For infrastructure investments such as pension and insurance funds, stability and predictability of returns on investment are vital. As a strong infrastructure asset class, renewable energy gives that and more. When you know what to look for, it is relatively low-risk and can provide higher levels of predictable, long-term, inflation-linked cash flows and uncorrelated returns than more traditional sectors. These sectors have been subject to significant price volatility in recent years. Moreover, opportunities for investment in the renewables field are growing rapidly. The International Energy Agency forecasts that renewables will become the world’s main source of electricity, passing coal in the mid-2020s.
Thanks to the Paris Climate Agreement – with an estimated $1 trillion of investment required to achieve global decarbonization and energy goals – renewable energy infrastructure offers a considerable global opportunity to generate significant returns for pension fund investors. Benefits range from fund diversification to positive risk-adjusted returns and higher-yielding long-duration inflation-linked income streams. (Source: GFI report, Nov 2017: The Renewable energy infrastructure investment opportunity for UK pension funds.)
As the report notes, there are a number of fundamental drivers for institutional investors when it comes to their investment portfolio requirements:
The GFI’s findings “all suggest that renewables infrastructure is a valuable new asset class for long-term buy and hold investors” such as pension funds and life insurance companies. Canadian and Australian pension fund investors are already significant players in the market in comparison to their counterparts in other countries. And, yet, there remains significant scope to exploit the growing number of opportunities globally.
“It is clear that the growing market for renewable infrastructure is paving the way both for potentially substantial returns for institutional investors; and for a swifter, more affordable transition to a low-carbon economy,” the report says.
6. Electricity generated by large-scale renewable sources is now competitive with or cheaper than new fossil fuel power in many markets.
7. Onshore wind and solar PV account for a majority of global power sector investment and demand is increasing.
8. There is increased competition in the supply chain, which has helped to drive down technology costs.
9. Output from technologies such as wind and solar can be variable by the very nature of their energy source. But, modern methods of energy storage and demand-side management and the nature of long-term subsidy and additional market incentives means renewables are free of sudden price fluctuations. These had an impact on fossil fuel markets in recent years, enabling them to provide predictable long-term returns.
10. New markets with strong growth potential are opening up and new technologies are emerging for good investment opportunities. For example, India is a market on many investors’ radar because of “an exceptionally ambitious target to reach 175 GW of renewables by 2022” and strong support policies, notes the GFI report. Latin America and Africa also present significant opportunities, although as emerging markets risks can be greater than in more established markets in Europe and North America.
Depending on risk appetite, there are various routes you can take to secure the best returns from the renewable energy sector. And, to take full advantage of the opportunities, as outlined above. You simply have to know what to look for and what to avoid. Infrastructure assets can include debt and equity, listed and unlisted assets. Meantime, investments can either be direct or indirect. For example, through dedicated infrastructure funds managed by professional managers. Again, it depends on things like risk appetite and liquidity needs. There really is no ‘one size fits all’ model for investment structure.
In addition, there are a number of different entry points within the project life cycle to consider. Each with its own level of risk and potential returns.
Should you opt for the development stage of the cycle? This is before construction even starts. Generally, it involves sourcing potential project sites, gaining planning permission, grid connections, permits, and available subsidies. Here, the investor’s costs are minimal but risks are relatively high. In fact, the risks revolve around failure to achieve any of the development stage objectives.
The construction stage of a project – preparation of construction plans, securing finance, and then completing the project build – could be a potentially better option and there are different entry points available. For renewables, it is this stage that typically accounts for the most significant proportion of total project cost. The associated risks are many and include delays and cost overruns. But, there is a possibility to minimize such risks. Or, one can avoid the institutional investor altogether. As GFI points out, to avoid these construction stage risks, investing at the completion stage is an option. In this way, another party can absorb the overrun, delay, and performance risks.
