Energy storage, PV-hybrid systems offer huge potential for off-grid mining sector

Fuel savings for the off-grid mining sector can nearly double with combined storage and PV-hybrid systems, according to a new study presented by Berlin-based consulting firm Apricum last week at the International Renewable Energy Storage Conference in Düsseldorf, Germany.

While only limited fuel savings have been possible until recently, the combination of storage units and PV-hybrid systems now offer considerable economic benefits while maintaining a reliable power supply, according to the report.

Citing a market potential of several gigawatts, Apricum says energy storage with PV-hybrid systems create “a highly compelling business case both for mine owners and storage providers.”

Increasing fuel price volatility, costly transport and periodic supply bottlenecks are leading mining companies to seek alternatives to traditional fossil fuels such as diesel. Continuously declining PV system costs are now driving the hybridization of diesel gensets with PV plants, offering a compelling option, according to Apricum.

“PV penetration of the system is limited to around 50%, at best 60%, because the efficiency of diesel gensets declines significantly when operating below 40–50% utilization,” says Apricum Principal Florian Mayr.

The intermittent nature of PV requires a spinning reserve so that back-up diesel capacity can be ramped up immediately to cover a potential drop in output. For this reason, multiple diesel gensets often run in parallel at low utilization rates, which decreases the generation efficiency and additionally limits PV penetration.

“As a result, only a meager 5-10% in fuel savings can be achieved for a mine in 24/7 operation according to our simulation,” Mayr adds.

According to the study, the addition of energy storage to the hybrid system reduces the need for a spinning reserve: If PV output drops, the battery jumps in and bridges the time required for the diesel genset to ramp up. Consequently, fewer diesel gensets are needed to run and the remaining units can be operated at a higher utilization. In turn, the nominal PV capacity in the hybrid system setup can be increased.

“By adding storage to our simulation, absolute fuel savings are almost twice as great as those from the original hybrid system thanks to the higher operation efficiencies of the diesel gensets and more PV power replacing fossil fuel-based generation. Because of this, both the IRR and payback period remain unaffected despite the additional capex [capital expenditures],” Mayr says.

In Western Australia, for example, Sandfire Resource’s DeGrussa Copper Mine has announced the installation of 6 MW of storage capacity along with 10.6 MW PV to hybridize an existing 20 MW diesel system, which is expected to generate more than $7 million in annual savings, Mayr adds, pointing out that Sandfire’s decision undercores the economic viability of hybrid solutions even in times of low oil prices.

With storage costs further declining, the attractiveness of storage with PV-hybrid systems will only increase, opening a huge, largely untapped market for storage providers, Apricum predicts.

The firm estimates the market size for energy storage to exceed 1 GW for the African off-grid mining segment alone – independent of any subsidy scheme.

“Globally, there are about 50 GW of larger gensets suitable for hybridization with renewables by 2020. This equates to several gigawatts of market potential for energy storage in this segment,” Mayr says.

Last year, U.S. thin-film group First Solar partnered with Australian solar company Ingenero on a diesel-PV hybrid project for mining giant Rio Tinto in Australia. With an initial capacity of 1.7 MW — and the potential to expand by an additional 5 MW — the Weipa Solar Photovoltaic Project is generating electricity for Rio Tinto Alcan’s Weipa bauxite mine, processing facilities and township on the Western Cape York Peninsula in Queensland while drastically reducing annual diesel consumption and carbon dioxide emissions.