Australia’s mining sector faces challenges to its competitiveness; operating costs are being adversely affected as a result of volatile commodity prices and growing international market pressures. Diesel fuel-generated power used in typical remote mining projects is generally reliable and quick-to deploy; however it is ongoing expensive operating cost. Many mines and communities in remote locations source electricity from diesel generation, and often pay over $300/MWh in fuel and carbon only (i.e. excluding CAPEX). These costs are expected to rise over time and are vulnerable to price shock events or supply chain interruptions in international markets.
Solar photovoltaic (PV) and other renewables can be integrated with existing diesel units to provide a highly reliable power supply. Such renewables now provide a cheaper source of electricity while maintaining the mining industry’s stringent reliability requirements; some renewables are now cheaper than diesel power — supplying electricity at approximately $226/MWh. Also, significant funding and concessional rate financing have recently become available to support the development of remote solar-diesel (or solar-wind-diesel) hybrid systems, including:
up to $2.2 billion of as-yet uncommitted grants through the Australian Renewable Energy
Agency (ARENA) and is now seeking mining industry partners,
up to $10 billion of concessional financing for emerging renewable technologies through the
Clean Energy Finance Corporation (CEFC) and this commences July 2013,
ongoing revenue support through the Renewable Energy Target scheme, and
other regional support programs administered by various governments.
This paper explores:
the business case for renewables – what applications and when to consider them,
the potential operating cost savings if solar was integrated,
the technical challenges and common pitfalls, and how to overcome them, and
the upfront investment costs and whether the site is eligible for Government subsidy programs.