Posted in: Microgrids

Solar for mining operations

Solar PV Microgrids for Mining: cost-cutting meets sustainability

The mining sector is one of the most important economic contributors to the African economy. However, mining is also facing several challenges – particularly with regards to sustainability and cost-saving. Mining operations are increasingly turning to solar PV microgrids as a reliable and sustainable alternative energy option.

Cost-cutting competitiveness

A 2019 Mckinsey review on measures to invigorate the South African mining industry identified cost-cutting competitiveness as a key factor. As an energy-intensive industry with a projected increase in energy consumption of 36% by 2035, the mining sector is looking to renewable energy, and particularly solar, as a significant cost-saving solution. This is evident in the agenda set for the 2020 Investing in Africa Mining Indaba taking place in Cape Town at the beginning of February, where industry experts will lead the conversation on the economic and societal benefits of renewable energy in mining.

A shift in industry thinking

proactive mitigation of ESG risks creates long term shareholder value.

Speaking to Engineering News & Mining Weekly Tom Quinn, an organiser of Mining Indaba, emphasised that:

‘It is now absolutely necessary for mining companies to have ongoing engagement with their investors and with the communities in which they operate in order to mitigate the risk of investor or community backlash from a lack of sustainable practices.’

This shift in industry thinking is aided by the economic benefits associated with using renewables such as solar PV microgrids to supplement more traditional energy sources. It is now widely accepted that maintaining a Triple Bottom Line is key to responsible investment. IFC’s Global Head of Mining Namrata Thaper advises that:

‘[E]xperience has shown that proactive mitigation of ESG risks creates long term shareholder value. This value is created by ensuring alignment between stakeholders and thereby reducing the likelihood of disagreements between stakeholders, which can lead to cancellation of concessions by government, labour unrest and strikes, community blocking or stopping of operations and more which are all events that can negatively impact financial performance…’

Renewable trends

‘The most advanced options… are hybrid systems that integrate solar, wind and batteries with diesel, gas or heavy fuel oil generators, without compromising reliability or power quality.’

For the mining industry, who rely heavily on consistent, uninterrupted power, the key energy trends to watch in 2020 are hybrid power, advances in renewables technology, variable power usage, intelligent seamless integration and meaningful cost savings.

Climate change, loadshedding and the fluctuating diesel price

However it is not just Triple Bottom Line reporting that is pushing mining companies to seek renewable energy solutions. Threats to productivity in the southern African region include unplanned breakdowns at state-run electricity utility Eskom, the fluctuating diesel price and supply disruption risks in the SADC region. The reliability of solar PV microgrids can mitigate these risks significantly.

On a global scale interruptions to energy production as a result of violent weather conditions caused by climate change has resulted in a growing shift to renewable energy. In response to this new challenge, businesses are focused on ramping up energy efficiency and reducing carbon emissions. Spencer Glendon, a senior fellow at Woods Hole Research Center cautions that climate change may be altering the economics of long-term infrastructure investment. It is crucial to ensure that one’s power supply is independent of at risk utility plants.

Solar PV microgrids offer a hybrid solution to these obstacles. In cases of remote locations, weak grid supply and reliance on diesel, there is an optimal business case for mines to use a solar PV microgrid. This typically combines a backup generator with batteries and solar to ensure a seamless transition and no interruption of power.

Positive outlook for solar PV globally and locally

‘the world’s total renewables-based power capacity will grow by 50% between 2019 and 2024’

The International Energy Agency’s (IEA’s) 2019 renewable energy market forecast for solar PV states that ‘the world’s total renewables-based power capacity will grow by 50% between 2019 and 2024’. Thus as there is a global transition to a varied renewable power sources the southern African region will find itself at a competitive advantage due to its strong irradiance levels (South Africa average more than 2 500 hours of sunshine per year). As a result of falling costs of solar PV and batteries worldwide, microgrids are now accepted as a reliable and cost-effective solution for industrial power generation.

The added benefits of third party financing

Financed solutions allows mining facilities to achieve immediate savings with no initial capex outlay. A solar Power Purchase Agreement (PPA) enables businesses to pay off and maintain their own solar energy systems at no upfront costs, while enjoying the immediate benefit of cost savings. Solar PV microgrids are increasingly the option of choice when looking to adopt a reliable, affordable, and sustainable energy solution.

Solar Microgrids and Battery Storage

Achieving electricity cost reductions through energy storage

Achieving electricity cost reductions through energy storage: what Business needs to know

Energy storage represents the major opportunity for the electricity sector, as affordable energy storage promises to solve the intermittency issues that occur with cheap renewable power such as solar PV and wind energy. Over the past few years, rapid declines in the cost of energy storage technologies, such as lithium-ion batteries, have made the topic of energy storage enter mainstream conversations. However, does energy storage as it currently stands translate into cost savings for business? 

