Posting in Energy
Rising energy costs loom over U.S. farmers, making renewable power an attractive option to reduce costs, stabilize prices, and remain competitive globally.
Californian growers operate on a razor thin margin, and rising energy costs are a looming risk that could threaten their competitiveness. Some experts say that renewables might be needed to keep farms in the black and contain price inflation.
The state's abundant natural resources and mild climate made it an ideal location for growing fruit trees and nuts. More than half the nation's fruit, nuts, and vegetables come from California. Those same qualities drew rapid population growth over the past century, and more people means a greater demand for power.
In response, peak energy pricing looms for businesses in California. The state public utility commission wants to reduce energy use during periods of high demand by charging more. Customers would pay a lower rate by using less energy at those times.
This affects growers' operations directly and downstream: cold storage facilities use a substantial amount of energy, and California's fruit crops pass through those facilities. Cooling energy has been available on the cheap, but bulk electricity discounts are nearing an end.
California's Castle Rock Vineyards hired REC Solar to install a solar power system and smart grid solution, creating a US$350,000/year energy cost offset, said Ryan Park, REC's director of business development. Power had already cost $500,000 annually without peak pricing in effect.
Utilities like renewable smart grid solutions like these, because the systems makes forecasting much easier, Park said. "They can depend on energy being taken off the grid." A battery back up ensures that utilities won't absorb any drop in power if weather conditions reduce solar energy recovery.
With energy prices on the rise, the U.S. farmers could lose their competitive edge to overseas growers without using renewables, Park argued. Water is already subsidized heavily in California, and price inflation could occur if costs continued to rise, he noted.
REC is a vendor, so I asked some independent experts what they thought. One university professor suggested that renewables could have a detrimental effect on a farm's competitiveness, and another saw renewable energy as being less of a competitive driver than the capacity to produce high quality at high volume.
"I'm not intimately familiar with the California power market, but I suspect that a higher proportion of renewables will not make Californian agriculture more competitive, but less so," said Dr. Matthew Roberts, a professor of agricultural, environmental, and development economics at The Ohio State University.
Sonja Brodt from the Agricultural Sustainability Institute at UC Davis acknowledged that energy costs are an issue of growing concern for farmers, compounded with concerns about the sustainability and environmental impact of fossil fuels.
"Oil prices tend to be set globally, with some regional/national variation, but in general, I believe it's true that high prices here are mirrored by higher prices in places like Chile, too," Brodt said. A major difference is that the labor market isn't even, she added.
Brodt said that the cost of labor is significantly lower in less developed economies, giving places like Chile a competitive edge. California has managed to remain competitive through "very high yields, subsidized water infrastructure, and high quality," she noted.
"At the same time, it is certainly true that the vast majority of California farmers operate on a very small (if any) profit margin, and reducing energy costs can certainly help them eke out a slightly higher margin. And there are probably more opportunities in this regard than in reducing labor costs any further."
Check out individual crop "cost of production studies" at the UC Davis to see the percent of total production costs comprised of energy vs. labor vs. various other inputs: http://coststudies.ucdavis.edu
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Apr 23, 2012
Renewable Energy Solar, Wind, Hydro, Geothermal and others should be on the front cover of every Science Book kindergarten through high school. Leaders and Schools in all Nations need to Teach more on Solar and Renewable Energy. When this Old World starts getting you down. From Pollution the cost of OIL, Heating Fuel,The Fuel you put in your Vehicles, You Electric Bills from cooling air conditioners and lights not to speak of the Evil. The TAX that all Governments Federal, State, County and City put on everything they can thing of. They are supposed to serve us. Not put a burden on its people. That they are elected to serve all the people you, not their own Pocket Books. The Wicked keep putting higher taxes on everything. Making it a Heavy Burden on many that are already struggling just to put food on the table. Too many Americans and People of all Nations have lost their home to the tax collector or to foreclosures from the unjust bankers greed and their Government leaders. More are out of work and lost their homes then in the GREAT DEPRESSION, in the last ten years. All Americans and many Nations need good jobs and more of them. Not more TAXES and Wars. There is a Industry that will employ workers and is growing by more then 50% every year. There is a clear way for all up on the roof the Sun Light is free fuel from GOD. Some wicked in Government have been backing Coal, Oil, Gas and the Nuclear industries for too many years. These kickbacks to them were called Subsidizing Industry Technology and high paid scientist. Most all Wise Men and smart Economist, Environmentalists and good at heart Scientist call this padding their pockets and subsidizing back to the Stone Age. This might even been funny in the 1960???s. If it were a Fred Flintstones and Barny Rubble Movie. About How to aggressively systematically work with the rich to Pollute Ground Water quality to the point it is unsafe to drink or use. 