With electricity prices expected to remain high, how will agriculture fare?

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ELECTRICITY and gas prices are expected to remain high for the foreseeable future after warnings of possible outages due to a supply shortage in recent days.

Yesterday, five states were warned of possible outages by the Australian Energy and Market Operator (AEMO), which runs Australia’s power grid. The shortfall was attributed to a $300/megawatt-hour cap imposed by the AEMO on suppliers, scheduled maintenance and a global gas shortage.

Although the grim predictions did not come to fruition after ordering the companies to add supply to the market, the organization today took another major step to suspend the electricity spot market as it does not can guarantee supply.

“These power shortages primarily affect generators revising their market availability in response to administered wholesale electricity price caps. In addition, there are production units offline for maintenance, as well as influencing factors, such as rising energy-related raw material prices,” AEMO said in a statement this morning.

“Today AEMO continues to encourage generators across the NEM through our Lack of Reserve Notices (LORs) in Queensland, New South Wales, Victoria and South Australia to offer their market availability, rather than being asked to do so.”

The situation has put many people on edge, including transformers, and prompted calls from academics and the Electrical Trades Union for an investigation into how the Qld’s power grid is run.

While an investigation may answer some questions, the situation is unlikely to be resolved quickly with a global gas shortage forcing prices higher and possible shortages to continue. A processor told Beef Central that the company’s electricity bill will likely rise by 300% next year.

Decrease network dependency

As electricity prices have increased in recent years in the agricultural industry, many farms have invested in infrastructure to reduce reliance on electricity.

Beef Central spoke to three feedlot operators in Queensland’s Darling Downs, all of whom have taken recent steps to distance themselves from fluctuating markets – through on-farm solar power, gas contracts term and the installation of infrastructure with the possibility of switching between diesel and gas.

Many feedlots have taken steps to reduce their reliance on electricity, with some using solar power.

Feedlots equipped with steam flakers can be heavy consumers of electricity or gas and the recent electricity crisis will add to record feed grain, livestock and diesel prices which have all put pressure on operations.

Earlier this month, NSW Farmers called for more government investment in on-farm electricity generation. Reg Kidd of the NSW Farmers Energy Transition Working Group said rural users paid significantly more than urban users.

“It’s a huge cost for rural people, but it’s particularly felt by large energy consumers such as dairy farmers and intensive livestock farmers,” Mr Kidd said.

“Many agricultural enterprises are seeking efficiency and certainty of energy supply by installing solar power plants or other renewable energy sources, backed up by batteries, and although the costs of these are gradually decreasing, they are still a major infrastructure investment to meet business rather than residential needs.

“NSW Farmers is asking the state government for investment in agricultural businesses, including grants and low-interest loans, to install renewable energy generation and storage.”

Necessary work on the electrical network

As the agricultural industry pushes to reduce its reliance on the national power grid, some are calling for reform of the entire system.

Professor at Monash University Ariel Liebmann said the current system was problematic and created too much uncertainty.

“The complete laissez-faire approach to both our natural resources (LNG) and our market frameworks that assume that all players are rational and that the market will fix the problem clearly failed us this week,” said the Professor Liebman.

“A different approach is needed with more direct investment from government. We must return to strict regulation like the one we had in 1998 before public electricity producers, gas infrastructures and networks were corporatized and partially privatised. This was supposed to increase efficiency and reduce costs for consumers. We had the exact opposite.

Agforce Grains chairman and Darling Downs farmer Brendan Taylor said he was unsure how to achieve this, but more reliable feed was needed for growers.

“Everyone is pointing fingers at each other, but it doesn’t solve anything,” he said.

“What we need is reliable basic power at an affordable price, because if it’s too expensive, the cost has to be passed down the line. Renewables and solar certainly help, but I don’t think they’re the silver bullet right now. »

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