Benefits of Solar Power in the Mining Industry

16 September 2020

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The financial performance of solar power systems has been proven in many business sectors and building types. However, the technology offers additional benefits in the mining industry, where diesel generators often power remote operations. Solar panels can produce electricity at a lower cost and with a local resource.

The Australian mining industry is one of the largest in the world. The country is a major exporter of minerals and ores like iron, nickel, bauxite, alumina, copper, gold, silver, uranium, diamond, opal, zinc, and rare earths. However, mining is an energy intensive industry, and its operations are often established in places with limited grid coverage.

Why Is Electricity So Expensive for Mining Companies?

Mining operations are often found in remote places with little or no coverage from the electricity grid. Since a reliable power supply is critical, mining companies often rely on diesel generators. However, this has several disadvantages in terms of costs, logistics and environmental impact.

Diesel generators are expensive to run, and electricity costs above $0.40/kWh are common when they are used in homes and businesses. When diesel generators are used in mines and other remote sites, electricity costs can exceed $1/kWh due to delivery costs and other factors. Mining operations consume large amounts of electricity, and they also deal with higher costs compared with companies with grid coverage.

The high electricity cost of diesel generators in remote sites also creates an excellent opportunity for solar power systems. When a mining company must assume electricity costs of $1/kWh, each kWh produced by solar panels is saving that much.

The installation costs of solar panels are also higher in remote locations, but this cost is only assumed once. On the other hand, diesel generators depend on scheduled deliveries at regular intervals to stay operational.

How Solar Power Improves Resilience in the Mining Sector

Unlike diesel, which must be delivered to mines at a high cost, sunlight reaches the site for free. By using a local resource, mining companies become less dependent on external inputs. This is a significant advantage when diesel deliveries are interrupted by natural disasters, such as tropical cyclones or bushfires.

Solar panels by themselves cannot deliver power on demand, especially in heavy industries like mining and metalworking. However, this reliability can be achieved with a combination of batteries and diesel generators. Becoming fully independent from diesel is difficult for a mine, but energy costs are reduced drastically when solar panels and batteries are added to the energy mix. Mining companies can combine these energy resources in microgrids, improving resilience while reducing electricity costs.

Since solar panels lack moving parts, they are not subject to mechanical wear and their service life can exceed 25 years. On the other hand, diesel generators are more demanding in terms of maintenance. In addition to the energy savings, solar panels offer maintenance savings in heavy industry. However, mining companies in particular must ensure that the solar array is cleaned regularly, since dust accumulation on their surface reduces production.

With current technology, batteries have a shorter service life than solar panels, and the best brands typically have a 10-year warranty. This means that mining companies can expect to change batteries twice during the service life of solar panels. However, batteries are a less mature technology – cost reductions and service life increases can be expected in the short term.

Reducing the Environmental Footprint of Mining Operations

When compared with the diesel generators used in mining operations, solar panels also offer the advantage of zero emissions. Diesel generators may produce around 1 kg of CO2 equivalent for every kWh generated. For example, if a diesel genset delivers 10,000 kWh of electricity, nearly 10 tonnes of CO2 eq will be released.

Since solar panels produce electricity with zero emissions, every kWh is keeping 1 kg of CO2 eq off the atmosphere. Considering the high energy consumption of the mining industry, the environmental benefit of solar power systems is significant.

Mining companies can deploy solar panels without an upfront investment by signing a Power Purchase Agreement (PPA). The solar panels and battery systems are installed and serviced by providers, while mining companies can focus on their core business. Instead of paying for the system upfront, clients can pay per kWh delivered during an agreed contract term, with the option of purchasing the system at the end.

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