Milk a microgrid

Copy of Chris Farm 9

There’s something interesting going on in the Latrobe Valley right now that I thought you ought to know about.

Local residents are being asked to sign up to a local energy feasibility study which, if it gets the go-ahead, will enable people with solar panels or wind turbines to sell any excess energy to others in their neighbourhood on their own terms – determining their own profits.

For dairy farmers, with lots of land and rooftops, it could provide another profitable income stream – not only saving energy costs but turning farms into profit-generating powerplants of the future.

To tell you more about it, here’s Belinda Kinkead, from the LO3 Energy team who are setting it up.

The Latrobe Valley project is such an exciting project for us because it is an opportunity for our technology to provide a significant and much-needed benefit to an entire industry.

We are working with Dairy Australia on this project and understand that reduced revenues are already making it hard to balance the books. We hear you.

Increasing running costs and greater weather unpredictability is only making it worse – and we were surprised to learn that, as a result, one in five dairy farmers are now preparing to quit.

But don’t quit just yet – because this could provide a way for you to turn things around.

It’s all about electricity.

You know better than me that dairy farming spends a lot of money on electricity. It’s used to run milking machines, pump water for irrigating fields, keeping milk chilled, heating water for cleaning equipment and providing light in the early morning hours.

And it’s expensive.

One case study showed a farm with 500 cows, 400 of which were milked twice daily, used 320 MWh of energy per year (875kWh per day). At an average cost of 25cents per kWh, that’s approximately $80,000 per annum[1].

But as farmers, you have extensive land and large areas of rooftops – perfect for solar panels or micro wind turbines.

Installing solar clearly has its benefits – it can reduce the amount of energy you have to buy from the grid, and any excess can be sold back to the grid.

Therein lies the problem. Right now, the only place to sell it is back to the grid, and it’s a closed market. There’s no price negotiation which means the return is usually in the retailers favour.

But, what if you could sell your unused energy to people in the local area – at a price they’re willing to pay? You reap the full benefit of the sale price of your energy.

For example (unless you were lucky enough to be an early solar uptaker) you would probably receive a feed in tariff of 10 – 15c/kWh[2] from your retailer. When you buy electricity from your retailer you would likely pay more than 35c/kWh at peak times, and more than 20c/kWh off-peak. That’s a significant gap.

There’s the prospect of a win-win where you can sell your excess generation to a neighbour for more than the feed in tariff, and they can buy electricity from you for less than the retail price. There are also other benefits associated with keeping your energy spend within your community – supporting local businesses and local jobs.

That’s the idea behind the Latrobe Valley Microgrid, a local energy market place.

It sounds complicated, but actually, it’s simple, and it’s proven – we’ve been running one in Brooklyn, New York for two years and the locals love it.

You might like to know that we have also partnered with SMF, and through the local councils, offer a financing option (Environmental Upgrade Agreement) that could ease your cashflow concerns for solar installations.

Everywhere in the world, technology and the sharing economy is changing business models – from Airbnb to Uber.

Adapting for the future is essential – and this really does make sense.

So if you’re looking to add additional revenue streams into your farm, take a look at what could be the solution. It’s all laid out on www.LatrobeValley.Energy

You can help make it a reality by taking part in the project. Join our feasibility study now. It doesn’t cost anything, we just need your consent to use your energy usage data on an anonymous basis to model the cost/benefits for the project. The more data we get, the more precise the results. Get online and register www.LatrobeValley.Energy.

[1] http://www.aginnovators.org/initiatives/energy/case-studies/energy-efficiency-supports-viability-family-run-dairy-near-wagga-wagga

[2] VIC minimum tariff for 2018/19 is currently 9.9c/kWh (https://www.energy.vic.gov.au/renewable-energy/victorian-feed-in-tariff)

Solar at the dairy: how to crunch the numbers

SolarDairy

I’d love to install a solar system here on the farm but since we use most of our energy in the dark or at sunset, it’s a real challenge make it affordable. I’m really grateful to dairy energy expert Gabriel Hakim of AgVet Energy in Warragul for writing this guest post on how to crunch the numbers!

Energy Audit with Gab

Gabriel Hakim and Wayne check out the dairy during an energy audit back in 2012

With the backdrop of the recent closure of Hazelwood, and continued uncertainties over supply and prices more and more dairy farmers are asking “Can solar work for me?”.

The way electricity is consumed on most conventional dairies – early morning, late afternoon, and overnight – means it is a challenge to maximise the direct benefits of solar.  In southern Australia, most of the electricity generated by photovoltaic panels (PV) occurs between milkings, during the middle of the day.

How this electricity is used has huge implications for the economics of PV.  The three broad options are:

  1. sell all unused generated electricity into the grid;
  2. store unused generated electricity and use it later; and
  3. change the timing of electricity-using tasks so they make use of the electricity as it is generated.