The other main entry points in a project’s life cycle. Once it becomes classified as an operating asset, which is when it has been operating for at least 12 months after the construction cycle is complete. Here, you could enter the initial operational phase when the price support system (PPA, subsidy) is still in place. Or, you can enter once that phase is over. In the first on these risks are minimal confined to operation and management of the assets. In the latter phase, risk rises as projects sell the electricity they generate on the wholesale market at the market or merchant price. However, capital expenditure at this latter stage usually gets fully paid off by this point. Overall, the operational asset phase is most likely the lowest-risk phase in a project’s life cycle for institutional investors.
Making the right choice to meet your long-term strategic goals really depends on a number of factors. Moreover, it requires the right expertise and thorough due diligence.
Not all projects are equal. Neither are the different markets or players in the field.
An understanding of the different markets and technologies, the opportunities, and what/where/who to avoid, along with the point on entry, is critical. With more than 50 years of combined experience in this sector, this is where Phoventus excel. And, where we can help.
Phoventus Inc. now offers professional engineering dispute resolution services. Thus, a full range of consultancy, facilitation, conflict management, and conciliation services are available to assist clients to resolve disputes and systemic issues.
The Dispute Resolution team at Phoventus has many years of experience and extensive knowledge of delivering effective communication and interest-based negotiations to help businesses achieve true solutions. Indeed, we have experts managing sensitive and complex cases, including dispute resolution services. Also, we are uniquely qualified to assist our clients in closing gaps between themselves and their business partners surrounding renewable power projects to avoid costly mistakes and to minimize their workforce costs.
Moreover, we know that disputes may jeopardize the timely completion of contracts and the quality of deliverables. In some cases, stakeholder disputes break down agreements and create larger problems. It is in both parties’ best interests to have disputes resolved quickly and efficiently. Also, our strategic and straightforward approach comes from our dedicated team of specialists with extensive energy industry knowledge and socio-economic technical background. We have a team with over 10 years of commercial and practical problem-solving skills advising various energy, utilities, and other major projects such as large engineering schemes and infrastructure projects.
Finally, we provide services below to individuals and businesses:
Canadian Power Engineers is the newest member of the family and a wholly-owned division of Phovetus Inc.
The 5th Annual Energy and Mines World Congress took place on November 27-29 at the Hilton Toronto. Since the first event in 2013, Energy and Mines have held 11 summits on alternative energy in mining. They were all in the key global mining markets of Canada, South America, the UK, South Africa, and Australia.
Clearly, this year’s summit aimed to provide energy professionals with a comprehensive understanding of the mining industry. In fact, it included workshops and sessions on the challenges of carbon and energy in mining. Other key themes included the risk associated with greenhouse gas emissions regulations and insecurities around energy use. Also, another theme included the cost and supply as well as the strategic role of carbon emission in shaping energy innovation in mining.
The summit highlighted realizing energy and carbon savings with mining microgrids, digitization, and electrification for integrating renewables and harnessing the potential of digital technology. In addition, the 2017 Agenda also outlined Natural Resources Canada’s Clean Growth in Natural Resource Sectors Program initiative. Moreover, it summarized its funding opportunities to the mining sector to reduce energy consumption and GHG emission.
Senior representatives from Barrick Gold, Natural Resources Canada, Goldcorp, B2Gold, Newmont, Anglo American, The World Bank, Kinross Gold, New Gold, IAMGOLD, AngloGold Ashanti, ArcelorMittal, Teck Resources, Victoria Gold, Erdene Resources, Fortune Minerals, Bloomberg New Energy Finance, The Carbon Disclosure Project, The Mining Association of Canada, Cisco, as well as Avalon Advanced Materials, were among the 50+ speakers.
Energy and Mines World Congress was 2+ days of beneficial networking with senior mining, energy, finance, and government representatives. It was an essential platform to hear the latest international case studies on renewables and alternative power options for remote mines.
Click here to download the congress brochure.
Click here to download the Market Annual Report of Energy and Mines on How Carbon is shaping energy for mines.
