The mining industry is changing the way it manages energy. In recent years rising costs have driven the industry to focus on efficiency, but efficiency can only go so far. To solve this growing challenge the industry is moving towards renewables for both grid-tied and remote sites (see examples
here, here, here and here).
Below we list 10 key factors driving the mining sector to examine renewables and why this is a growing business opportunity for innovative renewable energy companies.
1) On average, energy costs represent 15% of the total cost of production for mines. In metals mining, this increases to between 20% and 40%. Energy price and stability is a significant factor in mine profitability. Mines are actively seeking energy alternatives that provide stable power at stable prices.
2) High electricity prices in mining centres such South America, Europe, Asia and Australasia already means that renewables have reached grid parity with fossil fuels.
3) Power quality for grid tied mines in developing countries leads to frequent outages and loss of production driving the mining sector to explore more reliable, self-supplied power.
4) The increased demand for metals and minerals has forced mining companies to more remote sites and to sites with lower grade ore. The proportional cost of production from energy is on an upward trend and a greater focus for the sector.
5) Emissions legislation in the form of carbon tax and green energy incentive policies are being proposed or are in place in Australia, South Africa, Brazil, Chile and parts of Canada. Mining companies increasingly have to fiscally account for greenhouse gas emissions and are financially encouraged to seek alternatives.
6) The social license to mine is a now a major factor in mine planning. Mining companies are very conscious of their reputation and showcase the use of renewables, it’s benefits beyond the fence and mine lifetime.
7) CSR is now a priority for many mining companies. Sustainability reports now often highlight alternative, low-pollution energy initiatives.
8) By 2022 renewables use by the mining sector is expected to increase to 5%-8% (from today’s level of 0.1%). Wind and solar will account for 60% of renewable energy investments by 2022.
9) There are now numerous working examples of renewables at mine sites delivering stable power at affordable prices.(see here). Renewables is becoming more accepted by the risk averse mining sector.
10) PPAs (Power Purchase Agreements) and ESCO (Energy Service Company) models are now seeing greater traction in the mining sector – enabling faster adoption, de-risking the investment for the mining sector.