100% Electrification: Lower Operating Costs and Early Zero Carbon - Case study
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Case study 100% Electrification: Lower Operating Costs and Early Zero Carbon A business in Aotearoa NZ making it happen
Foreward
Climate change has created the absolute
necessity of decarbonisation through
electrification of the economy in Aotearoa NZ.
Leaders in business are actively engaged Working with the electricity distributor
in making this happen. This is an analysis and a willing retailer to create a flexibility
of one of those businesses. The owners model approach, using the farms DER
vision was to achieve full decarbonisation (solar/battery/software smarts) arbitrage
through electrification, maximising is utilised and the value of generation is
on-site renewable generation and grid acknowledged by reward for supply of
supply to electrify all required tools and electricity to the grid for consumers. The
technologies, replacing all fossil fuelled potential is significant across industry.
services, and incorporating electrical Mike Casey, the owner has not only
tools and appliances to operate the achieved the vision, he leads the way
orchard farm. through innovation, creating value for the
business, his industry and Aotearoa NZ.
This is a real-world example of reducing
operating costs of a business, achieving
decarbonisation and gaining other
benefits on the journey. Brendan Winitana
Chair SEANZ
15th September, 2021
The focus and outcomes are:
1. The cost savings achieved to electrify
the orchard farm business far exceeds
the finance and depreciation costs
as well as the operational costs. It Case Study Author
demonstrates that going 100% electric Craig Evans, CTQ Advisors
makes sound economic sense Contributor
2. The benefit and value of distributed Mike Casey, Forest Lodge Orchard Farm
energy resources (DER) with the flexibility Reviewers
market approach to electricity, to offset Greg Hoskins, Managing Director,
capital costs to achieve electrification Hoskins Energy Systems
and decarbonisation Terry Paddy, Director, Cortexo, IPAG
As an operating model, the principles Cristiano Marantes CEO, Ara Ake
applied herein can be adopted to suit Ashley Petterd, Energy Policy Adviser,
many other industries in Aotearoa New MBIE (in relation to energy policy and
Zealand, especially in the primary regulation)
industries. Shay Brazier, Director, Revolve Energy
Mark Toner, GM, Public Policy Regulatory
Affairs, Vector
Pg 1 | Case study: 100% Electrification
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SEANZ 2021 | Pg 2
Forest Lodge Orchard
100% electrification means lower
operating costs and early zero carbon
Forest Lodge Orchard is a newly Forest Lodge also invested in solar and
established 6-hectare cherry orchard in battery storage to further reduce the
Central Otago near Cromwell which aims carbon intensity of the orchard and to
to be the first large-scale food producer provide flexibility to manage energy
in the country to minimise the carbon costs.
emissions from food production by using
renewable energy.
Electric equipment is more
Forest Lodge will be 100% electric for its
first commercial harvest in January 2022.
expensive to buy…at the moment
Electrification means Forest Lodge will Electric equipment for orchard
avoid about 113 tonnes CO2-e each year. operations – irrigation, frost fighting,
farm equipment etc – cost $150,000 (or
45%) more than the conventional fossil-
Electrification means choosing fuelled options.
electric equipment, having an Fewer electric options are available. The
appropriately sized network two 30kW electric frost fighting fans
were imported from South Africa after
connection, and using the an extensive global search provided
flexibility of solar with battery a shortlist of one manufacturer.1
The electric tractor is coming from
storage to manage energy costs California after another extensive global
search provided a shortlist of two
manufacturers.
Forest Lodge is electrifying on-farm
energy use wherever possible with
electrification of irrigation pumps, But far more cost effective
frost fighting, farm equipment and
off-farm light vehicles. The still-to-be-
to operate…
electrified list includes the electric (and
autonomous) tractor which is arriving in Electric equipment has lower operating
Aotearoa New Zealand from California in costs, because electricity costs less than
April 2022. the liquid fuels to deliver the equivalent
output.
Forest Lodge needed to invest in a larger
network connection due to an increase
in maximum power required.
The purchase of the electric frost fans was supported by a grant from the Energy Efficiency
1.
and Conservation Authority.
Pg 3 | Case study: 100% Electrification
SEANZ 2021 | Pg 4
Forest Lodge will reduce its energy costs
by about $56,000 a year (nearly 90%)
compared to an equivalent sized fossil-
fuelled orchard.
