Renewables in Mining: Industry snapshot and remaining barriers

As the global energy transition continues, the mining sector’s shift towards renewables is picking up pace. What are the lessons learned from existing projects, and what are the remaining obstacles to overcome?

2019 was heralded as a tipping point for green energy projects in mining, the year when the business case for solar and wind was finally deemed more attractive than fossil fuels. Last year broke records both in the number of renewable projects at mine sites and in the renewable percentage in the overall energy mix of mines. “In 2019, over 3,500 MW of projects either were announced or contracted. That’s a significant increase over 2018, when we only saw about 1,200 MW of installed capacity, and we’re expecting that trend to increase significantly over the next couple of years,” says Dave Manning, Global Head of Hybrid at juwi Renewable Energy.

He adds: “Several years ago the trend was generally around 20-21% renewable energy fraction, but now with the adoption of battery technology we are seeing that fraction move up towards 100%, with some projects around 80% now both viable and reliable.”

Business as usual

For many in the mining sector, renewable integration is now considered business as usual. In fact, it would seem abnormal for any new project not to look at renewable options in its feasibility studies. “Any project that needs new energy, we’ll consider renewables first - it’s become the go-to technology for energy supply for us,” says James Koerting, Energy Manager at Gold Fields Australia. The company completed the second phase of its 56 MW Agnew hybrid project this year with the addition of 18 MW of wind power and a 4 MWh battery system on-site in Western Australia. This brought the renewable portion of Agnew’s energy mix up to 54% on average.

Koerting adds that he is currently studying the feasibility of a solar and battery project at another Gold Fields mine in Australia, where there hasn’t been renewables so far. He notes that this is not a greenfield project like Agnew was, but an augmentation to provide additional energy. “Renewable energy was preferred and it’s very viable. It also brings additional benefits in terms of the quality of the electricity there. It could be up to three times the amount of solar that we installed at Agnew,” he says.

In another part of the world, Centamin announced this year that it would build a 30 MW solar power installation at the Sukari Gold Mine in Egypt, covering 25% of the site’s energy needs and displacing 18 to 20 million tonnes of diesel annually. Catharine Farrow, Non-Executive Director at Centamin, explains: “We’re looking to reduce our diesel use and carbon footprint. We looked at some of the massive, highly successful projects that have been undertaken in the Atacama desert for instance, and believe that the desert of Eastern Egypt also presents perfect conditions, with very high solar outputs. It’s not like this is new technology. It’s really now about grasping the opportunity to reduce our carbon footprint and take advantage of solar PV.”

While installing renewables to reduce reliance on diesel at off-grid sites makes the most financial sense, grid-tied projects have also been was finally deemed moving in this direction. In Chile, more attractive Teck plans to have 100% of its electricity contracts sourced from renewables by 2030. In January this year, the company moved 50% of its energy contract from coal to renewables at the Quebra Blanca mine, and in September, it entered into a long-term power purchase agreement with AES Gener to source 100% of the power needs at its Carmen de Andacollo operation from renewables.

But Teck is also studying the option of adding some solar power behind the meter at Carmen de Andacollo. “There is huge solar potential there, so we have the opportunity to pilot some solar. At the moment, when you buy energy from the grid, you also buy other system services, like transmission and ancillary services. If you complement that with solar self-generation you can reduce system costs in your energy contract,” notes Marcos Cid, Energy Manager at Teck Chile. “The core of a mining company is to produce metal, but the idea is to provide some examples of how we can integrate renewable energy into our operations,” he adds.

Lessons learned

In the few years since the first large-scale solar plants were installed on mine sites, both miners and developers have gained a lot of expertise. One thing that has become clear is that there is no one-size-fitsall for this type of project. Solutions must be developed to fit specific variables, particularly around geography.

According to Manning, there are many factors to consider for both solar and wind applications. “With integrating wind turbines, the logistics requirements are always a challenge: getting access to the lifting equipment, the size of the port, the access roads are one of the limiting factors for a wind turbine project. With PV, we’re limited by the topography, so depending on how flat the area is. And last but not least: mine site integration. Key to success for us has been to closely work with thermal engine providers and the mine to design the optimum solution.” A robust and reliable mine site integration requires a microgrid controller that can adapt to changing ore bodies, processing methods, and future developments like electric fleets and hydrogen. This is why we have developed juwi Hybrid IQ, our mining-focused micro-grid control system that is compatible with mine site communication networks and provides mining-focused reporting.