This year, the Caribbean Renewable Energy Forum, organized by the New Energy Events LLC took place from 18th October to 20th October 2017 in Miami, United States of America. The conference focused on the enabling environment, commercialization, and implementation in the Caribbean region.
CREF is the biggest annual gathering of both local and international energy stakeholders reaching out for renewable energy investment opportunities in the Caribbean. Representatives from Cuba, Haiti, Jamaica, Dominican Republic, Barbados, Guyana, Puerto Rico, and Trinidad & Tobago gathered together in this year’s forum. They concentrated on investment regulation, financing, utility-scale, distributed generation, storage, smart grids, energy efficiency, and more.
This year, for the first time, The Ontario Government participated in CREF and took part in this hot renewable energy market.
On behalf of our team at Phoventus, our CEO and Managing Director, Rob Lydan attended the Forum. On the first day, after the welcoming remarks, attendees started the Forum with global trends shaping investment in clean energy in the Caribbean. The subtopics included President Trump’s reversal of the U.S. commitment to the Paris Agreement.
Another topic was the question of the impact of Irma and Maria on the flow of climate funding in the region. Also, the panel assessed the geopolitical and economic landscape. Moreover, it discussed how global trends would shape the trajectory of investment in the Caribbean over the course of the next decade.
Dr. Cletus Bertin, Executive Director of CARILEC, Joseph Cox, Assistant Secretary-General Trade and Economic Integration of CARICOM Secretariat, Therese Turner-Jones, General Manager, Country Department Caribbean Group of the Inter-American Development Bank, and many other Caribbean energy leaders took the stage. They projected their views about how the region can influence international donors.
Furthermore, they discussed the need of investing more resources to build resiliency in the face of a rapidly changing climate. Additionally, the feasibility of exporting surplus baseload from island to island was discussed. Also, the alignment to streamline the planning and procurement of generation by policy-makers and utilities was one of the topics. These were just some of the many striking facts that were taken into consideration during the conference.
Dialog between stakeholders generated around discussions driven by the need for islands to rethink the approach to resilience and shifted the move from a “What If?” to a “What’s Next?”.
The Caribbean Renewable Energy Forum was very well organized to connect people with the same goals. From networking lunches with roundtable exercises to case studies and presentations of new projects. In fact, exploring and understanding other entities in the region was never been this clear. During the conference, people took initiative to introduce their ideas on new approaches to procurement of renewables in a rapidly evolving market. Finally, people shared new approaches to financing climate & grid resilience, and more.
We collected some of the presentations and graphics for you. So, you can have a look at who are the top performers in the Caribbean and some new projects.
Share of Planned Electricity Produced from RE
Castalia CREF Renewable Energy Island Index and Marketplace
We would like to hear from you; so please let us know if you have further questions/comments about the CREF 2017.
Learn more about the shifting role of the Solar EPC and How the Solar Trade Case Could Change Everything.
As we gear up for Solar Power International, one solar EPC provider reflects on how the industry has changed. There have been many advances over the past few years and providers worry about what’s next.
Just five years ago, solar engineering, procurement, and construction companies (EPCs) were willing to be a lot more flexible when signing contracts to build solar projects than they are today. According to Robert Lydan, CEO and Managing Director at Phoventus, it’s about who takes on the majority of project risk. In fact, it used to fall on the shoulders of the EPCs but today they are increasingly risk-averse.
“The EPC business has grown from a market where clients were able to acquire EPC service with really extensive wraps around the liabilities and energy production estimates and all of the variables of the project,” he explained in an interview. “I’ve seen a very significant degradation of that.”
Lydan said that five years ago in an effort to build market share in what all EPCs understood to be a growing solar market, EPCs were willing to take on a much higher level of project liability.
“There was a time during which people’s desire to penetrate into a new market meant that they would do extraordinary things to do so,” he said.
Finally, take a look at the PDF for the full interview.
