Power Producers Going Off-Grid in South Africa

Big power producers are going off-grid to reduce electricity costs and avoid fuel price volatility.
Published: Thu 15 May 2014

The South African mining industry is becoming increasingly frustrated at the poor electricity service that the state’s utility is offering and as a result, are being forced to investigate more reliable forms of electricity.

The electrical infrastructure is ageing and is simply not coping with the country’s growing hunger for power. This pressure on the grid leads to numerous and lengthy power outages which is costing the country a fortune.

One of the biggest challenges for the mining industry is that there is no competitively priced electricity in the country due to there being no competition. The country’s only utility, Eskom, controls the energy market and there doesn’t seem to be any real competitors in the near future. Independent power producers are still selling their power back to Eskom instead of selling directly to the consumer.

Self-generation is the only choice for some

So, it would seem that from a risk-management point of view, self-generation is the best way forward. In fact, for some, self-generation is obligatory since they don’t even have access to grid power.

A good example of this is Cronimet Chrome Mining which was forced to generate its own power for its Limpopo mine in Thabazimbi as it was unable to secure a power connection from Eskom. The mine was operating off diesel generators until the end of 2012. Due to the high costs of operating on diesel, the company had no choice but to build a photovoltaic facility. The aim was to reduce its reliance on diesel generators.

The 4 170-panel facility spans a two-hectare area and was installed between August and December 2012, by solar contractor Solea Renewables and Cronimet Energy South Africa. The panels were imported from Jinko Solar, of China.

The solution is expected to have a payback period of less than four years and should operate for a period of 25 years – the mine reportedly had sufficient reserves to sustain mining for several decades.

The hybrid power solution generates electricity from the solar photovoltaic systems, integrated with the minimal use of diesel generators during the day, and switches over to full diesel generation for night operations.

Cronimet Power Solutions MD Rollie Armstrong says that the plant produces about 1.8 GWh and is expected to displace 450 000 l/y of diesel fuel.

According to Mr Armstrong, the company has seen a reduction of 20% to 30% in diesel costs per year. During the day time, savings are recorded at up to 60%. He points out: “The bottom line is that integrating renewable energy into mine operations saves on operating costs.”

Invaluable test bed

The successful commercial demonstration plant is serving as an invaluable test bed for Cronimet Power Solution’s technology. It has now become a showpiece as many interested customers are coming from as far as Eritrea and Mali to view the equipment in action.

Off-grid renewable generation is also taking off amongst major power producers in Australia and South America.

Matthew Cullinen, senior associate in research and intelligence for the Carbon War Room, explains that this move may not be the right option for every operator since the expected life span of the mine plays a major role. However, he points out that this approach should be considered as a way to avoid diesel price volatility and reduce operating expenses.

Growth in the use of solar for mines and other heavy industries will help create a mature market that can serve communities as well as companies. And as mines look to build out solar capacity, they might also look towards how that could be a legacy asset for local communities for years after the closure of a mine, explains Mr Cullinen.

Since energy security and reining in rising energy prices is a significant bottom-line issue, we predict that more big power users will see the benefits of off-grid energy production. It will be interesting to see if Eskom picks up on this potential market to perhaps sell or rent out renewable technology, assist with installation and eventually set up a smart grid in order to draw from this additional capacity.