Productivity improvements through energy innovation in the Australian sugar industry : final report 2017/011

Abstract

Water pumping forms a significant portion of energy use in Australian irrigated agriculture. Water for Australia’s $2 billion annual sugarcane crop is from precipitation and irrigation. As an irrigated industry in a variable climate, energy is a critical input and significant cost component in the sugarcane gross margin. With approximately 90 % of irrigated sugarcane growers accessing the national electricity grid for their energy needs, exposure to some of the highest power prices in the world threatens operating margins and export competitiveness. This project examined various technology components available to reduce the cost of pumping in a micro grid situation: solar PV, diesel gensets, grid energy, wind turbine and lithium-ion batteries. The results found that economic feasibility of incorporating components to lower pumping costs was heavily influenced by Ergon grid connection policies and retail pricing, i.e. export limitations of solar PV, feed-in-tariff rate and the high cost of undertaking ‘user pays’ studies for systems above 39 kW acted as a deterrent. Putting aside grid policy barriers, the study found solar PV to be the most cost-effective technology for this purpose when tested among a range of components. For smaller, grid connected irrigation plant (under 40 kWp), incorporating solar PV systems achieved high investment returns.

Renewable energy also offsets fossil fuel-based energy resulting in reduced greenhouse gases in each scenario. Farmers have many options when it comes to financing renewable energy projects. A power purchase agreement is a novel approach offering nil-upfront cost with immediate energy savings. Leasing and traditional debt financing models are also available to increase irrigator uptake. Adoption of renewable energy into irrigation pumps has been slow. This study found carbon and energy policy settings have room for improvement to accelerate uptake: increased STC threshold from 100 kW to 200kW, greater incentives for users connecting to the grid and a targeted approach from both water and energy policy to investigate innovative ways to incentivise a shift to renewables.