Investors moving on offgrid PV, mining leading the way

This week the Australian Renewable Energy Agency reported that module installation had commenced at Australia’s largest renewables mining project. On completion, Sandfire Resources’ DeGrussa Copper-Gold Mine in Western Australia will be equipped with a 10.6 MW PV power plant to supply the mine’s daily operations.

Single axis tracking will be deployed on the project that will utilize 34,080 solar PV modules. The juwi Group is acting as EPC on the project that will offset approximately five million liters of diesel fuel annually.

ARENA is providing AU$20.9 million (US$15.25 million) in funding for the AU$40 million (US$29.2 million) project and the agency hopes it will provide the mining industry with an example to be rolled out elsewhere.

While this is underway, international investors are showing increasing interest in offgrid projects for mining operations. Offgrid renewables consultant Thomas Hillig says that he is aware of one investment group having set aside €100 million for offgrid renewable investments.

“Over the last months we have done several introduction workshops to solar and wind diesel hybrid markets which address investors’ needs,” THEnergy’s Hillig told pv magazine. “After we announced a collaboration with an established renewable energy investor who is setting up a €100 million (US$109 million) plus fund for investing into off-grid projects, we have been addressed by even more investors.”

Hillig explained that as traditional renewable incentive schemes such as FITs, ROCs and tax incentives have declined or been wound back, development in sunnier regions has picked up.

“In these regions, the business case [for PV] is quite often excellent, but local governments or utilities are not always the most reliable PPA contract partner for investors,” said Hillig. “Mines often have to pay a high price for electricity: particularly if they are located in remote locations and diesel has to be transported over long distances. Mines consume much electricity that means that there is a good potential for large solar and wind power plants – often much more than in other industries.”

Offgrid projects do come with inherent risks. THEnergy’s Hillig said that often there is no alternative offtaker if a mine operation is shuttered due to commodity price fluctuations, however that this risk it mitigated by multinational mining groups’ good standing with the investment community.

While it may seem a relatively niche application of solar PV, the potential to supply mining operations with renewable electricity from PV in countries like Australia, Africa and parts of Latin America is in GW-scale. Ray Wills is the Managing Director of Future Smart Strategies and he says that as production and fuel-saving data begins to flow in from projects such as DeGrussa and BHP’s Weipa project in Queensland, that mining companies “will move very quickly” to employ solar PV in remote locations.

“Because these projects are being funded by ARENA and others, that data will become public and once that data is public I think many mine sites will start to move very quickly,” Wills told pv magazine. “I am suggesting as early as early 2016 we will see a lot of the miners step up and they’ll move past pilot [projects] and trialing to actually saying that solar will bring down operational costs.

We know that there is at least 700 – 800 MW of demand in diesel power generation alone [in Western Australia], so there is at least that much and that is just for the miners.”

The DeGrussa project will also employ battery storage, in the form of a 6MWh battery system.

pv magazine has formed a media partnership with the Energy and Mines conference series. The first of the 2016 conference series will take place in London on January 28-29.