A few things affect how keen mining companies are to move from study to the adoption of renewable energy. One thing is the prolonged downturn in minerals and metals commodity prices. The other includes a generally sluggish outlook for the mining industry. That is what Rob Lydan, a former global director for solar and wind renewable power at Hatch in Mississauga, Ontario says. “The commodity outlook is the oxygen that the mining business breathes,” he explains.
Lydan is convinced that most mining companies will proceed cautiously toward adopting solar PV, wind. Or, perhaps other alternative forms of energy within their operations. Of course, that is until commodity prices start to rebound out of their current slump. “At the top of the boom, people’s sole interest is how much more they can get out of the ground.” “And, how fast they can process it,” he says. “During a bust, their singular priority is avoiding cost. Commodity prices are the beginning and end of this business.”
It is true that renewable energy providers may find the current situation frustrating. However, now is the time to position for an uptick in commodity prices. “The ramping in between booms and busts—be it down or up—is when innovative ideas are likely to experience more adoption,” says Lydan. He, therefore, predicts that wind, solar, and other renewable energy options will begin to see greater adoption.” He claims that this will happen when the commodity depression ends and prices climb again.
The solar photovoltaic energy industry has burgeoned in Ontario ever since the provincial government introduced a feed-in-tariff Program two years ago. Under this program, the Ontario Power Authority currently guarantees a fixed price for a 20-year contract. The rates for every kWh generated are from $0.44 for ground utility-scale PV farms all the way up to $.80 for residential rooftop installations.
In 2009, Ontario had 46 MW installed, whereas in 2010 it had 169 MW installed. This year, the projected approved capacity is 455 MW. Most of the Ontario solar industry PV projects are still in the planning stages. But, according to a report by the U.S. Interstate Renewable Energy Council, by 2009 Ontario was already the third-largest market for solar PV installations in North America. It ranked only behind New Jersey and California.
The province’s FIT and MicroFIT programs have drawn scores of manufacturers, installers, developers, and other entrepreneurs anxious to capitalize on the perceived revenues into the solar business. Developments underway range from rooftop units on single-family homes (and aggregations thereof), to commercial-scale solar farms.
Surprisingly, the list of members in CANSia, the Canadian Solar Industries Association based in Ottawa, includes only a handful of the larger consulting engineering companies. There are small specialists and large contractor companies such as Bechtel and Black & McDonald. However, there is only a handful of the larger Canadian consulting engineering companies. We found only Genivar, Hatch, Morrison Hershfield, and Stantec.
Hatch has been an active participant in the solar industry for about 10 years. Moreover, it has a relatively large dedicated team within its renewable energy division. Rob Lydan is former Director of Solar worldwide with Hatch, based in the Mississauga office.
The design of the systems themselves is not complicated, says Lydan. “Building a solar farm is like assembling an automobile. It’s a matter of logistics, geotechnical, electrical, and civil engineering details. It’s not rocket science.” For that reason, many of the companies doing the design offer turnkey projects and use their in-house designers.
“The problem is that if you make an error, then the error is repeated 40,000 times.”
He suggests that this is where the leverage for consulting engineers lies.
Where Hatch comes into the picture is in providing reassurance to the site developers and financiers. “For us in the consulting engineering field, it’s not so much about detailed design. That is because they can go to a Tier 2 shop to get that done. But, from an uncertainty standpoint, when it comes to dealing between the developers, the lenders, the stakeholder, this is primarily the business that we are occupied in.”
Lydan describes their four main fields of solar activity: First is in guiding a proposal through the environmental approval process, which can take up to two years. Hatch has around 70% of the solar REA approvals work in Ontario. And, it is also currently involved in similar work for several 50+ MW solar farms in South Africa.
Second is doing due diligence for the developers and financers: “That’s a big body of work,” Lydan explains. These clients are typically large international banks and insurance companies.
Third, says Lydan, they do base engineering from a pre-feasibility and feasibility standpoint for the project developers and proponents. This stage of work might involve energy production modeling.
