New strategies and portability may help PV-for-mining solutions cross financing hurdle

Share

The report, released online today, outlines where PV contracts and the environment of mining differ. And where renewables may be a good fit for mines, this is not reflected in current uptake.

One issue is that mines often have a shorter lifespan than most solar products and are subject to the vagaries of market pricing for what they extract.

Thomas Hillig, the author, writes in the report: “Traditionally, [renewable energy projects] are calculated for investment horizons of 20-25 years. This is another misfit for renewable energy projects and the mining industry. Renewable energy investors are used to these longer pay-back periods. They invest in projects that are long-term, low risk and they expect, as well, lower returns.”

Later, the report adds, “Many mines have a remaining lifetime that is much shorter. In addition, the operation of a mine depends to a large extent as well on the market price of the corresponding raw material. i.e., if for example copper prices are very low, certain copper mines cannot be operated profitably and they are closed down temporarily. This is actually the case for many different mining sectors in mining. As a consequence mining companies calculate internally with a much shorter payback period for investments, often in the range of 4-6 years, sometimes even shorter.”

Hillig told pv magazine that traditionally the fuel expense for mines using diesel was spread over the lifetime of the mine's operation. With solar, that expense comes at the start. Hillig said, “That's something that many mining companies, which were struggling financially, were unwilling to do. Now, many third party investors are leasing rental or PPA solar panels to mines who only have to pay rental or leasing rates, or for the electricity provided in the PPA.”

Funding, acknowledged Hillig, is one of the bigger problems but not one that is insurmountable. One solution, he said, was for the mine to pay a higher price for the electricity generated at the start, with this price decreasing over time. The beginning price could be set at the same price of diesel.

“In extremis, the mine would get the electricity for free after the amortization of the plant,” he said. Another solution he outlined was for installations at mines to be those with higher mobility, meaning that they could be transplanted elsewhere if needed. “The electrics are in the container so the cost for dismantling the power plants and reinstalling it somewhere else is lower. If the mine is completely shut down, there is a Plan B and the installation can be built elsewhere, with less cost.”

The report, which looks at opportunities for external investors, is drawn from a study involving face-to-face and phone interviews with 21 anonymous experts in the finance and investment, renewable energy, and mining industries.

Popular content

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.

Share

Related content

Elsewhere on pv magazine...

Leave a Reply

Please be mindful of our community standards.

Your email address will not be published. Required fields are marked *

By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.

Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.

You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.

Further information on data privacy can be found in our Data Protection Policy.