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Renewable Energy, Hybrid Solutions Can Power the Mining of Tomorrow

Rising energy costs have forced mining companies to take a hard look at how they run their operations. In some cases, energy use can account for as much as 50 percent of a mine's operating costs.

Because of their often remote locations, and the need for reliable power, many mining operations are forced to rely on fossil fuels such as coal and diesel for power. While diesel generators may be reliable, they are expensive to run and produce significant carbon emissions.

Factors such as global shareholder pressure for sustainable practices, uncertainty around local regulations, and increasing advances in alternative technologies are putting pressure on mining operations to explore new options. 

Investigating Hybrid Power Solutions

For these reasons, a growing number of mining companies are incorporating on-site or locally produced renewable energy into their operations—these include alternate power solutions such as solar PV, wind, geothermal and hydropower. According to Black & Veatch estimates, if an average remote project with a power demand of 5 MW generated 15 percent of its energy supply through wind, it could save 10 percent in energy costs.

In some cases, a hybrid solution that pairs solar with energy storage (batteries) and diesel generators can be cost-effective for mining companies. This is particularly true for mines that have one or more peaks in demand throughout a day, as opposed to a fairly flat load profile. 

Often, microgrids—stand-alone, small-scale electrical grids with their own power system—are a viable solution for remote areas, with the option to be connected to larger grids for increased resilience. This adds an additional level of flexibility and sustainability, which can improve financial performance and environmental compliance.

Clean Energy Costs Nearing Parity

Perhaps most compelling is the significant drop in the cost of renewable energy generation over the last few years, which can be attributed to falling equipment prices, technology improvements and increasingly competitive labor. The cost to own renewable energy assets or purchase their power now rivals that of fossil generation. According to the U.S. Energy Information Administration, renewable energy accounted for more than 60 percent of generation capacity installed in the U.S. in 2016, with similar trends seen globally.

Outside of competitive costs, renewable energy provides significant benefits specific to mining organizations, including:

  • A hedge against conventional fuel price fluctuations
  • Reduction of carbon emissions
  • Sustainability
  • Low maintenance requirements

Solar, in particular, is a very low-maintenance source of energy production, making it ideal for both active mines and remediated mines with ongoing power needs such as water treatment, pumping, monitoring of instrumentation and ongoing commitments to local communities.

Traditionally, when mining companies have evaluated the potential for owning on-site renewable energy, the projects did not meet internal return thresholds. Further, third-party power purchase agreements (PPAs) often required term lengths longer than the remaining projected mine life. However, with the continued decrease in cost—and financiers’ growing comfort with renewable energy investments—PPAs with terms as low as 10 years are now possible.

Renewable energy solutions can help mining operations reduce costs, improve reliability and become more sustainable, and are worth investigating. 

Subject Matter Expert
Dennis Gibson: GibsonDB@BV.com

Contact us to learn more about what we can do for you.

@black_veatch