Total savings are greater because
electric equipment doesn’t need Forest Lodge will reduce
refuelling (a time saving) and requires
less maintenance, as electric motors its energy costs by about
are significantly less complex than their
fossil-fuelled counterparts.
$56,000 a year (nearly 90%)
compared to an equivalent
A larger network connection sized fossil-fuelled orchard.
Electrifying orchard operations at Forest
Lodge required upgrading the network
connection to 3-phase and 138kVA,
plus internal electrical work to connect
power to the frost fans and pumps. The
connection and internal electrical work
cost about $140,000, but these costs
will vary according to the location and
requirements.
Solar with battery storage
reducing overall costs Forest Lodge can use the solar and
battery storage to reduce its network
The 23.1kW solar array and 60kWh charges by minimising network use
battery storage cost $160,000, but when Aurora provides a demand
reduces annual operating costs by a reduction signal.
further $15,000 compared to a grid-only
electrification by providing flexibility to
manage energy costs. Network operators will
Forest Lodge uses the solar and battery need to signal the value of
storage to put a ceiling on average
electricity costs due to the flexibility flexibility before electrification
to purchase power from the system accelerates
when wholesale prices are low (and
the electricity probably less carbon
intensive) and use self-generated Making solar and battery storage part
electricity when wholesale prices are and parcel of electrification will provide
high. network operators with more options to
keep down the costs of electrification.
Because the local distributor, Aurora,
charges for network use in part based Electricity distribution and transmission
on network capacity used by a customer, network operators, along with the wider
Pg 5 | Case study: 100% Electrification
electricity sector, including government
and regulators, need to make sure that
An off-the-shelf service is
as people and businesses electrify, they needed to support mass
are encouraged to consider the longer-
term benefits from investing in solar
electrification
and battery storage so that flexibility
capability is available to provide a Electrification of Forest Lodge required
resilient and reliable network service and considerable effort from the owner Mike
defer or avoid network upgrades and Casey to integrate bespoke solutions.
higher network charges in the future. There was no off-the-shelf product or
service available from the electricity
Additional detail on how Forest Lodge
sector or equipment manufacturers to
uses the network and the current and
maximise the value of electrification.
potential value to the network operator of
the flexibility outcomes from the solar and The lack of off-the-shelf services from
battery storage is provided on page 16. the electricity sector means equipment
suppliers and installers – particularly
solar and battery suppliers – don’t have
the guidance or insight needed to design
systems that maximise value for the
customer.
SEANZ 2021 | Pg 6
Electrifying
a cherry orchard
The orchard has about 9600 cherry
Forest Lodge Orchard was trees. The first fossil-fuel free harvest
established in June 2019 with in summer 2021/22 is bound for the
domestic market. The fossil-fuel free
clear determination to minimise 2022/23 harvest will be exported.
the carbon emissions from Electrification of Forest Lodge has been
food production by using 100% mostly about avoiding use of fossil fuels
for on-and-off-farm transport, stationary
renewable energy. pumps and motors and residential use.2
Forest Lodge has chosen to electrify
everything – irrigation pumps,
frost fighting fans, farm vehicles,
farm equipment, light vehicles,
and the household – all powered
from the national electricity system
supplemented by a 23.1kW solar array
and 90kWh battery storage.
2
The orchard residence was renovated to electrify household cooking, water and space heating. This
involved replacing the gas hot water system, gas stove and oven, a gas fire and a diesel furnace for
underfloor heating (using about 4000 litres of diesel a year – that’s about 10t CO2-e!).
Pg 7 | Case study: 100% Electrification
Electrification will avoid over
100t CO2-e a year
Electric Fossil fuel CO2-e
option not used avoided a year
Electric 9,000L
24,000kg
Irrigation diesel
Electric
16,000L
Frost 43,000kg
diesel
Fighting
2,000L 5,000kg
Electric diesel now now
Farm 12,000L diesel 33,000kg from
Equipment from March April 2022
2022
Electric
5,000L
Source: Forest Lodge Light 13,000kg
petrol
Orchard and CTQ Vehicles
Advisors
SEANZ 2021 | Pg 8
Electrification will avoid over
100t CO2-e a year
An unexpected benefit
Forest Lodge will avoid over 100t CO2-e of electric frost fighting
a year compared to an equivalent fossil-
fuelled operation by using electricity is reduced crop loss
rather than diesel and petrol.
and a more productive
Electrification means Forest Lodge will operation.
emit no more than about 8t CO2-e a
year from using power from the national The much lower operating
electricity system.
costs of the electric
Actual emissions will likely be less
because Forest Lodge uses its solar and
frost fans makes it cost-
battery storage to lower its electricity effective to turn the fans
costs by drawing on the grid when the
spot price is low (when grid power likely on earlier resulting in less
has lower emissions) and using the sun fruit being damaged when
when the spot price is high.
it gets frosty.