Lastly, the consultants might be involved in connecting the solar farm to the main electricity grid. That’s work that involves “interconnections and negotiations with utilities, system design for substations, and interconnections and tap lines,” says Lydan.
Ontario’s goal is to see 2,700 MW installed by 2014 according to its draft Long Term Energy Plan released late last year. And if you think that is ambitious – consider that cloudy Germany already installed 6000 MW of solar PV power in 2010.
A typical 10-MW solar farm will have between 40,000-45,000 panels. One of Canada’s first operating utility-scale solar farms developed under the predecessor of the FIT program the RESOP program was First Light Solar Park in Nepanee, Ontario, a 10.5-MW development by Skypower and Sun Edison.
According to the Canadian solar research company ClearSky, $7.9 billion will be ready for solar PV in Ontario between 2010-2015. They also estimate that solar PV provides 12 times more jobs than nuclear energy per unit of energy produced and 15 times more jobs than coal and gas.
Here is everything you need to know about Implementing Operational Savings for Remote Mines. Take a look.
Rob Lydan’s speech, Canadian Power Engineers’ and Phoventus’ CEO.
Canadian Power Engineers is an Ontario-based, fully licensed, and accredited Engineering firm with a global reputation for excellence in power systems engineering. Above all, we are professional, independent, and focused on delivering value-added results to your renewable power or transportation project.
In fact, we provide engineering and procurement services to cover all aspects of your renewable energy, EV, or Remote Power project. Of course, our services are comprehensive, consisting of system engineering, design studies, and project management.
However, our firm is not a construction company and we don’t do installations ourselves. Instead, we do coordinate and provide engineering design and construction management for your chosen contractor. Unfortunately, we do not provide service to the single residence market at this time.
Our Mission is to provide an unparalleled technical focus on the core issues affecting the ownership, reliability, and profitability of power and energy projects.
We are a driven, passionate team. Our value is our insight into the latest technology and approaches needed to deliver our client’s projects on time and within budget. Renewable Power Specialist.
The African continent is particularly convenient to renewable energy solutions and mining companies. This is especially the case at remote sites, which could reap the benefit in their energy mix.
With its abundant water and sun, and having relatively undeveloped national energy grids in many states, Africa has greater potential for a rapid expansion of renewable power than many other parts of the world.
A recent study by consultants EY argues that global energy demand is set to increase by 36% between 2014 and 2035. Also, over this period US$6 trillion will be invested in renewable energy infrastructure – compared to US$2.75 trillion for conventional energy sources and US$1 trillion for nuclear.
A glance down the list of attendees at the recent Renewables and Mining Summit held in Johannesburg in May confirms that African mining houses are among many companies exploring how to power their operations from renewable sources. Participants at the event included Anglo American, AngloGold Ashanti, African Rainbow Minerals, ArcelorMittal, and Gold Fields. Analytics firm Navigant Research has estimated that renewables will supply 5% to 8% of all mining energy by 2022. And, Africa looks likely to lead the way.
EY’s analysts calculated that mining firms invested US$44 million in African and Middle Eastern renewable energy projects last year. That is the second-highest amount after the Asia-Pacific region. This investment will most likely reach US$312 million a year by 2018, and about US$730 million a year by 2022. All the main forms of renewable energy – wind, solar, hydropower, geothermal, and biomass – can serve as powerful elements of mining operations. However, some are more suitable than others in the African context.
Wind and solar remain the most widely used internationally. Navigant’s researchers foresee the deployment of 516 MW of wind-power capacity for mines by 2022, followed by 493 MW of solar.
Relatively few mines have explored biomass generation. However, Anglo American has taken a major stake in an algae farming business. There is a potential to produce up to 300 times more oil per hectare than conventional biofuel crops.
Also, a few companies have investigated the potential for turning their disused workings into energy storage facilities – ‘battery’ reservoirs for water that can be pumped in and then released to power turbines. Although, in the future, this may offer significant cost offsets and social legitimacy for mining firms.
