Clever collaboration cuts energy costs
If you're a greenhouse grower in Ontario – or anywhere in Canada for that matter – you know the biggest cost you face is energy. Be it natural gas, oil or electricity, prices of these inputs can make or break your profitability.
This is a fact greenhouse producers in cold climates have always faced. And that reality prompted a few Ontario-based greenhouse growers back in 1988 to talk about joining forces to leverage their combined natural gas consumption to obtain wholesale pricing. An energy co-operative was born.
The first few members retained a small team of energy experts dedicated to achieving their energy objectives – including lower energy costs and patronage rebates. At that time, the organization was called F&V Energy Co-Operative Inc. but changed their name last year to AgEnergy Co-Operative Inc. Since then, the co-operative has grown into Canada's largest farm energy co-operative representing more than 50 per cent of all greenhouse natural gas consumption in the province of Ontario.
A BALANCING ACT
To balance consumption patterns, membership was expanded beyond greenhouse growers to companies who use the bulk of their natural gas during periods when greenhouse consumption is low. For example, construction companies who lay miles of asphalt consume high volumes of natural gas in fine weather when greenhouses use little.
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Canada's largest farm energy co-operative represents more than 50 per cent of all greenhouse natural gas consumption in Ontario. |
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"Currently, we have approximately 300 flower and vegetable greenhouse operators as members," says Mike Bouk, executive director of the co-operative. "Those members use about half of all the natural gas consumed on all Ontario farm operations."
In late 2003, the co-operative opened its doors to other agricultural producers and enterprises, including elevators who use huge quantities of energy to dry grain. The co-operative has developed excellent relationships with a variety of suppliers and utilities. Now the doors are poised to swing even wider to help manage energy use on ALL agriculture and food enterprises. Moving beyond the provincial boundaries of Ontario is also in the cards.
PROGRAM CHOICES SUIT A VARIETY OF NEEDS
Natural gas users choose from a variety of programs, including fixed prices over one, three or five years or a customized energy portfolio including all three fixed price programs plus a market component. The co-operative professionally manages its purchases to minimize costs. Because of their large volumes, they are able to radically reduce transportation charges and pass those savings onto members.
For those who don't use natural gas, the complexities of forecasting and consumption patterns will be unfamiliar. If demand exceeds immediate supply and you haven't planned for enough, you will be asked to curtail consumption. Curtailment requires switching to another energy source. And if you don't switch and continue to consume natural gas beyond your projections, you will face both curtailment fees and high prices.
"That's where the expertise of the co-operative can really help," says Bouk. "We balance consumption of large volumes over 12 months and over the entire province. We can help members manage curtailment, usually avoiding fees and high prices that result during curtailment periods."
ELECTRICITY PROGRAM ADDED
Last year, the co-operative joined forces with the Ontario Federation of Agriculture to offer their first electricity program. By combining volumes of all participating members and purchasing half of the total at a fixed price and the rest from local utilities at spot prices, the co-operative was able to offer a rate below 5.0 cents per kilowatt hour. This compares to the government's guaranteed cap of 4.7 cents for the first 750 kWh per month and 5.5 cents per kWh after that. For large volume users (in excess of 18,000 kWh), the savings should be about 10 per cent. This contract expires May 2005 at which time new government regulations will be announced. At that point, the co-operative plans to announce a new program.
MORE INNOVATION TO COME
Many greenhouse growers operate cogeneration plants on their farms, producing electricity from the heat generated in the greenhouses and selling it back to the grid. The co-operative continues to investigate other ways to both generate and save energy on greenhouse operations. One of their newest initiatives is the investigation of producing energy from biomass.
Historically, the co-operative never made a profit because they provided natural gas to their members at cost. In future, their business plan calls for retaining savings on transportation of natural gas in order to build capital and increase their purchasing power. Once sufficient capital has been built, the co-operative will pay annual patronage payments based on each member's energy consumption.
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