Investment appraisal of technology innovations on dairy farm electricity consumption

J. Upton, M. Murphy, I.J.M. de Boer, P.W.G. Groot Koerkamp, P.B.M. Berentsen, L. Shalloo

Research output: Contribution to journalArticleAcademicpeer-review

24 Citations (Scopus)

Abstract

The aim of this study was to conduct an investment appraisal for milk-cooling, water-heating, and milk-harvesting technologies on a range of farm sizes in 2 different electricity-pricing environments. This was achieved by using a model for electricity consumption on dairy farms. The model simulated the effect of 6 technology investment scenarios on the electricity consumption and electricity costs of the 3 largest electricity-consuming systems within the dairy farm (i.e., milk-cooling, water-heating, and milking machine systems). The technology investment scenarios were direct expansion milk-cooling, ice bank milk-cooling, milk precooling, solar water-heating, and variable speed drive vacuum pump-milking systems. A dairy farm profitability calculator was combined with the electricity consumption model to assess the effect of each investment scenario on the total discounted net income over a 10-yr period subsequent to the investment taking place. Included in the calculation were the initial investments, which were depreciated to zero over the 10-yr period. The return on additional investment for 5 investment scenarios compared with a base scenario was computed as the investment appraisal metric. The results of this study showed that the highest return on investment figures were realized by using a direct expansion milk-cooling system with precooling of milk to 15°C with water before milk entry to the storage tank, heating water with an electrical water-heating system, and using standard vacuum pump control on the milking system. Return on investment figures did not exceed the suggested hurdle rate of 10% for any of the ice bank scenarios, making the ice bank system reliant on a grant aid framework to reduce the initial capital investment and improve the return on investment
Original languageEnglish
Pages (from-to)898-909
JournalJournal of Dairy Science
Volume98
Issue number2
DOIs
Publication statusPublished - 2015

Keywords

  • lactation curve
  • milk-yield
  • raw-milk
  • cows
  • pseudomonas
  • water

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