OPTIMIZING ELECTRICITY PURCHASING STRATEGIES

January 18, 2008
Written by Greenhouse Canada
It seems that not a day goes by without some mention of electricity costs, whether it is a newspaper article, television program, or someone at the door predicting doom and gloom if you don’t sign a fixed price electricity contract right this minute.

There is no question that energy costs, and particularly electricity costs, in the greenhouse sector can have a drastic effect on the bottom line. However, it makes more sense to gain an understanding of how and when you consume electricity before making a decision that could have a major financial impact.

Until the widespread installation of “smart meters” is accomplished, the only choices available to many businesses are to sign up with a retailer or to stay with their utility while trying to conserve as much energy as possible.

Reducing consumption does a lot more than decrease the cost of electricity per kilowatt-hour. Many of the so-called “fixed” utility costs are based on consumption as well. This makes it possible to see meaningful dollar reductions on both portions of the monthly utility bill.

For larger consumers with interval meters already in place, choices increase as do the opportunities to conserve.

One of the most critical tools in this process is load profiling. Interval meters constantly record the time of day electricity is consumed. This information is relayed to the utility so that when the monthly bill is prepared, the cost is calculated based on the Hourly Ontario Energy Price. The more electricity used during peak (expensive) times, the higher the cost.

Having a load profile prepared, along with “what-if” scenarios that can show the comparative costs of hedging, market price or some combination of both, is a great first step. The added bonus is that a load profile will clearly illustrate your specific usage pattern. This will afford you the opportunity to consider making changes in your operation to shift some functions to off-peak hours or to eliminate unnecessary usage. Many growers are quite surprised to see that the graphic representation of their actual consumption is vastly different from what they thought it would be. The money spent on profiling becomes relatively insignificant compared to the potential for cost avoidance and possible savings.

Currently, Ontario electricity prices are relatively stable and it is expected that this trend will continue for at least the remainder of this year. It is important to recognize that this pricing is, however, extremely low compared to world pricing, and that new power generation will soon be required to meet the demand. Isn’t it far better to prepare now, than to be scrambling for solutions at the eleventh hour?

Ag Energy Co-operative now offers a load profiling service. This program will analyze past consumption data for interval metered companies and create “what-if” scenarios to illustrate the financial implications of various purchasing strategies.

Ag Energy Co-operative is an independent, member-owned co-operative formed in 1988 to provide energy products and services to its members. It has grown to become Canada’s largest farm energy co-operative. The membership represents about two-thirds of all greenhouse natural gas consumption in the province.
In late 2003, the co-operative opened its doors to other agricultural producers and enterprises in Ontario.

When combined with its FireFly Energy division, the co-operative additionally supplies approximately one-third of all the electricity consumed by Ontario farm operations.
• www.agenergy.coop


AN EXAMPLE OF LOAD PROFILING
22In the graph at left, it is evident that the majority of usage takes place from 10 a.m. to 4 p.m. On this particular day, the Hourly Ontario Energy Price (HOEP) at noon was $0.0748/kWh. The HOEP at 3 a.m. that same day was $0.0289/kWh, which would have translated into electricity savings averaging over four cents per kWh for whatever usage that could have been shifted from midday to the overnight hours. While it is not possible to switch everything over to off-peak hours, one of the prime candidates for consideration is grow lights.

Load profiles not only identify opportunities to save while maintaining the same level of consumption, but will also highlight possible conservation targets.

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