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African Miners are Adopting Renewables and Energy Storage – Market Enters the Next Stage

by Voltalia

After various projects have demonstrated the value of renewables for reducing diesel, HFO and gas consumption, mining companies now benefit from a significant cost reduction potential.

 

In the last few years, more and more mining companies have adopted wind and solar systems to reduce their energy costs at remote off-grid mines. In the first phase, the focus was on the integration capabilities as miners were afraid that adding intermittent renewables such as solar and wind could affect the reliability of the power supply and even lead to production losses.

In various microgrid applications, renewables combined with diesel, HFO, or gas have proven to provide reliable power supply to remote mines.

For almost all mines, the integration of renewables will have a positive impact on their energy cost position. Mining companies do not have to invest their own money; independent power providers (IPPs) invest in the renewable energy infrastructure and sell electricity to mines through power purchase agreements (PPAs). This second market phase is characterized by price competition.

Large IPPs take advantage of economies of scale on components for solar and wind power plants not only for remote mining projects but also for much bigger grid-connected plants. Market leaders have managed to optimize the planning and construction processes substantially. However, conducting projects in remote locations, especially in Africa, requires an extended experience. Amongst the challenges of undertaking projects in Africa is financing, which requires an excellent relationship with local and international banks.

Cost optimization does not necessarily mean minimizing CAPEX but rather focusing on the total lifetime of the project and including O&M. It is also important to take the interplay of the different energy sources into consideration. Not every kWh of solar and wind energy generated means equivalent fossil fuel savings. When gensets run at suboptimal loads, they lose efficiency and require additional maintenance.

This development will play into the hands of energy storage applications at remote mines. In an energy-as-a-service concept, the shift to lowest total energy costs makes IPPs substitute more expensive diesel, HFO, or gas buy cheap solar or wind energy.

The hybrid installations for mines that have been realized in Africa so far are all without batteries. In order to increase the renewable energy “penetration rate”, i.e. the share of renewables in the system, energy storage needs to be added. With today’s battery prices, it is likely that in a first step mines will add energy storage to switch off their diesel gensets during sunny periods or windy periods of the day. That means that during these periods the mine will be fully powered by renewables.

First references for these hybrid power plants with storage solutions for remote mines have already been realized outside of Africa. In Australia and Canada, government incentives allowed for building flagship installations that demonstrate that the concept of switching off diesel gensets fully relying on renewables and energy storage works even for large-scale mines. In addition, energy storage solutions can provide additional services to the mine such as peak shaving. They also can contribute to fuel reductions as well as to lower wear and maintenance of the gensets by running them at more efficient load points.

If experience with hybrid solutions including energy storage adds up to economies of scale in procurement significant overall cost-reductions can be achieved. These overall cost reductions will make solar and wind energy extremely attractive for many mines. The number of remote mines that add renewables to diesel, HFO or gas is expected to grow quickly all over Africa.

For further information, please have a look at a report that we have published together with Voltalia: https://www.th-energy.net/english/platform-renewable-energy-and-mining/reports-and-white-papers/

 

Dr. Thomas Hillig,
Managing Director,
THEnergy | Dr. Thomas Hillig Energy Consulting


The ees International Magazine is specialized on the future-oriented market of electrical energy storage systems, not only from a technological-, but also a financial and application-oriented point-of-view. In cooperation with ees Global, the ees International Magazine informs the energy industry about current progress and the latest market innovations.
Contact: Xenia Zoller - zoller(at)ees-magazine.com