or electrified equipment. Each step taken will likely grow resilience, lower costs, and support a cleaner agriculture sector. Through reliable guidance, farmers can understand how they can engage and benefit from the clean energy transition.
For such guidance, contact us at KG2 Australia today!
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