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Category: Business, Economics and Finance / Industry / Electricity Energy and Utilities / Rural

Adelaide factory chooses shutdowns over high spot power prices

Sunday, 12 Feb 2017 12:11:51 | Simon Royal

Wool processing in Adelaide now costs much more than in China for the Michell factory. (ABC News)

High spot prices for electricity in recent days have led South Australian businessman David Michell to shut down his wool processing factory in northern Adelaide.

"In the past week, we've shut down two or three times — it was cheaper than paying the power bill," Mr Michell said.

Wool processing is energy intensive so when faced with a $300,000 rise in the contact price of electricity, the businessman decided to switch to the spot-pricing market, but it can prove volatile.

This weekend when Mr Michell checked the price, he found electricity available for $10 per megawatt hour, but in last week's heatwave conditions he said it had hit $13,000 per megawatt hour.

"We've got a whole team of staff glued to this big screen in our operations room, and at home on their computers, watching to see where it's going from hour to hour," he said.

David Michell. Photo: David Michell says finding a solution counts for more than blaming authorities. (ABC News)

Mr Michell said at the start of this year the factory in Adelaide was cheaper to run than a similar one his company established in China more than a decade ago.

But recent power prices have reversed that.

"We actually got down cheaper than China up until January this year when the power prices tipped the balance the other way," he said.

"I don't think this is going to kill us, but it is another complex market issue that we've found we have to manage."

Biomass converter in the planning

Cleaning wool does not just take a lot of energy, but big volumes of water.

Supported by Salisbury Council, the Michell operation started using recycled stormwater back in 2002, disconnecting its northern Adelaide factory from the mains supply.

Salisbury Mayor Gillian Aldridge said the Michell factory was looking at how to do much the same with electricity, by moving to a biomass converter.

Mr Michell explained the converter would run largely on the grease and oils washed from the fleece.

The businessman said a current "blame game" in the ongoing debate over cost and reliability of electricity supplies was unhelpful.

"I just don't want to get caught up in any of that — it's just not useful, I'm looking for a solution to a problem," he said.

"I'd be encouraging everybody to look at getting the state, the Federal Government together and business together to find a solution that actually works strategically for Australia, I don't think this is just an Adelaide issue."

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