While some technologies remain relatively neglected by the mining houses, there are clear benefits in those that have gained purchase. In comments to EY, Barrick Gold’s director of power projects Scott Fraser said: ‘Renewable energy cost structures have reduced to the point that, particularly for isolated mines, in some cases, they have become more economic than diesel-fired generators.’
Renewable energy offers mines the chance to gain a measure of independence from erratic local grids. It also enables them to reduce their carbon footprint and exposure to the volatility of fuel prices. Finally, it offers to greatly increase their social license to operate. This is especially the case if renewable installations also supply power to local communities, and persist after the closure of the mine.
Renewables have also become more affordable, with a range of financing options available. Mines today can support the development of third-party renewable operations by guaranteeing to buy their power. Or, they can form joint ventures in mining areas to install large facilities that serve several mines.
An increasingly popular option is the installation of complete ‘turnkey’ plants. They have a custom design for each mine. Moreover, they are able to generate constant power through hybrids of wind, solar, and gas or diesel.
These are particularly appropriate for the many remote mines in Africa, which may lie far from state infrastructure. Companies that build plants, such as Siemens’ Smart Generation Solutions, now offer mining firms an efficiency assurance for their turnkey installations. The company guarantees to save a certain amount of liters of diesel by installing renewable generation.
In several African countries, renewables constitute the main sources of energy for national power generation. This is especially the case in hydropower-rich states such as the DRC as well as Mozambique. As a result, some companies are able to argue that they already use renewables for 100% of their local electricity needs.
In Zambia, for example, First Quantum Minerals can rely on hydropower from the Zambezi Basin for all grid electricity at its Lonshi, Kansanshi, and Bwana Mkubwa copper mines.
In other countries, mining firms have turned to renewables by investing in regional power projects. Randgold Resources has recently commissioned the 20 MW Nzoro II hydropower station near its Kibali gold mine in the DRC. The company estimates that the plant will replace 6 000 liters of diesel use per hour. This will give a saving of up to US$35 000 a day at full capacity. The station supplies 5% of its power to neighboring communities. Randgold has permission to build a further three stations in the same area. Interestingly, they would take its local renewable generation to around 60 MW.
Also in the DRC, Ivanhoe Mines reached an agreement with the government to refurbish the defunct Nzilo I hydropower plant on the Lualaba River. In turn, it received priority access to electricity for its expansive Kamoa project. Currently, this is the continent’s largest high-grade copper discovery.
Similar developments have taken place in Burkina Faso. Over there, the Canadian gold producer Semafo has reached an agreement with the state to develop a 20 MW solar power plant. There is a potential to supply up to 10% of the country’s total generation capacity.
Other companies have opted for smaller-scale renewable installations to support localized operations. In South Africa, Anglo American has recently been awarded a contract for the construction of a solar plant. It will power its administrative buildings at the Kriel colliery. In the same country, many renewables analysts have hailed the installation of a 1 MW stand-alone solar/diesel hybrid plant at Cronimet Mining’s chrome operations in Limpopo province. The small plant operates on solar during daylight hours, with diesel to continue generation under low-light conditions.
Analysts at the Johns Hopkins School of Advanced Research in the US found something valuable. They claim that the plant has enabled Cronimet to reduce its annual diesel consumption by 24%, with a reduction of 1 200 tons of CO emitted.
They also note the potential for similar small-scale mine installations. In fact, they would transform community access to renewable energy in remote areas. ‘The adoption of distributed renewable energy systems by private-sector entities could represent one of the greatest opportunities for the development of the renewable energy industry; in areas where people have the lowest levels of access to this basic resource.’
The potential benefits of renewables are familiar. However, there are still challenges and limitations for their adoption by Africa’s mining houses. And, they are related both to the technology and the attitudes of companies.
