Can mines afford hybrid power solutions?

Can mines afford hybrid power solutions?

Hybrid power solutions at mining operations have increased in popularity across Africa. But how do remote mines integrate renewable energy to create their own power certainty in an economic climate where budgets are tight, and investment is hard to come by?

By Janine Espin

The energy consumption of the global mining industry amounts to 80% of the world’s electricity use. This is comparable to the total energy consumption of Australia, Mexico, South Korea, Italy, and Canada combined – a situation that is further aggravated by an intensive reliance on fossil fuels to power mining operations.

There is increasing global urgency to shift toward decarbonising to avert climate change by slowing global warming. This must be balanced with mining companies needing to keep the lights on and operations running more efficiently and cost-effectively than ever before.

This balancing act must take place against a backdrop of inconsistent electricity supply and rising commodity prices, which leaves mining operators stuck between a rock and a hard place. How do they integrate renewable energy into their power solutions to create their own power certainty in an economic climate in which budgets are tight and investment is hard to come by?

The cure for the load shedding blues

 A mix of cost-effective renewable energy and battery storage combined with the reliability of thermal energy, hybrid power plants have increased in popularity as the frequency and intensity of load shedding has risen over the past few years.

For mines with the capacity to operate off-grid, particularly in remote locations, diesel is the primary fuel for power generation. A hybrid energy solution entails combining upwards of two different energy sources, usually one renewable source such as solar with the other a typical energy source such as diesel.

By adding another renewable energy source and battery storage into the mix mines can reduce their reliance on diesel as hybrid energy systems can significantly reduce operating, maintenance and infrastructure capital costs over the long-term, while improving reliability and uptime.

Properly integrated hybrid systems are today capable of switching seamlessly between modes of power storage and generation as necessary. It is also now possible to retrofit solar systems with battery storage, which means that hybrid power solutions can be implemented in phases to spread the costs while bringing alternative energy generation more in line with the costs of conventional generation.

Smaller companies looking to avoid large capital outlay could make use of portable, flexible power solutions on a serviced rental basis which is more cost effective than outright equipment purchase, making provision for additional power modules to be added or removed in response to the changing needs of the mine’s life cycle.

Bigger capacity makes for a better business case

In South Africa, for example, larger mining companies that undertake to build a PV solar plant are no longer limited by the 10-megawatt capacity as this was recently increased to 100MW. This means there is now the possibility to recoup some of their costs by selling the energy they’re generating in excess of their own requirements to surrounding industries or to the municipality in which they are situated.

This is provided the municipality has a clean audit and the correct procedures have been followed. This means that the mine essentially becomes an Independent Power Producer (IPP), and it’s possible to take this one step further, by the mine offering the land via a lease-agreement mechanism and partnering with an external provider that will ultimately be the IPP, thereby alleviating the mine from incurring the cost of development.

Making hybrid energy more accessible for smaller mines isn’t possible as long as it’s necessary to import all the components. With the IPP Risk Mitigations and the REIPPP Round 5 Bids, it has become starkly apparent that we will need to develop the local capacity to manufacture PV panels and modules, as designated local content is very specific with regards to solar panels, including steel and the like. Here, the challenge is maintaining momentum once the government has set the wheels in motion for bids and the development of the renewable energy industry as a whole.

Community benefits from hybrid energy

It’s important to remember that it’s not just the mines that benefit from the establishment of a hybrid power plant, and the local community must be given the opportunity to participate. There will be short term job opportunities in the construction phase, as well as opportunities for the local supply of goods and services.

While there are no predetermined rules and regulations around building a PV plant or any hybrid solution at a mine, local content and local procurement should be top of mind. In this respect, it is vital to engage with communities and make them understand that even though it is a power generating plant that is being built on a mine, it doesn’t need to follow the Mining Charter or mining regulations, such as a Social and Labour Plan (SLP). It will be necessary, however, to comply with Environmental Legislation and Permitting requirements in the relevant municipal area.

The road to recovery

Hybrid energy is a huge opportunity for the renewable energy industry to expand and to partner not only with mines, but also with any large-scale manufacturing industry to facilitate a growing project pipeline that sits outside of what the government issues via the REIPP Programme.

This is the ideal time for private partnerships to take matters into their own hands and start producing and distributing power in a more energy-efficient, mutually beneficial manner so that all industries, including mining, can work toward the economic recovery we so desperately need, while reducing our carbon footprint.

Janine Espin is Managing Director at Economic Development Solutions.

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