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The strong benefits of Solar Energy is Clear Clean Air viewed in major cities as improving air quality. Clean Cities. By all that use there brain for good . View it as protecting the environment and Freedom from OIL , Coal and other Dirty Energy. While many Governments has eased the Taxes on Renewable Energy . Some cities in the states that these Legislators come from have worked against these tax credits. By doing so they are showing their true objectives. That they have stock in some power plants and do not want to lose all that Money they have been taking out of your pocket books for too many years. By taxing you on your Energy Bills. They want to Control Power and Tax Everything they can. Not let People be free to get their own power from the top of their own roofs. By adding their own taxes to them. These wicked leaders think that this will take away the incentives to harvest the Free Energy from the Sun. 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Electricity would not be nearly as expensive in California if it wasn't for its renewable mandate of 33% by 2020 (see http://www.huffingtonpost.com/2011/04/12/california-renewable-energy_n_848083.html ). Natural gas is currently around $2 per million BTUs. A modern natural gas plant can achieve 50% efficiency, so the fuel costs for 1 KWH are only 1.7 cents (1 KWH = 3412 BTUs). Of course you have to finance and maintain the plant and allow a profit for the utility, but there's no reason why electricity in California should cost more than 9 or 10 cents per KWH. As sboverie said above, the real shortage in California is water. It's a tough choice -- do you bring water to the population centers of California, or do you feed the rest of the nation and parts of the world?
Southern California is the most over populated unsustainable place in the US. They keep trying to be innovators to sustain an unsustainable life style that was destroying thousands of acres a month before the recession slowed the march of development. The LA river, like so many others in Southern California, has been turned into nothing better than an over sized drainage ditch that make a great movie set when you want a car chase or a shuttle crash. The marshlands around San Francisco Bay have been destroyed over the last 150 years by back filling, yet the phantom of global warming is blamed when the ocean tries to reclaim the marshes. California and all of its alleged innovations needs to go away.
With oil prices staying well above $70/bbl this also increases costs for agriculture. Farming can be intensive labor during different times as crops are planted to harvest. Oil also plays a big part as fertilizer, tires as well as fuel to help create abundant crops. It was cheap oil that helped bring about a green revolution that increased crop production that feeds 7 billion people globally. Renewable energy for use to cool or heat large spaces and having hybrid or fully electric tractors and other farm equipment can help keep crop prices low. Water is another big issue in California. Water is allocated in different ways and there is a constant battle to change the allocation. Recently, there was a massive migratory bird die off due to avian cholera that was exacerbated by a lack of water that caused the wet lands to be much smaller and crowding the migrating birds a lot more than usual. The crowding let more birds to be exposed to avian cholera leading to a massive die off. Oil is not a renewable resource and all the easy oil has been found and used up. As oil prices increases, it also makes some harder to produce oil economically feasible. Oil prices will rise and fall but for the most part will trend up and lead to everything costing more as a result. Agriculture is very important to feeding all of us as the human population continues to grow.
Water is an old problem in California and the west. The Anasazi Indians in Arizona/New Mexico were populous before Columbus, but were driven away by drought that lasted decades. Most of the water used in agriculture comes from snow melt in the Sierra-Nevada mountains. California produces a lot of fruits and vegetables for the rest of the US. I am not a California native, I have lived here a long time and find it sad that the state has the Granola reputation (full of fruits and flakes and what is left over is just nuts) when it really was a dynamic state that produced a lot of things from farming to the computer you use. California has a reputation for being wildly liberal but it is actually more conservative than Colorado, where I grew up. What makes most of California appear to be liberal is there is a lot of tolerance for new ideas.
A state with an economy larger than most countries needs to go away? Silicon Valley needs to go away?
Water shortages are a constant reminder that the place was never intended to support so many people. They create so much trash they have made an industry out of filling canyons with trash landfills. The court fights over these giant garbage cans are legendary among environmentalists. The bottom line is the economy would not be as big if a sustainable population lived there. What is there to admire?