In June, First Solar began construction on a groundbreaking $23.4 million power plant in Far North Queensland, after sealing a deal with mining giant Rio Tinto Alacan. It’s the first time a mining company has adopted renewable energy for its local operations, marking a major milestone for projects and communities that operate outside Australia’s main electricity grid – which up until now, have been reliant on costly diesel fuel.
A 6.7MW collaborative solar project to supplement the daily diesel consumption at Rio Tinto Alcan’s (RTA’S) bauxite mine in Weipa could be the key to a more sustainable mining industry, one that is being increasingly burdened by escalating energy costs.
The farm is the first off-grid solar photovoltaic (PV) solar project of its size for the mining sector in remote Australia, where there is no access to the country’s main electricity grids. It’s also the first of its type and scale in the world and, importantly, has the potential to unleash billions of dollars of similar investment.
Costing more than $23 million, the project will connect to RTA’s existing mini-grid at Weipa. It will also provide power to the company’s processing facilities and deliver electricity to the township and port facilities on the Western Cape York Peninsula under a 15-year Power Purchase Agreement.
The project will be developed in two phases by one of the world’s biggest PV solar systems makers, First Solar, and constructed by Australian solar firm Ingenero. As part of the first phase, which is expected next January, First Solar will install 18,000 of its PV panels (thin-film technology mounted on steel and aluminium structures), giving the farm a PV panel capacity of 1.7MWp DC and an output capacity of 12.MW AC. This is expected to provide up to
20 per cent of the midday power supply for the remote Weipa grid, reducing daytime diesel demand.
Subject to the success of the first stage, an additional 5MW hybrid solar system with storage capacity will be built to enable up to 100 per cent of the midday load to be serviced by the solar farm. Overall, the system will displace approximately 2.3 million litres of diesel and offset 6170 tonnes of CO2-e each year.
Aided by the Federal Government, the project has received an initial commitment of $3.5 million from the Australian Renewable Energy Agency (ARENA). An additional allocation of up to $7.8m is expected in the project’s second phase.
Once completed, the Weipa Solar Farm will complement existing diesel generation at Weipa with a reliable source of electricity by reducing RTA’s exposure to future fluctuations in diesel fuel prices. Of course, it also supports the company’s mandated commitment to the environment.
Combating pressure on the mining industry to remain competitive
Volatile commodity prices are placing significant pressure on mining industry operators to reduce risk and costs in order to remain competitive.
The Weipa mine, for example, relies on regular and expensive shipments of diesel to run, due to its location on the Cape York Peninsula.
The Groote Eyelandt mine in the Northern Territory was recently closed due to fuel costs proving too high to maintain. Such decisions have motivated the mining industry to focus on alternative energy technologies, such as solar.
And, it’s a challenge that will continue to become more prominent as the cost of diesel continues to rise and the cost of remote hybrid solar moves towards diesel-power parity in the coming years.
According to a 2013 Austrade Report, there is more than 1.2GW of diesel generation capacity installed in off-grid Australia, which supplies electricity to mines and communities. With a need to exploit deeper and lower grade ores, there has been a trend towards higher energy intensity. And, with a further 170 mining projects in feasibility phase, the industry’s off-grid fuel requirements will continue to rise, making fuel savings and fuel security an operational imperative.
This is what makes the Weipa Solar Farm so important. If the solar power and storage is employed intermittently, the use of daytime diesel could be completely ceased at certain times. With the Power Purchase Agreement offered by Ingenero and First Solar – which offers competitively priced, fixed cost power – the industry can begin to overcome its scepticism and begin to view renewable energy solutions as a viable way to assist mining operations to reduce costs.
“The project will be a working example of technology that can offer not just a cleaner but a cheaper alternative to fossil fuels in the near future,” Ingenero’s general manager of generation Rodger Whitby says.
“It is important to understand the unique challenges the industry is facing and provide a long term and holistic solution. Our hope is that the Weipa project will provide a convincing argument and proven process that will encourage Australian miners to consider solar.”
Weipa project the “tip of the iceberg”: ARENA
One of the hopes of the project is it will serve as a demonstration of renewable energy in action, to show miners the benefits of the technology, particularly when cutting energy consumption costs.
Significantly, it will also help increase awareness and knowledge within the mining sector of the processes required for the planning, building and operation of utility-scale off-grid energy applications on remote mine sites.
ARENA chief executive officer Ivor Frischknecht said off-grid communities and businesses have had little choice but to rely on diesel generators that are expensive to run and subject to volatile fuel prices.
“Transporting fuel long distances for generators is dangerous and subject to variable weather conditions – it is a costly, unpredictable arrangement that doesn’t make good economic sense,” he said.
“ARENA has made it a priority to work with major mining companies to find solutions and overcome roadblocks associated with integrating renewable energy into off-grid locations. The information and data generated by this project will be captured and transferred through a knowledge sharing plan negotiated with ARENA and will ensure the sector is in a good position to advance commercially viable, off-grid renewable energy solutions.”
According to Mr Frischknecht, miners need to be confident about the integration of such technology.
“I think this is just the tip of the iceberg, energy security is a big deal for miners. ARENA sees mining as a huge potential off-grid user of renewable energy in Australia and congratulates Rio Tinto Alcan for paving the way for other mining operations to adopt renewable energy and offset diesel use through this landmark demonstration project,” he said.
It’s the first project to be funded through the industry arm of ARENA’s Regional Australia’s Renewables Program.
First Solar and its partner, Queensland-based solar power company Ingenero, are investing $12.1 million in the project, with a total of $11.3 million conditionally committed by ARENA.
First Solar is a leading global provider of comprehensive PV solar systems that use its advanced module and system technology. Ingenero is an Australian leader in the delivery of solar energy for commercial, industrial, utility and residential customers. Their experience includes some of Australia’s most iconic installations including the Fraser Coast 400kW Community Solar Farm, 235kW Alice Springs Airport CPV Solar Farm and Australia’s largest rooftop solar power system (1.5MW) at the University of Queensland.
First Solar is also in talks with several other mining companies for potential projects of the same nature. The company’s vice-president of business development Jack Curtis said he is highly encouraged with the developments.
“This is a landmark project that demonstrates how solar PV can be used to power the resources sector. We really see this project and Australia, as the incubation location for a much more global platform for global collaboration with mining companies like Rio Tinto,” Mr Curtis said.