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Articles from FINANCE & LEASING (27 Articles)

Conundrum Holding’s Stawell Quarry has been a beneficiary of wholesale pool purchasing.
Conundrum Holding’s Stawell Quarry has been a beneficiary of wholesale pool purchasing.
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Reducing electricity costs in quarries

Electricity is becoming a major operating cost in most businesses today but several quarries are taking advantage of a new way to purchase electricity and reduce their energy usage.
For many quarries, electricity is a major operating cost. Crushers, screeners and other plant and equipment consume significant amounts of electricity. Short of shutting down its operations, the quarry operator appears to have little control over the cost. Recently, however, several quarries have taken advantage of a new way of purchasing electricity and reduced the energy component of their electricity bill by 20 per cent to 40 per cent.

THE TRADITIONAL APPROACH
Most quarries purchase electricity from an energy retailer via a standard retail contract. In order to supply electricity to the quarry, the retailer purchases electricity from the national wholesale spot market at the prevailing wholesale rate and then passes it onto the customer at retail contract rates. The spot market can vary between less than $1 per kilowatt hour to $12.50/kWh, depending on various issues such as constraints on the grid. Most of the time, though, prices are substantially lower than retail contract rates. No retailer wants to be paying high spot market rates so to avoid exposure to high spot prices the retailer puts in place a hedge, often paying a premium to a financial institution or generator to insure against high prices on the wholesale market. The hedging costs are expensive and the extra costs are simply passed on to customers through their contracted retail energy rate.

THE OPPORTUNITY
David Evans, the general manager at Progressive Green, a licensed electricity retailer, comments: “The wholesale price can and does vary constantly but extremes are rare. For most of the time the price on the spot market is much lower than retailers’ fixed contract rates. Generally the spot market price sits around 2c/kWh to 4c/kWh for most of the time. So a customer who can avoid the few periods when the prices are high (during “pool events”) has the opportunity to access inexpensive electricity most of the time and achieve significant savings, potentially as high as 20 to 40 per cent.”

Purchasing direct from the wholesale electricity market is not for everyone, however – there are customers who can manage their electricity load during pool events, eg by turning equipment off (shedding load) or switching to a back-up generator. At first glance, this seems onerous but history shows that the frequency of pool events above 30c/kWh is rare. An analysis of the last seven years shows that the majority of pool events are less than two hours in duration and events longer than two hours are rare. In 2010, there were 11 pool events in Victoria that required load shedding for a combined duration of 23 hours over the entire year, mainly between 3pm and 7pm on hot summer days. Furthermore, the events are usually forecast ahead of time by the market, with 12 to 24 hours’ notice.

Provided you are kept informed about upcoming pool events ahead of time, and can modify your production schedule to avoid consumption during pool events, then you can reap the benefits of lower electricity rates. For quarries, this means stockpiling a little extra ahead of time or modifying operation hours and running the plant earlier in the day.

A NEW APPROACH TO ELECTRICITY PURCHASING
“Progressive Green has recognised the opportunity to save customers money on their electricity bills by providing direct access to the wholesale market via its Managed Wholesale Pool Purchasing product,” explains Evans. “We offer a unique end to end management solution that includes a comprehensive notification and load management system.

“The solution keeps sites informed of market price events so that they know when to manage their load. There is also a unique control device that signals the right time to shed load and/or the best time to use load (low prices), an essential element for purchasing from the wholesale market.”

Brian Calovic, the quarry manager at Conundrum Holding’s Stawell Quarry site, in Victoria’s west, commented: “We recently started using Progressive Green’s wholesale pool purchasing and have been very happy with the results so far. Pool purchasing is giving us savings over 40 per cent, compared to contract rates that are being paid elsewhere.”

Source: Progressive Green









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Thursday, 22 August, 2019 9:37pm
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