He further explains that the process needs to start with a detailed site analysis. “If we deem a project and location viable for wind, we undertake a very detailed wind study, whether with a wind mast or sodar and lidar technology. For solar we use historic climate data and increasingly augment these with onsite monitoring. Battery size is usually determined by the thermal engine design, and the size of the solar and the wind as well as economic factors,” he adds.

Miners are very much aware of the granularity needed in feasibility studies and are willing to engage in a detailed analysis to make sure they get the best result for their investment. “The use of renewables has to be very prescriptive and almost surgical: we should look very carefully at where and how we can get the best results and emissions reduction from our investment. It’s about slicing dicing the energy data, digging deeper and deeper into the decision-making process to make the best improvement in the most efficient way,” Ron Miller, Director of Asset Management, Energy at Newmont.

And for the most ambitious mining firms, the biggest lesson learned is that more can be done. Gold Fields now assumes that 54% renewables — its average at Agnew — is achievable anywhere, and is starting to look towards 75%. Koerting points out that as the initial investments are gradually amortized, it becomes easier to achieve higher penetration at low costs. He says: “When we started the Agnew project in 2018, getting to 54% required government funding. We are now investigating getting to 75-85% without government funding by 2023, at a similar cost of electricity. Once the project capital is paid off, you still have residual value in your energy assets and you’re not paying a fuel charge, so when that time comes, you’re paying a very low marginal cost of energy. This makes the long-term economics around renewables much more attractive than traditional thermal projects.”

Next frontier

While progress is undeniable, miners are still facing a number of challenges on their pathway to decarbonization. The most significant one in the short term revolved around the energy implications of fleet electrification, an avenue most large miners are now exploring. “We need to find cheaper sources of electricity generation because if our cost of electricity is high, the hurdle we have to overcome to electrify is much higher. The other thing is that we need better and cheaper energy storage technologies. As we see the cost curve come down on solar/wind and energy storage, that confluence will bring market opportunities in electrification. We have to get that confluence to align the economics and the ESG components for a chance to make those adaptations to the operating model,” says Miller at Newmont.

Along with the drop in renewable costs, another development that could assist miners in their green energy procurement for electrification purposes would be modularity. At Gold Fields, Koerting notes that mining operators need to make sure that the power plants they are constructing today have got the flexibility to incorporate more generation in the future, in order to produce clean energy for mobility. “A lot of it is around emerging and redeployable technologies, so we need to start trialing and getting comfortable with them,” he adds.

The interoperability of electric mobile equipment and the adoption of alternative technologies in the exploration stage are two other aspects that Centamin’s Farrow would like to see miners and suppliers focus on. “Interoperability has always been a huge problem, and it’s holding everybody back because everybody is so protective of their technology. We’re a pretty small industry and I don’t think that’s going to get people anywhere,” she notes.

And according to many miners, life of mine remains the biggest constraint when trying to implement renewable solutions, and energy suppliers could do more to provide miners with the flexibility they require. “Suppliers should understand constraints like life of mine when approaching industry with renewable technology solutions,” points out Bruce Armitage, Energy Manager at Lake Shore Gold. “Wind and solar projects require 15 to 20 years commitment minimums for return on investment. These projects will be ignored when typical North American mining operations only show 7 to 10 year mine life. Renewable technology companies design products to improve GHG emissions and then try to adapt or scale system to different environments, but they should collaborate with mining supply companies so low-carbon technology is designed for environments in which we operate.”

The only way to overcome these challenges and to push the industry further along its decarbonization ambitions is through collaboration between miners, energy suppliers and OEMs, not just for the development of new technologies, but also for the continuous improvement of commercial relationships.

An effective 5-step approach to mining hybrids, according to juwi’s Dave Manning

Hybrid systems with solar, wind and batteries already provide lower cash operating costs today and are an effective hedge against energy cost volatility. Reliability of supply is as good or better than of fossil fuel solutions. And last but not least, solar and wind pave the way for electric fleets, green hydrogen and the long-term goal of carbon free mining.

An effective five-step approach to hybrids for mining would be:

1. Create scenarios for energy demand, traditional energy costs, contracting options and energy regulation (carbon pricing, green certificates, renewable energy mandates, etc.)

2. Invite or contract hybrid specialists to provide expertise or proposals (determine early if wind resource is attractive)

3. Compare different mining and processing methods or hybrid optimization to current operation with different energy systems and integration solutions

4. Compare low, medium and high-penetration hybrid solutions

5. Compare contracting options: System purchase (EPC) vs electricity supply contracts options (PPAs) or other models