Via Domainfax:
Based in the outer Melbourne suburb of Bayside, ANCA is one of an increasingly rare cohort of Australian manufacturers.
The precision tool manufacturer employs more than 1000 staff globally, with 450 in Australia, and turned over $180 million last year, but when its power supply contracts were up for renewal co-founder Pat Boland was in for a nasty shock.
“Like all other companies we were faced with our existing contract coming to an end for power, and initial quotes were coming in with a 200 per cent increase,” says Mr Boland.
ANCA was spending $460,000 a year on power but its existing provider, Alinta, quoted an increase to $1 million a year while competing provider Resolve Energy quoted $1.4 million.
“We are operating an international business and Australia is a very high cost place to do business, it puts another nail in the coffin,” says Mr Boland.
ANCA’s situation is not uncommon, with energy consultants saying businesses coming to the end of a three-year agreement will face price increases of more than 100 per cent.
In order to combat surging power prices ANCA has signed a deal with energy provider Flow Power to source renewable energy from Ararat Wind Farm, allowing the manufacturer direct access to long-term energy at wholesale prices.
Under the agreement ANCA buys a fixed percentage of wind and solar power directly from the renewable generator in real time, calculated at 30-minute intervals under a “take or pay” arrangement, meaning that the manufacturer will pay only for what it uses.
ANCA’s yearly cost is $700,000 for the 10- year deal, which still represents a 50 per cent increase.
“The big benefit is it’s really a substantially lower cost than our initial quote,” says Mr Boland. “It’s also a win-win. It’s about playing our part as a member of a community and bringing down greenhouse gases.”
Mathew van der Linden, the managing director of Flow Power, says wholesale electricity is a “game changer” for businesses.
“Our renewable corporate PPAs will open up the market to more Australian businesses and allow them to access lower power prices through agreements that have only previously been available to big corporations with the scale to negotiate one-to-one with large renewable plants.”
…Andrew Reuss is the founder and managing director of Sustainable Energy Solutions, a consulting firm that specialises in buying energy.
He says many businesses are scrambling for alternatives as energy prices continue to rise.
“Any business coming to the end of a three-year agreement is looking at increases of over 100 per cent on their overall bill,” he says. “Victoria and NSW have been hit the hardest with the closure of Hazelwood in April 2016. In the short term, there are no strong signals that indicate that energy prices will drop back to where they were 18 months ago. The government is talking about a National Energy Guarantee to bring stability back to generation, but that’s a long-term view.”
There’s not a lot of hope for a solution when even the so-called experts have no idea what is driving the price hikes. It’s the gas price owing to the export cartel not Hazelwood.
The one ray of hope that I can see is that when Labor gets into power it will surely use the domestic gas reservation mechanism that Do-nothing Malcolm created then left idle. It’s a free kick.
