Farmers continue to embrace solar

Electricity prices are never far from the headlines.

Electricity prices for Queensland’s intensive agricultural sector are now unsustainable, particularly for a heavily trade-exposed sector where energy, water and the climate are so inextricably connected. Climate change is continuing to affect water availability and put new stresses on not only cropping systems but also energy systems (particularly in constrained areas).

Future energy costs, reliability and sustainability (particularly given the changing climate patterns moving towards increasing frequency and the duration of drought and other 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, while CPI has increased by just 24% over the same period. And there is increased pricing uncertainty into the future with the final design of future tariffs post June 2020 still unknown; as the next Regulatory Revenue Proposal process, which determines the revenue allowance for Energy Queensland (Ergon Energy and Energex) under the National Electricity Rule (NER) and accompanying Tariff Strategy Statement continues, coupled with increasing uncertainty of generation costs across the National Electricity Market (NEM) and recent moves to ‘Big Stick’ energy retailers.

Many farmers have taken the initiative to manage unsustainable electricity prices, 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) and sought to decarbonise the ‘energy mix’ by adopting a range of technological solutions to improve energy efficiencies and ultimately drive on-farm productivity.

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

Just over three years of CEFC data provided to Queensland Farmers’ Federation outlined CEFC loans to agribusinesses for more than 1000 projects valued at $220 million.

The 2015–2018 data revealed just under $110 million was invested in more than 400 on-grid and 20 off-grid solar power projects, while Australian farmers were also committing to improving energy efficiency in their buildings, with almost 37% of the loan total invested in just under 200 projects to improve farm buildings and production systems.

Graph 1: Agribusiness technologies financed through $220 million in CEFC loans.

In reality, the extent of agricultural investment will be many times higher as these figures are only based on CEFC-financed loans and do not include the projects where farmers have purchased renewable or energy efficiency technologies outright or sought funding elsewhere. But they do demonstrate some important trends in investment and the 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 state government funded and Queensland Farmers’ Federation led Energy Savers Program. With electricity price uncertainty in the future, options are available for farmers interested in financing energy efficiency and renewable energy (see https://www.qff.org.au/wp-content/uploads/2016/11/Energy-Savers-Fact-Sheet-1.pdf).

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 both energy and water end uses will increase Queensland’s intensive agricultural sectors’ resilience and help them manage the rising liabilities from climate and carbon-related exposure, including increasing electricity costs, rising environmental compliance and the increasing scrutiny of customers and investors.

Image credit: ©stock.adobe.com/au/Federico Rostagno