In sustainability terms, RMI estimates that electrification and deployment of renewables in the mining industry could reduce up to a gigaton of carbon emissions from the sector.
How the Mining Industry Can Win with Renewables
Kevin Haley and Paolo Natali | Rocky Mountain Institute
Why does the mining industry represent a sustainability opportunity?
Of all the places to find sustainability advancements, mining doesn’t exactly jump out as a prime candidate. But in fact it is – with high energy consumption, distributed load centers, and the ability to convert an additional 30 percent of its existing energy load to electricity, the falling cost of renewables and energy storage is aligning with the needs of mining companies worldwide.
Just how significant is this opportunity?
In sustainability terms, RMI estimates that electrification and deployment of renewables in the mining industry could reduce up to a gigaton of carbon emissions from the sector.
Right now, conservative estimates of the mining industry’s energy use is about 1.25 percent of global energy consumption, or around 1,400 Terawatt hours (TWh) in 2014. By comparison, the total energy consumption for the country of Spain in the same year was about 1,300 TWh. RMI estimates that approximately 32% of a mine’s energy load is already electric, meaning cost-effective renewables can have a significant impact today. And with technology substitutions, RMI estimates that up to an additional 30% of load can be electrified, eliminating the need for gasoline, coal-fired power, and cutting diesel fuel use in half.
Is the switch to renewables going to be cost-prohibitive for mines or mining companies?
Generally speaking, we do not think cost is a barrier to change. Each mining site and company has unique characteristics that should be considered – this is a big part of how Sunshine for Mines is hoping to assist these companies in their transition to renewables – but by and large, renewables are already cost-competitive with the current costs for fossil fuels. For example, since 2009, the global levelized cost of energy (LCOE) for onshore wind has dropped by 66 percent, and global solar LCOE has dropped by 85 percent.
RMI’s insight brief also highlights research from Wall Street firm, Lazard, showing that solar is cheaper than diesel-powered generation across the board. Given the prevalence of diesel gen in the mining sector, and upgrade to solar can immediately start cutting costs. Furthermore, wind and solar can be highly competitive in relationship to utility-delivered power costs. The South Africa case study in our Insight Brief shows that average utility prices have been increasing since 2006, and are now higher than utility-scale wind and solar PV tariffs in the country. Again, this evidence supports a scenario where savings are available today to mining firms willing to replace a portion of their electricity load with renewables.
Outside of cost savings, how else can mines benefit from a switch to renewables?
Investing in renewable energy solutions can do more than cut carbon and save money – it can also create shared value for local economies. With mining companies looking to meet anywhere from 20 percent to 40 percent of their energy demand with renewables, these investments could lead to significant employment growth for local manufacturers, installers, and service providers.
New energy technologies can also lead to improved community relations. Microgrids, for example, are becoming an increasingly popular way to manage renewable energy systems, storage, and locally dispersed load centers. In the context of mining, a renewables + microgrid solution could provide ancillary benefits to local communities lacking infrastructure or access to energy. With the global microgrid market poised to top $35 billion by 2020, mines looking to invest in a complete renewable energy solution can start taking advantage of economies of scale in the microgrid industry, creating shared value that benefits both mines and the surrounding community.
And mitigation of climate risks goes beyond carbon reduction for the mining firm itself. Take the country of Chile for example. Chile has a national target of 20 percent renewable energy by 2025, which is included in its Nationally Determined Commitment to the Paris Agreement. According to a 2015 study, the Chilean mining industry consumes 38 percent of all electricity produced in the country. Should the government of Chile want to find a business-friendly climate solution that helps it meet the 20% renewables goal, working with the mining sector might be a good place to align mutual interests.
How does Sunshine for Mines play a role in advancing renewables in mining?
Sunshine for Mines is a relatively new program within RMI, but we’ve already started working with some of the biggest mining companies worldwide to provide portfolio analysis, review business strategy, and make recommendations across the transaction timeline as firms look to procure renewable energy and energy storage solutions. Our team has a strong legacy of electricity systems expertise at RMI, and we are solely focused on applying our knowledge of energy and business models to the mining industry.
We hope to work with even more companies, as a neutral third-party, and find new, innovative ways to reduce energy spend and cut carbon at the same time. We partner with major engineering firms to ensure our strategies are sound, and so far our work has been well-received.
As sustainability becomes a requirement for businesses worldwide, we’re hopeful that companies will take the renewable energy opportunity seriously and explore tailored solutions – as opposed to making false assumptions about what’s possible. We hope our research is the first step toward shining a light on renewables in mining, and we’re looking forward to a world where energy intensity need not imply carbon intensity.
Additional reading
Blog: https://rmi.org/news/digging-carbon-cuts-mining-industry-can-win-renewables/
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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