RIVERLAND fruit and vegetable growers using irrigation are facing an uncertain future due to SA’s high electricity prices.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
SA's electricity futures contract prices are hovering at about $77 a megawatt hour, after peaking at $90/MW late last year, which is almost double the futures prices of NSW and Vic. Irrigators who renewed contracts late last year have faced rises of up to 100 per cent.
Short-term price fluctuations were expected after the closure of Alinta coal and gas power stations at Port Augusta last year, with Premier Jay Weatherill saying SA would be better off long-term by being a leader in renewable energy.
The short-term is the issue for Riverland irrigators, according to Central Irrigation Trust chief executive officer Gavin McMahon.
“The main issue is increases in their costs, whether it be through a party like ours that supplies them with water, whether they pump themselves, or they have to re-lift and on-pump and pressurise their own systems. Increased power translates directly through to their cost structures,” he said.
“The difficulty a lot of them (growers) have is they’re competing on an international marketplace, so their products are being sold at an international market product price and the cost of power isn’t factored into that.”
Mr McMahon was disappointed Australia had gone from a low-cost power country to one of the highest-cost power countries in the world.
“In a time of innovation, getting businesses operating and creating jobs, it's a significant handbrake,” he said.
The handbrake has been applied to the Riverland area according to Mr McMahon, who said the fruit bowl region’s status as a leader in water efficiency had been undermined by high energy prices.
Mr McMahon said there was no solid plan for the transition to relying on renewable energy and is skeptical of the states’ baseload energy sources.
“We’ve encouraged wind generation and renewables. Our baseload thermals are dropping out so what is going to provide us with that baseload of power? Somebody has to step in and fill that gap,” he said.
Member for Chaffey Tim Whetstone echoed the sentiments of Mr McMahon, saying a lack of government planning was partly to blame.
“For all the dialogue about going to green energy, utilising sun and wind, we are sadly paying the highest power prices and having to resort to fossil fuel power,” he said. “The government has put a high level of uncertainty into the marketplace and their lack of understanding of what it means to be heavily-reliant on power is a concern.”
Mineral Resources and Energy Minister Tom Koutsantonis says high energy prices are “not a uniquely SA issue” and “the government is working with energy suppliers and producers to increase efficiency and develop greater interconnection with other states”.
“The rapidly changing nature of the energy market and the mix between traditional and renewable energy production makes it hard to predict energy prices into the future,” he said.
“The government is developing a program to work through all issues faced by SA consumers and businesses in its transition to a low-carbon economy.”
Exorbitant electricity prices and inconsistent power supply have forced fourth generation fruit producer Will Swinstead to invest significant capital in backup energy systems, and implement sanity-sapping management practices to keep his family's property, Overland Corner Estate, commercially viable.
The watermelon, winegrape and citrus growers have been forced to restructure their operating system, shifting to an on-demand system in which they pay a base rate for electricity.
“We pay so much a month regardless of whether I turn a pump on or not,” Mr Swinstead said.
“We have more risk. We have to shut down our system when there are high spikes in power prices and there seems to be more of them happening due to weather conditions and demand.
“We will become exposed there if there’s serious drought because I'll still have to pay a certain amount a month whether I use one kilowatt or 1000kW.”
Mr Swinstead keeps a constant watch on SA's electricity prices and demand on the Australian Energy Market Operator website to avoid being hurt by price spikes.
“I have to shut my system off during the main time I want to actually irrigate, and have to be ahead of the game to predict that coming and shut it off for two to three hours,” he said.
With product prices in Mr Swinstead's sector dictated by supermarkets, growers cannot adjust their prices to share the electricity price rise burden with consumers.
“Electricity and water supply are two vital resources we need to produce food and they are becoming less secure due to a lack of planning,” he said.
Mr Swinstead wants plans developed to stabilise and secure electricity prices and sources, ensuring his industry’s future.
“Securing power down the line is important. Not just for me. Hopefully my children might be on the land and what are we doing to strengthen it, to make it more reliable, to have our own sources?” he said.
![UNDER THE PUMP: Riverland fruit producer Will Swinstead, Overland Corner Estate, is one of the region's many irrigators facing financial and managerial pressure caused by SA's high electricity prices. UNDER THE PUMP: Riverland fruit producer Will Swinstead, Overland Corner Estate, is one of the region's many irrigators facing financial and managerial pressure caused by SA's high electricity prices.](/images/transform/v1/crop/frm/quinton.mccallum/5de09a03-b0b7-4019-b3ab-1181d2d2a9c5.JPG/r0_181_3696_2382_w1200_h678_fmax.jpg)
We have more risk. We have to shut down our system when there are high spikes in power prices and there seems to be more of them happening due to weather conditions and demand.
- - WILL SWINSTEAD