Two major announcements have triggered huge interest in the topic of renewable energy and mining. Sandfire Resources intend to develop a 10.6MW PV plant at their DeGrussa copper mine in Western Australia. The project would be approximately 10 times as big as the largest existing solar–diesel hybrid power plant in the mining sector, and Sibanye Gold in South Africa is planning to build a 150MW solar plant to gain control over their energy costs, which make up 20% of their total costs currently. These announcements could spark a significant move in the mining industry towards the adoption of renewable energy.
The mining industry will be joining other industries in the move towards solar as benefits are realised. Major firms such as IKEA, Google, Apple, Facebook, Microsoft and Amazon are backing some of the world’s biggest solar and wind projects. An increasing number of industrial off-takers are also working towards producing their own electricity. [Engerati- IKEA Plans Largest Rooftop Solar in Kansas and Apple and Amazon Commit Big To Solar Power, Google Sees Green, and Renewable Energy Investments-Essential for Tech Firms.]
Unhappy with energy supplier
The new THEnergy study “Renewable Energy as a Leverage for Mining Companies in Negotiations with Utilities and Diesel Suppliers”, based on 32 interviews with experts from the mining, financial and renewable energy sectors, shows that many mining companies are not satisfied with their energy supplier.
It is true that oil prices and coal prices have fallen to a six-year low but mining companies are not seeing these savings on their electricity bills. The main reason for this, according to the report, is because reductions in oil and coal prices are often not passed onto industrial off-takers.
Added to the high prices of grid electricity, the mining industry often suffers at the hand of unreliable electricity supplies. This is especially true in Africa, parts of Asia and South America. In these regions, grid-connected mines have to deal with frequent load shedding or power outages which are not ideal since reliable power is obviously critical for many mining processes.
Discontent with current suppliers is further aggravated by long waiting periods for grid connection and missing customer orientation of many electrical utilities and diesel suppliers.
Renewable energy- good business sense for mining sector
In many countries the market structure, above all in the utility sector, is rather monopolistic and characterized by a low degree of competition, says the study. In this context, renewable energy providers break up the market and can offer interesting alternatives.
Mining companies can also improve their negotiating position considerably by backing renewable energy projects. It is estimated that mining groups can improve their electricity prices by up to 20% and their diesel prices by up to 15% after they have built their first wind and solar pilot projects. The mines do not necessarily have to finance the plants by themselves as a number of external investors are in a position to offer power purchase agreements based on renewable energy to mining companies, and to finance solar or wind installation directly at off-grid mining sites.
“Wind and solar energy have not only become cost competitive with conventional sources of energy, but at the same time they boost the negotiating position of mining companies towards their current energy suppliers,” explains Dr. Thomas Hillig, founder of THEnergy. “Mining companies who understand this potential will not wait very long with building their first wind and solar pilot plants.” [Engerati - Renewables Costs Now Competitive With Fossil Fuels.]