- Wednesday, 21 February 2018
RDW is now in the power generation business through our investment in four solar systems with over 100kW of total capacity (although it never achieves that).
Well, we’ve succumbed to the pressure. Our businesses have continued to grow, yet through power savings initiatives still uses the same amount of power. However, our power costs continued to increase, and the predictions are that this will continue increasing exponentially as more and more subsidised “renewable” energy hits the grid. The reason is simple: the energy grid is set up so that the subsidies must be paid by those who don’t have solar or wind power stations to those who do. Further, there is no requirement for solar or wind to contribute to network upgrades or any requirement to provide base load power, very much a have your cake and eat it situation. This will hit the people and businesses who can least afford it the hardest (tenants and low income people). We held off joining the band wagon until now in the hope that subsidies would be removed to stop distorting the market, thereby bringing down the cost for all consumers.
Our experience thus far indicates that we should achieve a payback time of less than 3 years. The key is to size the system and site usage so the system matches the demand curve as closely as possible. That is, the system produces power for our own needs primarily so we avoid having to buy expensive power from the grid. It does not stack up if you plan to export to the grid, nor use battery storage.
By the way, the International Energy Agency predicts that globally solar and wind power capacity will increase about 5 times by 2040 from where it is today. Sounds impressive, right? The problem is the starting point. Currently these technologies have capacity to produce 110 Mtoe (or 0.8% of world supply), which is predicted to grow to 641 Mtoe (3.6%), an increase of 531 Mtoe. That is a best case figure, by the way, as it assumes subsidies will continue or increase. During the same time period, this is dwarfed by gas (increasing 1,349 Mtoe), Coal and Oil (up 616 MToe), and the list goes on. By 2040, over 75% of the worlds energy supply will still be from fossil fuels. Australia is the only developed country not investing in Nuclear and Coal plants. Contrary to what mainstream media would have you believe, more and more countries are now abandoning renewable subsidies and targets. The UK and Spain for instance cut solar and renewable subsidies, and the installation of renewable energy plummeted. The US is also unlikely to continue to subsidise renewable energy, and China and India’s investment is primarily in Coal and Nuclear plants. I’m not sure what Australia is “leading the way” to, other than power poverty and uncompetitiveness… A 50% renewable target sounds outright stupid, if worldwide renewables will be less than 4%.
Where cost of living is increasing
It is tough running a business or household budget, as the cost of living continues to increase, whilst wages and the price businesses charge for products and services stays relatively stable.
Recent reports by Deutsche Group and Queensland Economic Advocacy Solutions have analysed where cost of living increases have been greatest. In the 10 years since the GFC, private sector prices have increased in Australia by just 10%, against a 60% increase for prices driven by Government. In the past 5 years, the increase is 5% for private sector goods and services against 27% for public sector charges. That’s more than 5 times faster.
The problem is, with the exception of tobacco, the public sector cost increases are in areas that budgets can’t avoid. To give you some examples:
Last 5 years Nationally Last 10 years in Qld
Tobacco up 76% up 196%
Electricity up 25% up 126%
Education up 25% up 82%
Medical Services up 25% up 81%
Childcare up 44% up 67%
Rates up 32% up 52%
Average wages in Qld have risen 35% over the past 10 years. It’s well overdue that we started asking our politicians and public sector (at all levels) to freeze increases, and insist they reduce inefficiencies and costs.
Autonomous now retro
It feels like only a handful of years ago that we heard about the first autonomous haul trucks. But it is now 10 years since Komatsu deployed their first autonomous truck in the world, with the second one going into a Rio Tinto mine in Australia in late 2008. Autonomous trucks were originally driven by a desire to improve safety. The uptake is increasing as the technology has now become relatively mainstream and is a sign of the times. Autonomous trucks have reduced load and haul costs by more than 15% compared to conventional haulage methods. This is achieved through the obvious savings attributed to less people and other employment related costs such as accommodation. Running costs are also reduced, including tyre life increases of 40% and reduced fuel costs.
On many installations, the payback on the investment can be 1 year. That is probably the reason we are now seeing Caterpillar retrofit 19 793F’s and Komatsu retrofitting 29 830E’s for Rio Tinto. A sign of the times.
As always, onwards and upwards!