INTERVIEW - Renewables at mines not yet an easy task but Suntrace is optimistic

Fresh off the commissioning of a megawatt-scale off-grid solar-plus-storage hybrid power system at the Fekola gold mine in Mali, German renewable energy expert Suntrace GmbH is heading to another gold mine in West Africa.

Martin Schlecht, Chief Operating Officer at Suntrace, told Renewables Now that the company definitely sees itself as being involved more intensely in the mission to marry renewables with mining operations in the near future.

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“We are currently advising another gold mine in West Africa, where we are supporting them in assessing the suitable technical solution and in the procurement of an EPC Turnkey supplier,” Schlecht said. “We want to grow our support for decarbonisation of mines by implementing renewable energy projects for their sites selecting cost-competitive solutions. ”

Hamburg-based Suntrace is a privately-owned independent technical advisor, specialising in holistic renewable energy solutions across all project phases from origination to operation. The company played a role in over 10,000 MW of renewable power projects in 45 different countries worldwide, and brings experience from 14 countries in Africa.

Schlecht is delivering a presentation “Renewables for Mines – Finding the Best Path for Implementation” at the Energy and Mines Africa Virtual Summit taking place online on May 4-6. Ahead of the event, he shared some insight into the complexities of setting up a renewable energy system at Africa’s mines.

A PALETTE OF OPTIONS

Mining sites are some of the most polluted environments in the world, yet its miners extract metals and minerals that make up the ingredients of solar panels and wind turbine generators that enable the energy transition for everyone else. In recent years, there has not been a shortage of mining companies announcing projects to incorporate clean(er) energy into their operations or closing power purchase agreements (PPAs) for renewables.

However, navigating different regulatory environments and a wealth of technological solutions for green energy can be tricky, and even trickier in a complex place such as the African continent.

“The implementation of renewables is definitively a more convincing business case for off-grid mines,” says Schlecht. “These are the cases which usually are highly beneficial in favor of the renewable electricity supply.”

The solutions vary for grid-connected mines, as Schlecht explains.

“Each mine that is grid-connected has signed a PPA that ensures a reliable supply of power. The terms of this PPA will determine the options that the mine has to reduce energy under this PPA and substitute this with renewable energy.”

Those seeking a solution from an independent power producer (IPP) will find that the regulatory conditions are different in each market. Some “may or may not allow energy to be procured from an IPP “across the fence”. If an IPP is possible, such renewable energy would need to compete with the existing PPA tariff,” Schlecht adds.

If an IPP selling electricity across the fence is not permitted, a company may opt for embedded generation (inside the fence) that can substitute grid-supplied electricity.

A utility may adjust its tariff as well, inspired by the competition, which can adversely reduce the competitiveness of renewables, according to Schlecht.

IF THE PRICE IS RIGHT

As long as renewables are cheap, there is going to be a business case for setting up a clean energy system at a mine, and even more with lower prices of battery storage. But, not long ago, companies had to press pause on their plans for renewables due to high costs.

“We had several occasions a few years back, when the renewable solutions were less competitive against the fuel cost for off-grid mines. Specifically, when the oil price plunged in 2014-2016, the benefits of the renewable solutions at that time were melting away and investment decisions were postponed,” Schlecht tells us.

Even in sun-rich Chile, implementing solar power projects was not without challenges, as the COO relates:

“In Chile, solar developers were developing projects against the high prices of electricity traded at the power exchange, and their business case evaporated when the prices dropped to values below the generation of cost of solar. It took a few years for solar to reach competitive levels again with reduced cost for PV. Many developers were negotiating PPAs with mining companies, however, almost no PPA was closed during these years. Mining companies were grid-connected and had signed up for long term PPA contracts with utilities, which either made it difficult for them to extricate from the PPA obligations or they did not want to procure and manage their energy supply from different sources under possibly conflicting PPA rules.”

“Currently, saving CO2 emissions does not yield much revenues directly, as for example by selling carbon credits,” he says, but is nevertheless optimistic that miners can square this circle with the present technologies and benefit from future CO2 regimes that will follow.

“What we see however is, that there is a lot of untapped potential already today to implement renewable energy at mines and have an immediate cost benefit, larger capacity sizes can be implemented subsequently. It is important to keep the options open for enhancing the renewables over time” Schlecht adds.