Total water use however does not provide a complete picture of the challenges
and trade-offs around water access for individual licence holders (e.g. either imposed
via State and Federal water legislation or the costs associated with accessing the
water). For example, whilst groundwater usually provides for greater reliability than
surface water, access to groundwater via pumping is often significantly costlier than
utilising surface water due to greater energy requirements. Studies have found that
the (electricity) cost impacts are particularly severe on agricultural producers who
have pumped or pressurised systems due to the electricity intensity of their irrigation
equipment (Sapere Research Group 2018). As such, agricultural producers who have
invested in water efficient systems often find those (water) efficiency savings more
than consumed by increased power bills. The total costs of accessing a megalitre
(ML) of water depends on (a) the State-based water licence and usage charges;
(b) farm set-up and the water delivery system (e.g. on-farm and off-farm); (c) the
load profile of the irrigation equipment and the associated State-based electricity
tariffs (or diesel costs); and (d) the water requirements of the planted crop. Whilst the
farm set-up and the water delivery system are generally fixed, points (a), (c) and
(d) can vary within and between seasons due to differences in water access and the
determination of tariffs/rates associated with water and electricity/diesel. In particular, various studies have demonstrated the pumping regimes are dictated by crop
water requirements and licencing arrangements which in turn constrain the
timeframe in which irrigation can occur (Sapere Research Group 2018). This often
results in inelastic demand by agricultural producers who are not able to vary their
energy and water use – making them vulnerable to inflexible tariff arrangements.
Despite this inelastic demand, agricultural (electricity) load generally have lower
costs to supply compared to ‘typical’ small customer loads due to seasonal demand
peaks in late spring (QLD) and early summer (elsewhere) corresponding with
rainfall variations between regions. Approximately 45% of irrigation loads operate
continuously throughout the day; however, those that irrigate for part of the day have
pump loads predominantly overnight and at a minimum during the afternoon (at the
time of system peaks). Most critically, very few pump loads are ‘on’ at times of peak
system demand, suggesting that agricultural producers do not substantially contribute to temporal congestion within the NEM (Sapere Research Group 2018).
However, given the current electricity tariff framework, agricultural producers are
often faced with ‘demand/capacity’ electricity tariffs (e.g. including demand
charges) that apply in NSW and QLD when consumption of electricity exceeds
160 MWh, irrespective of the demand on the network (AER 2015). Due to the nature
of the farm set up and water delivery system (e.g. pumps and pressurised systems),
this threshold is nearly always exceeded during irrigation periods in both States
although the quantity of electricity consumed may be low. Whilst both QLD and
NSW growers had access to specific agricultural/irrigation tariffs (NSW) or transitional tariffs (QLD) in the past, both States have progressively phased out these
specific irrigation tariffs since the 2014 (Sapere Research Group 2017). In the case of
QLD, transitional tariffs are the due to expire in 2020 (QCA 2017). With this shift,
agricultural producers have been progressively moved to ‘demand/capacity’ electricity tariffs that have caused an exponential cost increase without a corresponding
7 Water Security: Challenges to the Irrigation Water-Energy Nexus in Australia
99
and trade-offs around water access for individual licence holders (e.g. either imposed
via State and Federal water legislation or the costs associated with accessing the
water). For example, whilst groundwater usually provides for greater reliability than
surface water, access to groundwater via pumping is often significantly costlier than
utilising surface water due to greater energy requirements. Studies have found that
the (electricity) cost impacts are particularly severe on agricultural producers who
have pumped or pressurised systems due to the electricity intensity of their irrigation
equipment (Sapere Research Group 2018). As such, agricultural producers who have
invested in water efficient systems often find those (water) efficiency savings more
than consumed by increased power bills. The total costs of accessing a megalitre
(ML) of water depends on (a) the State-based water licence and usage charges;
(b) farm set-up and the water delivery system (e.g. on-farm and off-farm); (c) the
load profile of the irrigation equipment and the associated State-based electricity
tariffs (or diesel costs); and (d) the water requirements of the planted crop. Whilst the
farm set-up and the water delivery system are generally fixed, points (a), (c) and
(d) can vary within and between seasons due to differences in water access and the
determination of tariffs/rates associated with water and electricity/diesel. In particular, various studies have demonstrated the pumping regimes are dictated by crop
water requirements and licencing arrangements which in turn constrain the
timeframe in which irrigation can occur (Sapere Research Group 2018). This often
results in inelastic demand by agricultural producers who are not able to vary their
energy and water use – making them vulnerable to inflexible tariff arrangements.
Despite this inelastic demand, agricultural (electricity) load generally have lower
costs to supply compared to ‘typical’ small customer loads due to seasonal demand
peaks in late spring (QLD) and early summer (elsewhere) corresponding with
rainfall variations between regions. Approximately 45% of irrigation loads operate
continuously throughout the day; however, those that irrigate for part of the day have
pump loads predominantly overnight and at a minimum during the afternoon (at the
time of system peaks). Most critically, very few pump loads are ‘on’ at times of peak
system demand, suggesting that agricultural producers do not substantially contribute to temporal congestion within the NEM (Sapere Research Group 2018).
However, given the current electricity tariff framework, agricultural producers are
often faced with ‘demand/capacity’ electricity tariffs (e.g. including demand
charges) that apply in NSW and QLD when consumption of electricity exceeds
160 MWh, irrespective of the demand on the network (AER 2015). Due to the nature
of the farm set up and water delivery system (e.g. pumps and pressurised systems),
this threshold is nearly always exceeded during irrigation periods in both States
although the quantity of electricity consumed may be low. Whilst both QLD and
NSW growers had access to specific agricultural/irrigation tariffs (NSW) or transitional tariffs (QLD) in the past, both States have progressively phased out these
specific irrigation tariffs since the 2014 (Sapere Research Group 2017). In the case of
QLD, transitional tariffs are the due to expire in 2020 (QCA 2017). With this shift,
agricultural producers have been progressively moved to ‘demand/capacity’ electricity tariffs that have caused an exponential cost increase without a corresponding
7 Water Security: Challenges to the Irrigation Water-Energy Nexus in Australia
99