The 18.5kW electric irrigation
pump was the start of the
electrification process increasing the upfront cost compared to
a diesel alternative.
Electrification of Forest Lodge started
The electric pump is cheaper to run at
with an 18.5kW electric irrigation pump.
about $0.90 an hour when supported by
At the same time the network the solar and battery storage and about
connection was upgraded from single- $2.80 an hour at typical commercial retail
phase to three-phase and the nearby electricity prices, compared to about
transformer was upgraded to 41kVA. $7.70 an hour for a diesel pump.
The upgrade took 18 months from start
Forest Lodge is saving about $11,000 a
to finish, with most of the time spent
year in operating costs by electrifying its
on paperwork and approvals, and cost
irrigation.
$26,000 (split 50:50 with a neighbour).
The larger connection and transformer
served double duty by supporting
Electric frost fighting is lower
maximum export from the 23.1kW solar cost and may improve crop
array on the orchard shed roof.
productivity
Electric pumps cost about the same to
purchase and install as diesel pumps.
The two 30kW electric frost fans were
The main difference in cost is electric
imported from South Africa after an
pumps may need a larger network
extensive global search provided a
connection and internal electrical works,
shortlist of one manufacturer.
Pg 9 | Case study: 100% ElectrificationThe installed cost of $170,000 was Operating costs for the farm equipment
nearly 20% more expensive than the will be about $25,000 less than the
conventional diesel-powered option, equivalent fossil-fuelled options. The new
though some of this was due to it being electric tractor alone will avoid about
the first ever installation in Aotearoa. 10,000 litres diesel a year.
The electric frost fans required an No differences in operating capability
additional upgrade to the transformer at or performance have been observed
the network connection from 41kVA to when compared to the conventional farm
138kVA, plus internal electrical works. equipment. Charging of the equipment
and vehicles is managed through the
The total cost of upsizing the network
same system that manages the solar and
connection was about $100,000, though
battery storage.
just over half was for moving from single-
phase to three-phase. Many agricultural
operations will already have a three-
phase connection, potentially reducing
Solar and battery storage
the cost of upsizing. combined further reduce energy
Internal electrical works cost a total of costs and provide option value
$40,000. These costs will always be site-
specific
for the local network operator
Forest Lodge is saving about $22,000 a year
by electrifying its frost fighting, due to the The 23.1kW solar array and 60kWh
electric frost fans being cheaper to operate battery storage were installed to match
than equivalent diesel fuelled fans. energy needs of the orchard over a year.
The solar array can produce about
Electric farm equipment and 90kWh of power a day during the spring
and summer and about 20kWh a day in
electric vehicles the autumn and winter.3
The orchard can operate off-grid for a
As a producing cherry orchard, Forest few hours. Going completely off-grid
Lodge needs an array of equipment and was not plausible because relying solely
vehicles. on solar and battery storage to power
Currently the orchard uses a modified golf the orchard operations would require
cart, an electric mower, assorted electric a much greater investment. And most
(farm-grade) gardening equipment and importantly, with no grid connection,
two electric light vehicles. there would be no opportunity to gain
additional value and revenue through
The electric equipment and farm vehicles services to the electricity system now
cost about 35% more to purchase than and in the future.
the equivalent fossil-fuelled options.
The solar and battery system investment
The electric tractor coming in March 2022 of $160,000, represents about 20% of the
will be about $115,000 versus $75,000 total cost of electrifying Forest Lodge.
for the conventional diesel-fuelled The solar and battery system investment
equivalent. The tractor was sourced from provides two key benefits.
Monarch Tractors in California after due
diligence on electric tractors.
The Forest Lodge solar array generated 28.43MWh in February 2021 and 7.5MWh
3
during July 2021.
