Why renewable energy makes economic sense for mining
Most mining and energy professionals would incorporate renewable energy into a mining operation to reduce operating costs.
This is according to a survey taken during a recent webinar: How to reduce reliance on grid power in Africa? which focused on how mining companies can reduce their reliance on grid power. GERARD PETER reports.
According to the survey, 42.86% would embrace renewable energy if it resulted in overall cost reductions cost. This was closely followed by reducing grid reliance (34.69%) and decreasing environmental impact (26.53%).
The Webinar, moderated by Mining Review Africa’s Editor-in-Chief Laura Cornish, focused on dealing with how to overcome power constraints for new and existing mining operations, particularly in remote regions on the continent.
With most state-owned energy utilities struggling to keep the lights on for the general population, it is increasingly difficult to rely on grid power to operate continuously.
In addition, with ever-increasing diesel costs, companies are now turning to renewable energy alternatives.
An expert panel comprising Anders Cajus Pedersen, chief regional power systems officer of the African Development Bank (AfDB), Ian Curry, an independent renewable energy expert and Tobias Hobbach, founder and MD of Sustain Power, unpacked the options available, the benefits of using off-grid renewable energy and the challenges that accompany integrating renewable power options into mining operations.
Starting the conversation Curry advised that implementing renewal energy sources is not needed to completely move away from grid power, but rather should be seen as a case of effective energy planning for mining operations.
“Mining companies have to look at their own energy requirements and approach renewable energy in a systematic way, considering operating costs in order to achieve the lowest cost of energy for a mine.”
He added that energy planning should be done in three phases – short-, medium- and long-term – similar to how mines plan their minerals extraction and operational planning.
Keeping the lights on
Emphasising the need to turn to renewable energy sources, Hobbach pointed out the grim reality that 600 million people living in Sub-Sahara Africa alone have no access to electricity, making it even more important to seek out off-grid solutions.
He added that a trend currently in industry is to have a leapfrog approach to electrification.
“Thanks to technology we are now able to create centralised electricity solutions. For example, we have developed solutions that are African Energy Commission (AFREC) approved and will work well in mines.
They are also ideal for mini grids that embrace clean technologies such as solar in turnkey containerised systems that are easily deployable so that the power generation goes to where the power demand is actually required. These are quick to install and can easily replace diesel generators.”
Meanwhile, Pedersen added that mines have unique power and energy requirements. Not only does a mining plant require 24/7 supply, but also an instantaneous energy buffer for large power fluctuations as well as constant voltage and frequency stability.
He believes that given the ever-decreasing costs of renewable energies, particularly wind and solar, it is now possible to create green mini-grids for mining operations.
Given the rising cost of fuel and the instability of grid solutions in Africa, coupled with the decreasing cost of renewable energies, it would make sense for mining companies to look at integrating these alternatives into their operations.
However, as Curry stated, the immediate challenge is the resistance to change in a highly conservative industry.
“While mining executives realise that traditional power options are a challenge, more often than not they say they are ‘miners’ and not ‘power generators’.
This opens them up to a multiplicity of independent power producers (IPPs) and technology providers with all sorts of sophisticated financing methods.
“In my opinion, this exposes mines to an even greater risk because as a result of their lack of understanding of the energy industry, they often fall foul to off-take agreements that are not well suited to the mine’s operational requirements,” Curry explained.
Fortunately, he added, that some mining companies are starting to look strategically at their energy requirements and this is also creating opportunities for IPPs to work collaboratively with mines to find a cost effective and sustainable solution.
Hobbach concurred with Curry and elaborated on some of the other challenges of implementing a green off-grid solution. “I believe there are two main hurdles to implementing these clean energy solutions,” he explained.
“The first is the legislative hurdle that is unique to a particular country or region and this has an impact on receiving power generation licences.
“Secondly, there are operational challenges. For example, a remote operation in the Democratic Republic of Congo might struggle to get power generation equipment to site and also have trained personnel and there is also maintenance operations that need to be considered.”
Although the cost of renewable energy is decreasing, access to finance for such solutions remains a challenge.
According to Pedersen, when an organisation such as the AfDB decides to support green mini-grids in a mining operation, it is not only looking for a return on investment and projects that are financially viable, but also at other benefits that a mining operation will bring from a community and environment point of view.
He explained, “A potential mining borrower should demonstrate meaningful impacts such as how its operation will reduce Co2 emissions; provide electricity for households, public institutions and SMEs; and ultimately help to industrialise the continent.”
Regarding the actual deal structure, Pedersen added that his organisation will part finance a project and advised that mining companies engage with the AfDB at an early stage so at to eliminate the need to secure financing from ‘more expensive’ institutions.
Exploring viable options
With considerable renewable energy resources on the continent such as wind and solar, Pedersen believes that the most viable options for mining operations include hybrid solutions, i.e. renewable energy solutions coupled with grid power to ensure that operations continue 24/7.
In addition to wind and solar, he suggest that biomass energy sources also be explored. Already, he stated, there are countries in Africa where biomass is concentrated, cheap and easy to deploy for energy generation.
In closing, Curry noted that green mini-grids will not only benefit mining operations but will greatly assist in the development of the African continent.
“Looking at remote mining operations, the economy that forms around these particular areas are 100% dependent on the mines.
“As you know a mine has a limited life cycle and I truly believe that the implementation of renewable energy resources and the production of electricity, initially using the mine as the anchor off-taker, can ultimately lead to contributing to the power grid in the area long after the mine has closed, thereby creating sustainable economies for the long-term future.”
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