MINING

SUNSHINE IS GOLDEN

FOR THE MINING INDUSTRY

This case study details the renewable energy solution modelled for a tailings processing and exploration diamond mining operation. It uses certain assumptions to demonstrate the engineering and economic feasibility of various hybrid energy approaches.

BY GLYNIS COETZEE, TOUCHPOINT ENERGY*

CASE STUDY: RENEWABLE ENERGY SOLUTION FOR MINE

Technical and commercial review for a solar photovoltaic and battery energy storage hybrid project to supply a South African based mine.

The mine is an open-cast prospecting mineral and tailings crushing and processing operation, situated in the Northern Cape region, of South Africa, and operates 24 hours per day, seven days a week. The mine electricity supply is grid-connected directly to the Eskom grid and could potentially export energy via the local 10MW substation, approximately 15km away from the Point of Connection (PoC) to the mine incoming supply. The mine has several diesel generators on site that provide electricity supply backup in the event of outages.

The load profile is essentially flat at a peak demand of 4.8MW (see Figure 1). There was planned maintenance over the lower consumption period, which is an anomaly to be ignored for the purposes of this model.

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Storage projects in Varel, Lower Saxony, Germany using NaS (sodium suphur) batteries. For more information on NaS batteries in South Africa, please email Lloyd Macfarlane, Altum Energy at lloyd@altum.energy.

PROBLEM STATEMENT

The mine operation, which runs crushing and sorting machines, water processing and purification as well as general mining processes has a monthly electricity bill of between R3.5-million and R5-million, comprising and inclusive of usage charges in cents per kWh consumed, network demand charge in cents per kWh, as well as other service and ancillary charges at fixed rates.

The primary objective of this project’s first phase is to lower the electricity consumption and therefore usage costs of the mine operation and improve the yield, by the installation of a photovoltaic (PV) solar energy generation system. This PV solar system is intended to provide cheaper electricity, generated from a renewable resource and, if economically viable, provide non-fossil fuel security of supply, by the additional installation of an energy storage system (ESS) to mitigate load shedding and other outages that may occur periodically due to lightning strikes or other unforeseen events.

BATTERY ENERGY STORAGE SYSTEM

A battery energy storage system (BESS) has been selected to meet these objectives. Both Lithium Iron (Life) and Sodium Sulphur (NaS) BESS options were examined to determine the optimum Levelised Cost of Storage (LCOS) in this application. The ratio split between off-peak, standard and peak usage costs are calculated as a percentage of the total consumption to provide a basis for modelling the application of the BESS. The NaS BESS was selected as the NaS economics are advantageous when compared to LiFe under these conditions and is most suitable for the six-hour option, while the LiFe BESS is more suitable for a twohour backup.

The addition of a BESS to provide uninterrupted power for the full 24-hour operational cycle, essentially creating a fully gridindependent energy usage scenario, would potentially allow for a lowering of the network maximum demand (NMD) charges by lowering the peak. Due to the initial CapEx costs, this would likely have the nett effect of increasing the usage tariff above the current Eskom tariff, diminishing the cost savings, thus the focus is on operational expenditure cost saving for now.

CHALLENGES AND ASSUMPTIONS

The primary challenge is to ensure that the solution is financially beneficial to the operation by being able to offer a reduced tariff on a power purchase agreement (PPA) for a set period. In this instance, it is assumed that there will be a 15-year PPA – reducing the period further will have the effect of increasing the proposed tariff.

The mine is on a Time of Use (ToU) tariff of Ruraflex Interval and to determine the competitive levelised tariff which must be achieved, the breakdown of percentage usage in each of the ToU periods is applied (see Figure 2). This is a typical usage breakdown, but further savings are achievable by planning the battery storage to peak save.

RURAFLEX - NL 22/23

Extra c/kWh Tariff 22/23 Import

0.3474

1.53 LowPeak 12%

0.3474

0.6676 LowOff 18%

R1.88

R1.02

0.3474

0.3474

0.3474

0.3474

1.0528 LowSTD 51%

R1.40

4.6899 HighPeak 2%

0.7714 HighOFF 4%

1.4209 HighSTD 12%

R5.04

R1.12

R1.77

Average 100% R1.5036

Under the PPA proposal, Touchpoint Energy builds, owns, operates and maintains the entire PV solar generation system until the end of the PPA period, whereafter it reverts to the mine at no cost. The mine can then either choose to continue to operate the system, potentially under a Service Level Agreement with the original or a new Independent Power Producer, or may require a decommissioning of the system.

