Energy costs

Dairy shed energy costs

Dairy farms across Australia have experienced significant increases in their electricity costs for dairy sheds and irrigation since 2010.

The increases have been driven by several factors, including some States’ investment in upgrading network infrastructure and the introduction of the carbon price in 2012.

Dairy Australia in late 2013 commissioned analysis of dairy shed power bills over three to five years, including the first 12 months after the carbon price was introduced on 1 July 2012.

The studies focused on energy use and cost at the dairy shed. They did not look at other energy-related costs faced by dairy farmers, such as energy use for irrigation or carbon price costs passed back to farmers by dairy processors through the milk price.

The analysis found that while median daily dairy shed energy use remained fairly constant from 2010 to 2013, the median daily costs rose between 18% and 100% depending on the State.

The median average tariff charged rose between 0% and 64% over the period, while service fees increased between 14.5% and 44%, with several jumping 192% due to a change in billing type.

More information

Australian Dairy Shed Energy Costs (PDF,742KB)

Dairy Australia in late 2013 commissioned analysis of dairy shed power bills over three to five years, including the first 12 months after the carbon price was introduced on 1 July 2012. This fact sheet examines the power bills for 59 representative dairies of varying sizes and farming systems across Australia. 


Renewable Energy Target

The Australian Government has commissioned a review of the Renewable Energy Target (RET), originally introduced by John Howard in 2001. The 45,000 GWh RET by 2020 consists of 41,000 GWh from large-scale projects such as wind farms, and an unlimited volume from small-scale projects such as PV panels on households and SMEs like dairy farms. This subset is known as the Small-scale Renewable Energy Scheme, or SRES. The review panel is due to report in mid-2014.

Australia’s energy regulators estimate the RET costs consumers between 1% and 5% additional on their bills. Based on the sample dairy shed power bills in Dairy Australia’s analysis, the RET may be costing dairy farmers on average around $250-$1500 a year.

However, once installed, renewables are extremely cheap to run because their fuel is more or less free.  This means the increasing proportion of renewables in the national energy mix is depressing wholesale electricity prices. A March 2014 report by Intelligent Energy Systems Advisory Services (IES) concluded scrapping the RET would make no difference to wholesale prices in the short to medium term, but would lead to higher wholesale prices from 2017 onward, due to reduced market competition and greater reliance on coal.

The RET includes the SRES, which subsidises the cost of PV panels, solar hot water and heat pumps. The DA Dairying for Tomorrow 2012 Survey found 18% of dairy farmers have installed heat pumps, 15% solar hot water, and 15% solar PV.

According to Solar Power Brokers ‘Solar Choice’, the SRES discounts the price of PV panels by about 30%, for example. This means a dairy farmer installing a 5kW PV system on the dairy roof would pay around $8600 with the SRES, or $12,500 without the SRES. The farmer would also save $500-$2000 a year in reduced energy costs, depending on where they are located and the farm business – or more, if they are also paid a feed in-tariff for excess energy into the grid.

However, payback times for solar PV remain beyond the five-year payback benchmark for dairy farm businesses, even with the SRES.

Smarter Energy

In 2012 and 2013 Dairy Australia received funding from the Department of Industry and Science to provide 1400 Australian dairy farmers access to personalised on-farm energy assessments, workshops and information resources. By June 2015, 21% (1,399) of Australia dairy farmers completed an energy assessment through this project.

Many of the farmers across Australia who received energy efficiency assessments at the dairy are already reaping the benefits of having identified areas for improvement, and are investing in changes. The assessments have found that while no two dairies are the same, milk cooling, milk harvesting and hot water production are the areas of highest energy use. The assessment recommendations ranged from small changes to existing equipment that can be implemented immediately, to advice on new technology and long term investment options.

Funding for this program closed on 30 June 2015. However, the case studies and fact sheets developed through this program will remain available to the industry via this website.

For fact sheets, case studies and other resources see:  dairyingfortomorrow.com.au