Mines explore modular and movable solar systems Friday, 16 December 2016

Mining can be a labour-intensive process that has long depended on diesel and gas for its electricity generation.

One reason for this, according to Dr. Will Rayward-Smith, general manager of SunSHIFT, is that fossil fuels have historically matched sector characteristics better than renewable energy sources.

“The cost of energy from large-scale solar photovoltaics (PV) is now comparable or lower than diesel or gas generation in new off-grid applications,” Dr. Rayward-Smith said. “The major difference is in the cost profile. Fossil fuel generators have a low capital cost but require expensive fuels. Solar PV is basically the other way around.”

Miners also typically procure energy on short- to medium-term contracts because of the flexibility, so a mine can be shut down if commodity prices fall, for example, Dr. Rayward-Smith said.

“Fossil fuel generators can be easily relocated and reused in this scenario. Solar PV, however, is traditionally static and becomes stranded,” Dr. Rayward-Smith said.

Mining companies can also face labour and capital constraints. Australia has some of the highest ‘stick-built’ solar PV installation costs in the world due to labour costs and remote locations.

Capital constraints on miners can also mean a preference for higher operating expenses, rather than increased capital expenses, according to Dr. Rayward-Smith.

“A diesel generator is cheap and you can use fuel over time, whereas a solar farm is more expensive up front, but very little cost over the long term. The characteristics of mining and renewable energy historically just haven’t matched particularly well,” he said.

Developing economies around the world also face similar challenges to off-grid industrial users in Australia.

“Despite the low cost and environmental benefits of renewable energy, emerging markets often do not have sufficient capital to fund utility-scale solar PV. These markets also have a higher risk profile that makes funding challenging and often lack the skills, labour and equipment to deploy large-scale renewable energy,” he said.

“They typically turn to third parties who provide low capital and moveable fossil fuel-based energy solutions.”

This is where modular and portable solar systems can be useful, such as SunSHIFT’s pre-engineered, pre-fabricated, moveable turnkey solar PV solution specifically designed to overcome the limitations of traditional solar PV in the mining sector.

The system was developed by Laing O’Rourke, in collaboration with SunPower and ABB, and supported by the Australian Renewable Energy Agency (ARENA).

“The ability to rapidly drop in a large-scale solar power plant, integrate it with new or existing energy sources and storage to create a ‘micro-grid,’ and relocate it like a diesel generator at any time is a game changer,” Dr. Rayward-Smith said.

“All of a sudden the barriers to adopting solar PV – the limited flexibility, the risk of stranded assets, the difficulty in financing, and the expensive, labour intensive site assembly in remote locations – are removed.”

But solar PV still faces some challenges, such as not being able to generate energy at night and ensuring enough sun is provided to the system.

“So we use a hybrid energy system of solar, fossil fuels, and storage,” he said. “However, grid-level battery technology is rapidly evolving and the combination of solar PV and energy storage is forecast to be cost competitive with fossil fuels in five years. This would allow us to provide reliable low-cost energy to off-grid industry without any fossil fuels.”

Despite these challenges, Dr. Rayward-Smith said the business case for using solar PV energy on mining sites stacks up, not just financially, but also from a risk perspective.

“It removes or at least reduces the need to transport fuel, which is a logistical challenge in a country as big as Australia. You have to build expensive high specification roads to handle the constant heavy road trains delivering the fuel, and inclement weather can stop remote operations by delaying fuel deliveries and washing away roads,” he said.

Being reliant on fossil fuels also exposes companies to geopolitical risk and uncontrollable cost volatility, according to Dr. Rayward-Smith.

“With energy being one of the major mining costs, this has a big impact on the industry’s viability,” he said. “For example, diesel price increases in the six months to June 2016 alone have added roughly $2.10 per tonne to the price of iron ore mining and transport.

“Whereas with renewable energy, you’re obviously generating it on your own site and you can control your own destiny to some extent. The ability to reduce even small amounts of fossil fuel use has real economic benefits to miners.”

Government support

Australian government support is helping mining companies get on board with renewable energy, such as the Australian Renewable Energy Agency (ARENA), which provides financial support to renewable energy projects.

In September last year, ARENA provided an initial $3.5 million to support Australia’s first commercial diesel displacement solar plant at Rio Tinto’s Weipa bauxite mine in Queensland. This plant is expected to save up to 600,000 litres of diesel each year.

ARENA funding has also helped SunSHIFT develop its product.

“SunSHIFT wouldn’t have happened without ARENA’s support and seed funding,” Dr. Rayward-Smith said. “They can see the potential in the technology and have been instrumental in enabling the adoption of renewable energy in the mining sector.”

[Caption: The first SunSHIFT prototype deployment at Laing O’Rourke’s 550 bed construction camp at Combabula in remote Queensland, which integrated with the existing diesel generators to make a hybrid energy system. The camp is no longer there as the SunSHIFT system was packed up and removed.]