After various projects have demonstrated the value of renewables for reducing diesel, heavy fuel oil and gas consumption, mining companies can now benefit from the significant cost reduction potential that renewable energy holds, according to a newreport by THEnergy and Voltalia.

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 this first phase, the initial focus was on the integration capabilities as miners were afraid that adding intermittent renewables such as solar and wind could affect the reliability of power supply and even lead to production losses.

In various microgrid applications, renewables combined with diesel, heavy fuel oil, 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 characterised by price competition”, explains Thomas Hillig, MD of boutique renewable energy consultancy THEnergy. “With the support of a leading renewable energy player, the new report analyses how IPPs can offer extremely competitive PPAs to remote miners.”

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 optimise 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 optimisation does not necessarily mean minimising 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.

“During the last 14 years, we have gained experience in renewable energy projects including solar-diesel hybrid microgrids, projects in remote locations and in developing countries”, points out Alexis Goybet, head of hybrid solutions at international renewable energy producer Voltalia. “Our experience adds up to our economies of scale in procurement and translates into significant overall cost-reductions in the range of 20-30% in comparison to new market entrants.”

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, heavy fuel oil or gas is expected to grow quickly all over Africa.