Other assumptions are as follows (including but not limited to): • All land area required – between 15HA and 22HA – is available for development of the PV solar facility and BESS installation for the options described

TECHNICAL AND COMMERCIAL SOLUTIONS

• 10MW connection size • Operation and maintenance (O&M) as well as insurance costs are included in the financial model • Financial model assumes that the full production will be purchased (take-or-pay) • P50 yield figures have been used in the financial model • Escalation for the tariff from Eskom is projected at a regular10% increase per year • Exchange rates assumed at R14.85/U$D

Option A: 5mw load plus six-hour battery backup

This option sizes the PV solar generator at 10MW/11MWp to ensure that the NaS 250-1500kWh BESS can be charged using the PV during daylight generation hours. This option provides for six hours of BESS backup, which would allow for further reduction of the use of power from Eskom. Because of the mine’s 24-hour operation, the stored battery energy could be used during the peak morning and peak evening times, thus reducing the reliance on the expensive Eskom electricity.

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Peak times in low and high demand season.

Commercial feasibility

The financial model based on the above design produces the following feasibility for the project, while achieving the desired return for the investor. • Project cost approximately R235-million • Touchpoint Energy tariff is at 135.25c/kWh against the levelised Eskom tariff of 150.36c/kWh • Annual escalation at 6% against an escalation of >10% by Eskom

The mine would enjoy immediate starting savings of more than 10% on existing levelised tariff over the period of renewable energy production, as per the savings graph below. Cumulative savings over period of the PPA – usage only, excluding any potential savings on NMD – amounts to more than R352-million.

Municipal vs Touchpoint Energy costs per year.

YEAR USAGE SAVINGS / MONTH USAGE SAVINGS / YEAR

2023 R283 674.75 R3 404 097.01 2024 R411 959.41 R4 943 512.88 2025 R558 14906 R6 697 788.67 2026 R724 269.96 R8 691 239.47 2027 R912 559.62 R10 950 715.39 2028 R1 125 487.96 R13 505 855.56 2029 R1 365 780.61 R16 389 367.26 2030 R1 636 444.35 R19 637 332.22 2031 R1 940 795.26 R23 289 543.08 2032 R2 282 489.39 R27 389 872.71 2033 R2 665 556.64 R31 986 679.69 2034 R3 094 437.78 R37 133 253.39 2035 R3 574 025.21 R42 888 302.49 2036 R4 109 707.60 R49 316 491.23 2037 R4 707 418.99 R56 489 027.83

Option B: 5mw load plus two-hour battery backup

This option sizes the PV solar generator at 6.3MW/7.4MWp with the addition of an 8.4MWh LiFe BESS. This option provides for two hours of BESS backup for load shedding mitigation, which could allow for a reduction of the use of the expensive peak time power from Eskom at the beginning and/or end of the day.

Commercial feasibility

This financial model produces the following feasibility for the project while achieving the desired return for the investor. • Project cost approximately R125.5-million • Touchpoint Energy tariff is at 112.75c/kWh against the levelised Eskom tariff of 150.36c/kWh • Annual escalation at 6% against an escalation of > 10% by Eskom

The mine would enjoy immediate starting savings of 25% on existing levelised tariff over the period of renewable energy production, as per the savings graph below. Cumulative savings over period of the PPA – usage only, excluding any potential savings on NMD – amounts to approximately R315-million.

Municipal vs Touchpoint Energy costs per year.

YEAR USAGE SAVINGS / MONTH USAGE SAVINGS / YEAR

2023 R476 231.18 R5 714 774.21 2024 R578 638.68 R6 943 664.12 2025 R694 007.94 R8 328 095.32 2026 R823 754.98 R9 885 059.73 2027 R969 441.01 R11 633 292.07 2028 R1 132 786.92 R13 593 443.00 2029 R1 315 689.11 R15 788 269.30 2030 R1 520 236.88 R18 242 842.55 2031 R1 748 731.51 R20 984 778.16 2032 R2 003 707.24 R24 044 486.83 2033 R2 287 954.20 R27 455 450.37 2034 R2 604 543.71 R31 254 524.47 2035 R2 956 855.90 R35 482 270.85 2036 R3 348 610.15 R40 183 321.82 2037 R3 783 898.34 R45 406 780.07

Both options provide considerable savings for the mining operation, reduce the company carbon footprint and increase the yield for the mining operation with no capital outlay so that the mine company can focus on its core business.

ADDITONAL BENEFITS

An added benefit of the project would be the reduction of the operation’s carbon footprint, as well as the potential for job creation in the area used for the basic maintenance of the installation. The resultant CO2 annual saving is approximately 15 665 tons per year for Option A and 23 226 tons per year for Option B.