Reducing Electricity Costs at Quarries

By on February 12, 2012

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 innovative quarries have taken advantage of a new way of purchasing electricity and reduced the energy component of their electricity bill by 20% to 40%. PROGRESSIVE GREEN PTY LTD reports.

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 -$1/kWh 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 the majority of the time the price on the spot market is much lower than the fixed contract rates offered by retailers. Generally the spot market price sits around 2c/kWh to 4c/kWh for most of the time”.

Evans: “So a customer who is able to avoid the few periods when the prices are high (during so called “pool events”) has the opportunity to access inexpensive electricity most of the time and achieve significant savings – potentially as high as 20% to 40%”.

Purchasing direct from the wholesale electricity market is not for everyone – however – there are customers who can manage their electricity load during pool events – e.g. by turning equipment off (shedding load) or switching to backup generator.

At first glance this may seem onerous but history shows that the frequency of pool events above 30c/kWhr is rare. An analysis of the last 7 years shows that the majority of pool events are less than 2hrs in duration and events longer than 2hrs are rare.

During 2010 there were 11 pool events in Victoria that required load shedding for a total 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, usually with 12-24 hours’ notice.

So provided you are kept informed about upcoming pool events ahead of time and are able to modify your production schedule to avoid consumption during pool events then you can reap the benefits of lower electricity rates. For quarries often 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

David Evans again: “Progressive Green has recognized 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. 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. In addition there is a unique communication and 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, Quarry Manager at Conundrum Holdings Pty Ltd’s Stawell Quarry site (pictured above), 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% compared to contract rates that are being paid elsewhere”.

For more information please contact Progressive Green on 1300 08 06 08 or by emailing info@progressivegreen.com.au

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