$220m funding helps farmers embrace renewable energy

Queensland farmers are keen to embrace renewable energy, such as solar, in response to unsustainable electricity price increases. Fortunately, help is available...

Electricity prices for Queensland’s intensive agricultural sector are now unsustainable, particularly in the heavily trade-exposed sector where energy, water and climate are so inextricably connected. Climate change is continuing to affect water availability and put new stresses on cropping and energy systems, particularly in constrained areas. Future energy costs, reliability and sustainability, especially in relation to the frequency and duration of drought and extreme weather conditions, are a major concern to farmers.

Some Queensland farmers have been on the receiving end of electricity cost increases of more than 200% in 10 years; the consumer price index has increased by just 24% over the same period. In addition, there is increased future pricing uncertainty, with the final design of future tariffs after June 2020 still unknown. The next regulatory revenue proposal process, which determines the revenue allowance for Energy Queensland (Ergon Energy and Energex) under the National Electricity Rules, continues, coupled with increasing uncertainty of generation costs across the National Electricity Market and recent moves to ‘big stick’ energy retailers.

Many farmers have taken the initiative to manage unsustainable electricity prices and offset unavoidable peak-demand charges (often due to crop or animal welfare needs, particularly on hot days, or mandatory water licence access terms and conditions). Many have also sought to decarbonise the ‘energy mix’ by adopting a range of technological solutions to improve energy efficiency and ultimately drive on-farm productivity.

One area of available funding for farmers is the Clean Energy Finance Corporation (CEFC). The CEFC is responsible for investing $10 billion in clean energy projects on behalf of the Australian Government to assist with lowering Australia’s carbon emissions by investing in renewable energy, energy efficiency and low-emissions technologies.

Just over three years of CEFC data were provided to the Queensland Farmers’ Federation outlining CEFC loans to agribusinesses, with funding provided to more than 1000 projects, valued at $220 million.

The 2015–2018 data revealed that just under $110 million was invested in more than 400 on-grid and 20 off-grid solar power projects. Australian farmers were also committed to improving energy efficiency in their buildings, with almost 37% of the loan total invested in projects to improve farm buildings and production systems.

In reality, the overall extent of agricultural investment will be many times higher, as these figures are only based on CEFC-financed loans and do not include projects where farmers have sought funding from other sources or purchased renewable or energy-efficient technologies outright. Despite this, the findings demonstrate important investment trends, revealing areas in which farmers are seeking loan assistance to make clean energy improvements to their operations.

The agricultural sector is continuing to make significant investments in clean energy to decarbonise the economy. This is expected to continue in Queensland with the extension of the Energy Savers Program funded by the state government and Queensland Farmers’ Federation. With uncertainty surrounding future electricity prices, options are available for farmers interested in financing energy efficiency and renewable energy.

Australian farmers are among the cleanest and greenest in the world and should be congratulated for their commitment to sustainable and productive farming. The water–energy–climate nexus will need various solutions, but efforts to drive efficiency in energy and water end uses will increase the resilience of Queensland’s intensive agricultural sector and help farmers to manage the rising liabilities from climate and carbon-related exposure, including rising electricity costs, environmental compliance and the increased scrutiny of customers and investors.

For more information, visit www.qff.org.au/blog/extended-energy-savers-program-needs-farmers/.

Image credit: ©stock.adobe.com/au/vermontalm