SEANZ 2021 | Pg 10Forest Lodge uses the solar The solar array and battery
array and battery storage to storage provides Forest Lodge
minimise its energy costs with flexibility to ‘modify its
generation and consumption
They do this by using solar or energy
from the battery on-site when spot patterns in reaction to an
prices are high and drawing from the external signal (such as a
national electricity system when the
spot price is low. change in price) to provide
Forest Lodge has a stretch goal of a service within the energy
timing energy import and export from system’.
the grid to produce a net zero energy
bill for the year.
The Forest Lodge solar array and battery
storage is well suited to providing
flexibility services and happens to be
in a location where Aurora is actively
procuring flexibility services in the Upper
Clutha and Wanaka area to defer network
upgrades.
This flexibility service has value to the
“When the spot price is local network operator – Aurora - and to
the wider power system.
under $0.15, we know
The solar array and battery storage
that power is likely to be allow Forest Lodge to reduce its use of
renewable and abundant. the network when Aurora says doing so
would help avoid network costs.
Likewise, when the spot The benefit for responding to the
price goes above $0.40, it’s demand reduction signal from Aurora
is a reduction to the demand-based
likely that coal and gas are component of the network charges paid
being used to supplement by Forest Lodge.
supply at that time, and By managing its use of the network at
specific times, Aurora has set Forest
that there is a shortage of Lodge a chargeable demand of 0.5kVA
for the coming year compared to the
power available.” ‘standard’ of 35.5kVA for an operation
with equivalent electricity use. The
“We need to cover a $0.23 ability to reduce the chargeable demand
spread to break even on represents a reduction on the network
charges paid by Forest Lodge of nearly
arbitrage. This takes into $9000 a year.
account battery wear
and tear, power loss from
inverting, and Contact
Energy’s cut on our export.”
Pg 11 | Case study: 100% Electrificationelectricity is supplied by longer network
More value is likely to be circuits to small numbers of customers.
available in the future from the Having solar and battery storage in place
flexibility of the solar array and will help to avoid higher network charges
needed to pay for network upgrades as
battery storage more economic activity and agricultural
production electrifies.
Forest Lodge could have electrified
From this perspective, investing in
without incurring the ‘extra’ capital
solar and battery storage as part of the
investment in solar and battery storage.
electrification process will help to reduce
By minimising the energy costs and the cost of electrification by avoiding
reducing network costs, the solar with or delaying major network upgrades to
battery storage is expected to reduce provide the capacity to support increased
annual operating costs by another use of electricity in the future.
$15,000 compared with pursuing a
Electricity distribution and transmission
grid-only electrification. The incremental
network operators, along with the wider
reduction to ongoing operating costs
electricity sector, including government
relative to relying on a grid-only power
and regulators, need to make sure that
supply improves the simple payback by
as people and businesses electrify, they
one year.
are encouraged to consider the longer-
Solar and battery storage will provide term benefits from investing in solar
longer-term and as-yet realised value to and battery storage so that flexibility
network operators as mass electrification capability is available to provide a resilient
accelerates by providing flexibility and reliable network service and defer
on tap to use to defer or avoid extra or avoid network upgrades and higher
network investment needed to cope with network charges in the future.
increased pressure on the network from
The opportunity of flexibility – both
electrification (particularly on the same
available and missed – is suggested at in
feeder).
the response by Forest Lodge to the grid
Solar and battery storage could be emergency on 9 August 2021.
particularly valuable in rural areas where
SEANZ 2021 | Pg 12On 9 August 2021 the
electricity system operator
requested distributors to
reduce demand due to a
shortfall in generation. Power
was cut to about 35,000
“We believe it was our civic duty
homes.
to export, and we could have
Forest Lodge was able to exported much more if there
export about 14kWh to the had been a protocol in place to
local network during the request us to do so. We believe
emergency – sufficient to that being available to support
supply about 3-4 homes. the grid at the right time and
place should be financially
rewarded in the same way
generators are paid to generate
power. DER could become a
significant revenue stream for
businesses and encourage more
companies to install batteries
and export capability.”
Pg 13 | Case study: 100% ElectrificationEnergy, now provides a bespoke retail
Extra detail on how Forest service where customers buy power from
Lodge uses the network the grid at the spot price and sell their
power, for example when Forest Lodge
Extra detail on how Forest Lodge uses has surplus solar power or chooses to
the network and the potential value to discharge its battery.
the network operator of the flexibility
Finding Simply Energy was not
from the solar and battery storage is
straightforward, requiring lots of ringing
provided on page 16.
around to find an electricity retailer able and
willing to do what Forest Lodge wanted.