Speaking at the 2013 Renewable Energy and Mining Summit in Toronto, major mining contractor Hatch’s former director of solar power, Rob Lydan, said that mining companies are unlikely to rely on renewables for more than 30% to 40% of their total energy needs.
As he explained: ‘This is an industry that is taking inordinate risks building projects in remote locations, and they have to stomach that risk. They can’t send a thousand people home because the sun wasn’t shining. That’s simply not going to happen.’
His comments indicate the apprehension with which renewables are sometimes viewed by miners. As erratic sources of power that will almost always have to be supplemented with generation from diesel. There are also concerns about the upfront costs of installing solar or wind plants, at a time when many junior and mid-tier companies are finding it difficult to obtain credit. But, these challenges will likely decrease in the coming years.
Africa’s mining houses have a lot to gain by embracing renewable energy sources. Those that move quickly are likely to see long-term gains over their competitors. This will particularly be the case if fuel prices continue to rise. The mining industry will also benefit from an expansion of the global renewables industry. It has already stimulated demand for minerals that were neglected.
By David Bannister
Canadian Power Engineers is an Ontario-based, fully licensed, and accredited Engineering firm with a global reputation for excellence in power systems engineering. We are professional, independent, and focused on delivering value-added results to your renewable power or transportation project.
Until quite recently, miners generally used words like ‘unreliable’, ‘expensive’, and ‘risky’ to describe renewable-energy power. But, outdated perceptions of most forms of renewable power are slowly giving way to a new generation of miners. In fact, they are embracing new renewable energy technologies. Consulting engineering firm Hatch former director of solar and wind, Rob Lydan, participated at the Renewable Energy and Mining Summit, held in Toronto last week. He said that the fact remained that renewable energy was cheaper than fossil fuel power solutions, such as diesel-fired generators.
Today, miners typically spend about 30% of the operating cost of a mine on energy. That is in comparison with 23% to 25% a few years ago. And, at some point, mining firms cannot be profitable unless they decrease the cost of energy. Lydan pointed out that operating a typical diesel-powered generation set would cost about $0.28/kWh to $0.32/kWh, compared with the current average operating cost of solar power of about $0.17/kWh and wind power of about $0.14/kWh.
However, owing to the supply of renewable energy technologies being inherently intermittent, except for geothermal power plants capable of maintaining baseload requirements at the low end of the cost curve, a more advantageous approach for miners would be to engineer hybrid renewables solutions. They will increase the installation’s reliability, while, at the same time, achieve operating cost savings of 10% to 30%.
Lydan said the balance between diesel and renewable power had tipped owing to the price of both solar and wind energy has declined significantly. In fact, the cost of solar energy components had fallen by nearly two-thirds in the past three years, he said. Miners like the concept of green energy for a number of reasons. They prefer it because it helps new projects gain a social license, it leaves a positive legacy after the mine closes. And, it gives companies the potential to earn carbon credits. But, he stressed, miners, need the promise of cost reductions before making a move.
“At this point, hybrid energy projects have to compete against all the capital demands of the mine. And they have to have a payback similar to any capital activity at the mine. “Renewable power project performance is so well understood these days that risk premiums associated with their adoption in utility markets are lower than the risk premium in mining projects,” Lydan said, adding that investors were in fact keener to invest in a new renewable-energy project than in a new mining project in the current economic climate. Renewables solutions for mines make the most sense for projects in remote locations, especially for off-grid projects.
Lydan pointed out that component costs did not determine the type of renewable energy a mine should implement. But, rather what natural resources were available. Size mattered too; Lydan explained that solar projects were easier to install for small energy requirements. That is because cranes and other heavy equipment are not necessary. Of all the issues resources firms needed to consider around implementing a renewable solution, integration remained the top issue. “Miners won’t accept a situation where you’re going to shut down their mine. They’re not interested in that. Therefore, everything from the question of backup energy sources to protecting the power system at a mine needs to be carefully considered,” he said.