From electric vehicles to large-scale utility batteries: the global market context

The popularity of electric vehicle (EV) technology in many ways has facilitated rapid growth in the energy storage services market, driving down the costs of Lithium-ion batteries and associated technology. Daniel Goldstuck, head of Energy Storage and Microgrid Services at SOLA, believes that the progression of storage products and services can be clearly seen in the increasing presence of battery suppliers and other industry service providers at conferences, who tout their ability to provide reliable, high-tech solutions to intermittency battles. In addition, the mushrooming of utility-scale battery programmes globally indicates that interest in energy storage is entering the large-scale energy services market, leading potential clients to see energy storage as a potential solution to some of their needs. “The procurement of large-scale transmission assets ‘in front of the meter’ shows that utilities are starting to use energy storage to provide a number of services, including frequency response, renewables smoothing, and transmission deferral,” Goldstuck asserts. 

The uptake of such solutions is expanding globally. California, for example, has over 1 GW of storage solutions installed, and the state also provides rebates for residential storage systems. In Africa, Microgrids that combine energy-storage technology with clean energy generation are lauded for their ability to provide stable power to communities with weak or no grid access. Pico-grids, or home solar kits, are also increasingly seen as ways to assist rural homesteads and villages with electricity provision. 

However, the application of microgrids and energy storage solutions do not only apply to rural and utility scale efforts, but also to the large segment of commercial and industrial energy consumers in between. Rurally-located mining operations, for example, can benefit from energy storage applications that link to cheap and reliable renewables, moving operations to electricity that is less cost- and carbon- intensive than diesel.

storage and solar PV: a perfect match

Solar PV is the cheapest form of energy in most countries globally. This is because it is solar power is an abundant renewable resource, the technology to harness it is relatively cheap to install, and it lasts for 20-plus years. However, solar PV is most abundant in the middle of the day, and starts to wane during “peak” energy hours such as early morning and evening. When combined with energy storage, the abundant, cheap electricity generated by the sun during midday can be stored and deployed during these peak usage times. Because storage is also programmable, it can be deployed when most needed – preventing wastage and increasing the economic value of each kWh stored. 

However, this programmable aspect of microgrids also make them more expensive than the typical grid-tied solar PV facility. “Solar PV and storage microgrids need to function seamlessly, so that power is not interrupted, and battery life needs to be managed carefully in order to ensure their longevity. This takes quite specific and extensive engineering to get right,” Goldstuck adds. 

Issues such as cycling the battery every day can affect the warranty of the product, depending on the type of battery and warranty arrangement. Energy throughput of the battery has the largest impact on the life of the battery, and therefore the warranty. Unlike solar modules that have a 25 year lifespan and relatively low operations and maintenance requirements, batteries need to be very carefully sized and configured, taking into account things like days with low-irradiance or cloud cover, where batteries may be put under pressure.

Although renewables and energy storage solutions are a perfect combination in a world headed towards increased renewables, the above factors mean that at the moment, the combination of solar PV and batteries into microgrids is more costly than straight grid-tied solar PV.

When does storage make sense economically?

However, the business case for storage and microgrid solutions is very clear for certain business sectors. “Rurally located agro-processing units such as medicinal cannabis farms are particularly well-positioned to make use of renewable energy storage microgrids,” contends Goldstuck. “They require consistent, large amounts of reliable electricity in order to power greenhouses and other farming equipment – yet are often situated on constrained grid networks and may rely heavily on diesel to run effectively,” he adds.

Diesel is expensive, both monetarily and environmentally, and yet diesel generators are widely used to power remote facilities. Diesel generators have even been used in South Africa to maintain the grid supply whilst there was constraint to major power stations. And despite energy storage solutions still being pricier than solar PV, diesel is still more expensive than the combination of both. Given that diesel is so expensive, the business case for implementing a clean-energy microgrid is particularly good  in relation to diesel saved.  

In contrast, storage for grid-tied facilities seeking a tariff-optimization solution generally requires closer analysis to determine the business case. “In South Africa, only a few tariff structures are currently at the price point to justify adding a storage asset. This is rapidly changing as the cost of storage decreases, and the costs of centralised electricity supply increases,” adds Goldstuck.

Energy storage economics cheat sheet

As a rule of thumb, energy storage microgrid solutions will make economic sense if they prevent at least 30% of the facility’s current or proposed diesel usage. Such cases are typically:

  1. Facilities on a weak or constrained grid network that need additional power to function
  2. Facilities without electricity grid access
  3. Facilities requiring consistent power that the grid is not able to provide for at least 30% of the time. 

Based on the above criteria, the following industries lend themselves particularly well to solar PV and energy storage microgrids:

  1. Islands without electricity grid access, or where the grid itself is powered by diesel (such as Robben Island)
  2. Game lodges or hotels that do not have access to the grid
  3. Large developments in rural settings that require more power than the grid can provide (such as the Cedar Mill Mall development)
  4. Mining operations situated remotely
  5. Farms that have extensive greenhousing requirements such as Medicinal Cannabis facilities 
  6. On-grid buildings experiencing outages for more than 30% of the time.

In conclusion, Goldstuck admits that there is a long way to go before large-scale energy storage solutions can be broadly implemented. However, he remains optimistic. “We’re just scratching the surface of what’s possible in terms of storing the abundant renewable resources we have available. In the years to come, energy storage solutions will become widespread options for commercial and industrial facilities”.

Solar Microgrids and Battery Storage