An off-the-shelf service is Simply Energy is now working on adding
needed to support mass an additional bespoke flexibility trading
service. This would allow Forest Lodge
electrification to participate in the Aurora Upper
Clutha Non-Network Alternative project
Electrification of Forest Lodge required which uses the flexibility services from
considerable effort from the owner distributed energy resources to defer
Mike Casey to package up several network upgrades.
bespoke solutions. There was no off-
The lack of off-the-shelf services from
the-shelf product or service available
the electricity sector means equipment
from the electricity sector or equipment
suppliers and installers – particularly
manufacturers to maximise the value of
solar and battery suppliers – don’t have
electrification.
the guidance or insight needed to design
Forest Lodge has needed to source systems that maximise value for the
equipment, including bespoke fabrication customer.
and importing gear, work out how to
adapt conventional farming practices,
manage energy use and production to
maximise value (ie, lower energy costs
as much as possible), and find people to
work with that could make it all happen.
Much of the equipment and technology
integration was done in-house by Forest
Lodge. The arbitrage between grid and
solar power occurs via a self-written Much of the equipment
algorithm run using a RasberryPi which
decides how much to export based on the
and technology
spot price at the Cromwell grid export point. integration was done
Interactions with the electricity sector in-house by Forest Lodge.
started with requesting a network
connection which matched the expected The arbitrage between
electricity requirements of an electrified
orchard.
grid and solar power
The next step was finding a retailer.
occurs via a self-written
Simply Energy, a subsidiary of Contact algorithm.
SEANZ 2021 | Pg 14provide each other back-up). Aurora is
Extra detail on how Forest observing emerging network congestion
Lodge uses the network in the wider Upper Clutha region, mainly
due to household space heating.
Forest Lodge is connected via circuit
The Forest Lodge and Queensbury
QB2423 to the Queensbury substation
substation active power flows for each
and Cromwell grid exit point.
half hour between February and July 2021
The Queensbury substation is summer are contrasted in the chart. The chart
peaking, along with the Lindis Crossing indicates Forest Lodge makes minimal
and Camphill (Hawea) substations, mainly use of the network during June and
due to irrigation. Aurora is observing July, and by routinely exporting power
localised summer peaking network probably helps to alleviate the winter
congestion at the Queensbury and Lindis congestion problem affecting the wider
Crossing substations (these substations Upper Clutha area.
Forest Lodge Orchard & Queensbury substation
profile 1 February 2021 to 31 July 2021
Pg 15 | Case study: 100% ElectrificationAdditional detail on the
electrification numbers
Annual Energy Costs
Conventional (fossil) Electric (grid) Electric (grid + solar/battery
$63,000 $22,000 $7,000
Source: Forest Lodge Orchard & CTQ Advisors. Note: All costs are exclusive of GST.
Conventional (fossil) energy costs calculated based on 42,000 litres of diesel and petrol a
year and a $1,000 network charge. Electric (grid) costs calculated based on 66,000kWh a
year and a $12,500 network charge. Electric (grid + solar/battery) costs calculated based
on the same power use and a $4000 network charge.
Capital costs
Conventional (fossil) Electric (grid) Electric (grid + solar/battery
$340,000 $630,000 $790,000
Source: Forest Lodge Orchard & CTQ Advisors. Note: All costs are exclusive of GST. Capital
costs of Electric (grid) and Electric (grid + solar/battery) scenarios would reduce by $55,000
if Forest Lodge had started with a 3-phase connection.
Annual operating costs and simple
payback of capital costs
Conventional (fossil) Electric (grid) Electric (grid + solar/battery
$63,000 $22,000 $7,000
15 years 14 years
Source: Forest Lodge Orchard & CTQ Advisors. Note: All costs are exclusive of GST. Simple
payback of the incremental cost of electrification is 7 years for the Electric (grid) scenario
and 8 years for the Electric (grid + solar/battery) scenario. 3 price increase variables are
excluded in the simple payback calculations as assumes retail power prices remain
at current levels (prices will likely increase over coming decade); diesel prices remain at
current levels (prices will likely increase); and network charges remain at current levels
(charges will likely increase). Payback period will be reduced once increases factored are
included.
Annual carbon emissions (tonnes CO2-e)
Conventional (fossil) Electric (grid) Electric (grid + solar/battery
113 8www.seanz.org.nz
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