The reality of course, is to deploy a combination of these options. This post explores option 1 for installing solar on an existing dairy with:

  • Twice-a-day milking. 6:00 – 9:30 am and 3:30 – 6:00 pm (includes milk cooling time)
  • 450 milkers calving all year round
  • 40-50 units
  • Conventional cooling (glycol chiller, with final direct expansion cooling in vat)
  • Conventional cleaning (warm pre-rinse, hot wash, hot final rinse) – ~1,600 l hot water/day
  • Average daily electricity consumption 450 kWh (large user)
  • Electricity charges are 22.6cents/kWh and 10.1 cents/kWh (ex GST and after discounts have been applied) for peak and off-peak respectively. Annual spend on electricity is $22,206.71 (ex GST).

How big should the PV system be? 

The optimum size depends on several things such as; the load profile, how much of your consumption you aim to off-set, the available roof space (or ground space), and how much you’re willing to invest.

For this case, let’s choose a 50 kW quality brand PV system. The going price for this roof-mounted system on a tilt frame is $59,545 (ex. GST) net of RECs.  And, from July 1, 2017 the feed-in tariff rate increased to 11.3 cents/kWh.

Whilst the calculations for the economic analysis might be straightforward, the real challenge is making realistic assumptions about power usage.

Unfortunately, many solar systems salespeople don’t have a good appreciation of dairying and I have seen too many instances where the intended outcomes are never realised because of poor or incorrect assumptions.

For the example dairy, the maximum proportion of PV generated electricity that can be consumed directly is 48% because the bulk of the electricity generated is typically between 11:00 am and 3:00 pm, when very little or no equipment is operating.  To increase the proportion of direct consumption would require shifting tasks to this timeslot – option 3, to be discussed in another post.

The PV system

PV system Size 50 kW PV capital cost $59,545
Average annual electricity generation  72,560 kWh Simple payback period 5.8 years

GabrielSolar1Table

Even with 48% of the generated electricity being directly consumed – and 52% being exported – the annual savings are substantial, $10,613 in year 1. The simple payback period for this investment is 5.8 years. Higher tariffs or future price increases would make the payback shorter.

The “take-home” lesson here is that the more you can consume directly the better the financials stack up.

If the PV system was bigger, say 80 kW, you might be able to capture a little more for direct use during the winter months but you will be simply exporting more to the grid. It is still financially attractive but requires more investment (~$95,300) and payback time is extended by about six months.

Financing solar
The financial indicators above assume farmers have the money to fund this investment stashed under the pillow (we all wish it was).

Fortunately, over the last three years or so the financing market has become far more amenable to funding energy related equipment. The number of institutions that offer products targeting this space seems to grow every month.

The Sustainable Melbourne Fund (http://sustainablemelbournefund.com.au/), for example, has broadened its focus to regional areas and is very interested in getting involved in the agricultural sector. They were really impressed by the environmental credentials of the Green Cleaning System I designed a few years back.

A cashflow-neutral investment
Financing an investment such as this can be very attractive as the savings in the electricity bills can be used to service the repayments. By negotiating a low (interest) rate and reasonable term length (5-7 years), these types of projects can become cashflow positive from the very first bill.

If we were to finance the above 45 kW PV system over a 7-year term, the fixed monthly repayments would be $846 equating to $10,152 per year. If we manage to achieve 40% or more direct consumption of the PV generated electricity, then this project would be “cashflow neutral” or even slightly positive from the outset. After seven years, the saving can be banked.

So, “Should I go solar?” is worth thoughtful consideration. The option presented here is the least financially attractive of the three options but still has merit. Ensure that any assumptions made are directly relevant to your situation. Do your homework and don’t hesitate to seek advice.

Thank you, Gabriel, and Milk Maid Marian looks forward to the next installment of solar smarts.

Solar on the farm? Maybe.

It costs between $4000 and $5000 per quarter in power bills just to run the dairy, so we jumped at the chance to have an energy audit done on the farm by Gabriel Hakim, thanks to GippsDairy.

Energy Audit with Gab

Gabriel and Wayne check out the systems

It showed us where our energy is used and highlighted that maybe we had better look at increasing the flow of water to our milk heat exchanger. Still, there were no massive savings to be made (and don’t we all love a silver bullet?), so I’ve started investigating alternative power for the dairy.

A wind turbine would have a payback period of 60 years! Jeepers! So, I’ve since been looking at solar. You can now lease solar systems with the repayments matched to your electricity savings, making the exercise cashflow neutral. Very nice! The only thing now is to get the right size system.

It’s not as easy as you think because the cows are generally milked too early and too late in the day to capitalise on solar energy, so I think we’ll be starting off small. That’s not so bad because it won’t lock us in to the technology forever and I am sure something even better is on its way!