CSP potential for mining in Australia
Mining and CSP would appear to be an ideal fit in some of the world’s most mineral-rich countries because these combine plentiful sunshine and intensive energy demands from the sector.
The logic is clear: why not build CSP plants on some mine sites in order to power extraction and processing with cheaper, cleaner, abundant energy? This would not only cut carbon emissions and mining’s heavy reliance on fossil fuels but also provide price stability, in contrast to the volatility of diesel over the relatively long cycle of most mines.
This double benefit – environmental and economic – could potentially be reaped from Northern Mexico to South Africa, Namibia, Botswana, South-western USA, Peru and Chile, analysts told a CSP Today special report in July 2013.
In fact, the first CSP plant in Latin America has already been installed at a Chilean copper mine, Minera El Tesoro, a subsidiary of Antofagasta Minerals. This is a small parabolic trough unit providing 7MW for process heating.
Now the spotlight has turned on Australia. SolarReserve, based in California, announced at the end of last year that it was opening an office in Perth to pursue both large-scale CSP and photovoltaic projects, with a focus on the off-grid mining sector. This could include gold, uranium, iron ore, copper and other mines.
In Western Australia alone, more than 1,000 operational mines run primarily on diesel, according to SolarReserve. The fuel is often trucked hundreds of miles to remote off-grid locations at high cost.
The company says its own solar thermal technology, with integrated molten salt storage, could instead deliver a reliable, cost-effective baseload supply of electricity at many of these sites.
SolarReserve has been researching into the Australian mining market since 2009. However, although its new base in Perth can be seen as a declaration of intent, mixed signals are emerging about whether the company can make the breakthrough it seeks in the short term. The company says it has targeted 2018 as the date when it hopes to have such a plant up and running, taking into consideration the time it takes to develop, finance and build a project.
On the plus side, SolarReserve’s 110MW Crescent Dunes plant at Tonopah, Nevada, is due to start producing electricity for NV Energy by the middle of this year. Executives say this will give a much-needed boost to the sector as another viable demonstration of thermal solar power in action. This will be the first of its kind with integrated storage.
“We’re starting to get quite a few requests from executives around the world to tour the facility,” says Tom Georgis, senior vice president of SolarReserve. “Some are Chilean, African, Middle Eastern, Asian and we’ve had our share of Australian visitors too.”
“Once it’s operational, the perceived technological risk and that premium that’s built into the feasibility studies of mining entities and their engineering firms will start to dissipate. They will become much more comfortable recommending to their board that this is a viable option.”
On the other hand, the renewables sector in Australia, including CSP, has been dealt a blow with new prime minister Tony Abbott planning to cut $435m from the Australian Renewable Energy Agency (Arena) as part of carbon tax repeal legislation.
Arena, which has helped fund solar and wave energy projects, will also see deferred until the next decade $370m that was announced in the 2013 budget.
Tony Mohr of the Australian Conservation Foundation said the axing of the $435m would move the country “to the back of the global race for clean tech”, though the move will not affect projects already approved.
For its part, SolarReserve also admits to disappointment at the threat to renewables subsidy in Australia while insisting it will not change the company’s strategy there.
“We are not reliant on those programmes but of course we would love to see them funded because we think they are good for Australia and for the mining sector. We are still going to be able to compete on pure economics,” Georgis says.
SolarReserve says it could easily beat the fuel price of most mines, which is typically the equivalent to $250 to $300 per MW/hr. “For our Nevada project the PPA (power purchase agreement) price published by the Public Utilities Commission is $135 per MW/hr. There is some subsidy around that but even without it we would be far cheaper than diesel.”
Key to the economic viability of CSP at any given mining project are size and duration. The technology requires considerable upfront capital – including transportation and construction costs – therefore SolarReserve is first targeting very large mines with a minimum 18 to 20 year commitment to operations, and perhaps as long as 30 years.
This would involve configuring the utility scale version, i.e. between 100MW and 150MW, for baseload generation at off-grid mines.
However, it is also looking at the potential for “redeployable technology” that could be cost competitive at much smaller mines. “If a mine does only last 10 to 15 years we can disassemble the solar thermal facility, shift many of the components and erect them at a different location.” In this case the electricity requirements might only be 30MW or 40MW,” Georgis says.
Another inherent advantage of CSP with storage is that the thermal component can be used in many mining processes, allowing deeper access to minerals and more economical operation.
“The key to any electricity production is scale. That means we need to build two, three, four of these in Australia so we can optimise the supply chain, reduce labour costs, reduce the technological risk premium – which means our cost of capital from the lender goes down and we can shorten the construction period.
“So kickstarting project number one is essential and that’s why we’re here.”