A solar-battery plant at an Australian mine has shown hybrid power has a place in the sector, but according to Sandfire Resources mining companies expect to contract cheaper, cleaner power from a single provider.
Energy projects hailed as ‘firsts’ and ‘blueprints’ generate widespread interest and media attention. But they have to be in operation for a period of time before they genuinely earn their ‘game-changing’ status.
GridChangeAgent.com spoke to both Juwi and Sandfire Resources to discuss the mining sector’s appetite for hybrid power, following deployment in 2016 of a large off-grid solar PV-hybrid system at Sandfire’s DeGrussa copper-gold mine, 900km north-east of Perth.
Juwi designed, built and also operates the plant that consists of a 10.6MW tracking solar PV farm coupled with a 4MW lithium ion battery system.
The hybrid plant supplements the existing 23MW diesel power station, each month generating 1.7GWh of clean power, reducing the mine’s annual diesel consumption by 20%.
Amiran Roth-Deblon, who heads Juwi’s global business initiatives and works almost exclusively on projects in the mining sector, says that over the next 3-6 months a number of projects are set to reach financial close.
Mining sector’s requirements
“The mining industry has high requirements in areas such as health and safety and reliability in relation to power, so to have a proven off-grid hybrid project at scale, to mitigate diesel generation, has been a critical step. The last two years we’ve seen many more mining companies taking renewables-hybrid systems seriously. Increase in tenders is evidence of that,” he says.
The solar-storage system at DeGrussa is owned by French renewable power producer Neoen, with Juwi providing O&M services. Australia’s Clean Energy Finance Corporation (CEFC) provided debt and the Australian Renewable Energy Agency (ARENA) provided recoupable grant funding, which made it possible to have a six-year power purchase agreement (PPA) between Neoen and the offtaker, Sandfire Resources.
It is now possible to develop hybrid projects so they recoup investment without needing funding support mechanisms, according to Roth-Deblon.
DeGrussa is likely to continue beyond the expected lifetime. “We are optimistic we will operate beyond the six year mark. However knowing the PV arrays have a life cycle assessment of around 20 years and inverters 10 years, we may not get to fully utilise all of the equipment. At this stage there are a number variables, all of which will be reviewed by Sandfire and Neoen in regard to the PPA at the appropriate time in the future,” says Peter Gordon, electrical superintendent at Sandfire Resources.
Though DeGrussa is the most advanced, Sandfire Resources has several other projects in various exploratory stages in western Australia as well as in other regions, some of which are through joint ventures.
“Would we look to renewables again, in future? We’d approach it differently for new ventures from scratch. With DeGrussa, Juwi came to us with the concept and there was already diesel power generation in place. From a mining company’s perspective, the source of power ultimately has to be reliable and cheap. We’d be looking for one provider that takes care of all power generation, be it diesel, gas renewables, or energy storage,” says Tadhg O’Scannail, engineering support manager at Sandfire Resources.
Due to the grant funding from ARENA, there is an open-learning element to the solar-storage hybrid plant at DeGrussa. O’Scannail confirms other mining companies have been in contact since it went live.
“What we’ve seen too is the growth in the number of companies moving into this area. KPS, a contract power supplier that operates the diesel gen-sets at DeGrussa, has said it wants to expand its portfolio with clean power generation. There are also big construction players getting involved,” says O’Scannail.
The mining energy projects in Juwi’s pipeline are mainly off-grid, though Roth-Deblon notes growing interest in behind-the-meter solar projects for large grid-connected mines, in South Africa for example. Typically the off-grid projects tend to be in the single to double-digit megawatt range.
“You can see projects in the mining industry that are solely renewables and there are some which incorporate energy storage with solar, in Africa, but the storage is a small component. To go with such a big battery at DeGrussa has meant a meaningful reduction in fossil fuel consumption and reducing that exposure to fuel price changes,” Roth-Deblon explains.
In Juwi’s pipeline are hybrid projects that also combine solar and wind. “There is a confluence of favourable factors at play in Australia, which include a large mining industry, good renewable resources and well-structured off-taker agreements,” he says.
Mining companies want to concentrate on their core business, so they traditionally contract out power as a service, freeing up capital for core investments.
“We’ve shown that hybrid energy systems fit within that model. We know how to make PPAs work. Our input can be solely technical, or we can bring experience from financial and legal aspects. Whether we act purely as an EPC or in a wider role, we don’t mind, we are completely flexible,” Roth-Deblon says.
In Juwi’s immediate pipeline are projects with various independent power producers (IPPs), as well as investors with exposure in the sector. Their clients, the mining companies, tend to be mid-tier, like Sandfire, or in some cases juniors at the stage of going into operation. “For projects in the more immediate timeframe, the types of mining companies that are the off-takers tend to have simpler corporate approval structures.”
Juwi is also consulting with several of the top ten mining companies by revenue, which include Glencore, BHP Billiton, Vale and Anglo American. According to Roth-Deblon: “Though some have done, or are doing, smaller renewable hybrid projects, tenders are being put together for large-scale projects. In the next two to three years we’ll see some go into development. Whether done through PPAs or financed and owned by the mining companies themselves, if the mine is big enough with a lifetime of decades, we’ll have to see.”
“With the third party approach, such as DeGrussa, you know that the hybrid plant is being managed and operated to get the best performance and optimised output. Our background is in renewable energy, so we know how to get the best from these plants,” he says.