Electricity is a major operating cost for many quarries – with crushers, screeners and other plant equipment consuming significant amounts each day. Short of shutting down operations, most quarry operators believe there is little they can do to reduce the impact of energy on their bottom line.
Recently however, several forward-thinking quarries have taken advantage of a new way of purchasing electricity, reducing the energy component of their electricity bill by up to 30%.
Traditionally, quarries purchase electricity from energy retailers via fixed rate contracts which contain standard peak, off-peak and shoulder rates. But because these retailers purchase electricity at variable market rates, quarry owners are financially disadvantaged, particularly when wholesale prices are low.
The wholesale market can vary between -$1/kWh and $14/kWh. And most of the time, prices are lower than retail contract rates. No retailer wants to pay more for electricity than what they’re charging their customers. So to insure against high wholesale market prices, they pass on that risk to you in the form of high hedging costs (and other costs).
However, quarries that purchase electricity directly from the wholesale market access inexpensive electricity when available – while implementing strategies to avoid the few periods when prices are high. This may include turning off equipment (i.e. shedding load) or switching to back-up generators.
Although these strategies may seem onerous at first, it is important to remember that high price events are indeed rare. An analysis of the last 10 years shows that most high price events rarely exceed two hours in duration.
During 2010 for example, Victoria experienced 11 high price events that would have required load shedding – amounting to just 23 hours over the entire year. What’s more, these mainly occurred between 3pm and 7pm on hot summer days – and were usually forecast 12-24 hours ahead of time.
So provided quarries are kept informed about high price events in advance, they can modify production accordingly. This often means stockpiling a little extra ahead of time or modifying operation hours and running the plant earlier in the day.
The huge financial upside of doing so is simply too great to ignore.
To learn more about wholesale energy purchasing for your quarry, contact PG Energy today or call us on 1300 080 608.