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Reducing Dairy Energy Costs

06 August 2013

A typical dairy could save €1,800/year by simply altering management strategies and embracing energy efficient technology, Teagasc researchers have found.

Introduction

Efficient use of energy is one way to improve the cost competitiveness of the Irish dairy sector. At this moment, electricity costs on Irish farms are around four per cent of milk production variable costs, but they are expected to increase in the short to medium term due to rising global energy prices. Understanding and reducing electricity costs will have the potential to reduce overall energy use and reduce production costs.

On-farm energy audit results

Energy audits carried out as part of the Dairyman project on 22 commercial dairy farms over 12 months in 2011 provide an insight into the main areas of electricity use.

These are milk cooling (31 per cent ), the milking machine (20 per cent ), water heating (23 per cent ), other equipment (18 per cent ), water pumping (5 per cent ), and lighting (3 per cent ). The average cost of electricity for the farms in this study was 0.51 cent/litre, with the minimum being 0.26 cent/litre and maximum 0.89 cent/litre. The average herd size was 118 cows but the study included farms ranging from 47 to 290 cows (see Table 1).

Assessing energy costs and energy tariffs

A simple calculation can be made to approximate on-farm electricity costs. Firstly add up the total electricity charges over a year excluding standing charges, VAT and PSO levy, these figures can be found on the electricity bill. Multiply by 100 to convert from euro to cents. Next add up the total number of litres of milk sold to the processor over the same period. Dividing the electricity cost in cents by the number litres will give the cost in cent per litre. The average three bedroom house in Ireland uses approximately 5,000 units of electricity per year, this could be deducted to account for domestic usage if the dwelling house in on the same meter as the farm.

Checking your pricing and tariff structure against the best available rates can also yield significant savings. This can be done using a pricing comparison website such as www.bonkers.ie. All you need is information about your present tariff, annual usage and night rate usage in order to make comparisons and calculate possible savings. If you decide to switch suppliers it is important to read the small print. Check the standing charges and termination charges.

Potential for reducing costs

Energy costs can be reduced in two ways. Firstly by using more night rate electricity (from 12 midnight to 9 am) or moving electricity supplier to avail of lower unit rates. Analysing the results of the Dairyman audits showed that the average farm in the study could save €500/year by moving to the most competitive supplier and €170/year by adjusting the night rate timer correctly. There is no investment cost involved in these changes.

The second way of reducing energy costs is to reduce total electricity consumed through the use of energy efficient technology. By implementing energy efficient technologies on the milk harvesting equipment substantial savings can be realised because 80 per cent of all electricity consumed on the farm is used in the milking parlour.

However an upfront investment cost will be incurred to purchase and install the energy efficient equipment. The time taken to recover this cost is an important factor in deciding whether or not to invest. The simple payback method is a useful tool to quantify the length of time taken (in years) for the energy efficient technology to pay for itself through the resulting energy savings.

Good examples of these energy efficient technologies are: 1) the application of a Variable Speed Drive (VSD) on the vacuum pumps of the milking machine which would save €460/ year, with a payback of seven years, 2) a solar thermal system for preheating water would save €350/year with a ten year payback, 3) improving the efficiency of the milk cooling system by increasing the milk to water flow ratio of the plate cooler from 1:1 to 2:1 would save €350/year with a seven year payback.

By making all of the changes described above, a permanent saving of €1,800/year could be achieved, recovering all investment costs in six years.

Conclusion

This study identified a number of areas where improvements can be made to reduce energy costs through simple management changes and through the application of suitable energy efficient technologies. Total farm energy costs can be calculated without specialised equipment. Farms with high energy costs have more to gain by improving their energy efficiency

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