Some may snicker when the mining industry and ecological sustainability are mentioned in the same sentence. Minimizing environmental impact is no easy task for an industry that consumes vast water and energy resources to rip mountains of ore out of the ground and process them with chemical cocktails. But on the energy front in recent years, the potential of renewable energy technologies in mining operations, especially photovoltaics, has become a hot topic.
Just take a look at the guest list for the Renewables & Mining Summit and Exhibition that will take place in Santiago, Chile, 6 – 7 May. In attendance will be major players from Chile’s mining and electric industries, government agencies and industry associations, as well as a mix of domestic and international renewable energy companies vying to improve their position in the bustling Chilean market. The country’s Energy Minister, Máximo Pacheco Matte, who was in Germany last month promoting Chile´s renewable energy potential at the Berlin Energy Transition Dialogue 2015, will deliver the keynote speech.
All this hubbub underscores the momentum of economic and political importance that the issue of sustainable energy in mining has gained. As little as five years ago, for mines to dabble in renewable energy was less a function of competitiveness and more a public image exercise, or “feel-good PR”, as Chris Benedetti of Sussex Strategy Group in an interview with SNL Metals & Mining puts it: “That’s changed. As the price of renewable technologies has diminished significantly, then it starts to become not only an environmental attribute, but is also just a smart economic perspective”.
In most countries, mines have traditionally counted on conventional fossil fuels to meet their energy needs and are now scrambling to respond to rising fuel prices at a time when commodity prices are flagging and operating margins shrinking. The quality of grid connections in remote areas can be spotty, electricity prices erratic and fuel supply chains costly for on-site thermal generation. Photovoltaic technology offers concrete advantages, particularly where energy costs are high and sunshine is plentiful. PV foregoes the need for fuel logistics chains and the cost per kW of the technology continues to drop, especially with respect to large utility-scale installations necessary to generate the kind of juice a mine demands. PV plants offer clean, reliable supplementary electricity, which is now as much an economic and political imperative as a public relations boon.
![By U.S. Air Force photo/Airman 1st Class Nadine Y. Barclay [Public domain], via Wikimedia Commons, Chile, photovoltaic, mining, renewable energy](http://milkthesun.blog.en.s3.amazonaws.com/wp-content/uploads/2015/04/Giant_photovoltaic_array.jpg)
Chile’s Dilemma & Opportunity
In Chile, the pressure is on for the government to ensure that the electricity demand of its star industry will be met. Copper makes up roughly 60% of the country’s exports and 20% of its GDP. While Chile has reaped the rewards of its metallic endowment, the country’s dependency on its mining sector has created serious energy challenges. Its mining sector already gobbles up 90% of the electricity generated in the Northern grid and the electricity consumption of the industry as a whole is predicted to double by 2025. Energy operating costs make up about 14% of the total cost of production and over a quarter of the cost per unit of copper. Compared to their counterparts in neighboring Peru, Chilean mines pay twice as much for energy.
Luckily, the bulk of Chile´s geological payload is perfectly located to exploit its other natural endowment: sunlight. The breathtaking Atacama Desert, a Mars-like swath of the world’s harshest terrain, is the stage for most of the mining activity in Chile and also the target location of PV project developers. The Atacama has the highest solar irradiance in the world with 275 watts per square meter. Together with the high price of electricity, these ideal conditions have led to PV generation parity for utility-scale projects and grid parity for residential customers on the northern grid.
The Chilean photovoltaic market has subsequently exploded. By the end of 2013, a total of 4 megawatts had been installed. Nearly 400 megawatts were installed by the end of 2014, most in the sun-soaked North, with 873 megawatts under development and 8 gigawatts of projects approved in the pipeline. Among the projects were notable collaborations. American PV developer, SunEdison, and Chilean mining and steel company, CAP Group, inaugurated the connection of the 100 megawatt Amanecer Solar Project outside of Antofagasta last year. Mining firm, Collahuasi, and Spanish developer, Solarpack, have started construction on the 25 megawatt Pozo Almonte plant in the Tarapacá región.
![Chile, photovoltaics, mining, renewable energy, By Freddy Alexander Bugueño Tolmo (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons](http://milkthesun.blog.en.s3.amazonaws.com/wp-content/uploads/2015/04/Valle_de_la_Luna_San_Pedro_de_Atacama_Chile..jpg)
Challenges & Outlook
The marriage of renewable energy and mining clearly makes economic, environmental and political sense under the right conditions. However, challenges still remain for projects in the Chilean pipeline. Lead times are long for larger projects and renewable energy projects are not subsidized by the government. Finding the proper funding can be tricky, particularly when a PPA with an off-taker like a mine or foundry is not immediately available. Explains Mike Garland, CEO of U.S. power company, Pattern Energy, in an interview with the Economist, “There are people building projects and selling into the spot market but it’s a very risky business and it’s hard to get long-term financing for it”.
It is also important to note that despite the important synergies that exist, sustainable energy systems won´t be providing the bulk of mines´ power any time soon. The sheer volume of electricity consumed by the mine and the lack of feasible storage capacity ensure that renewables will play a supporting role in the energy mix of mines. According to Chris Benedetti of Sussex Strategy, mines are extremely vulnerable to changes in the supply of electricity and for solar and wind, “a penetration rate of energy of 30% to 40% is achievable, but above that it is very hard to use renewable energy, and miners will still need to use diesel for 70% of their energy needs”.
For the PV industry, the Chilean experience, though a case study of extremes, is not unique. The topic of mining and renewable energy is just beginning to take off. The Renewables & Mining Summit and Exhibition is becoming active in many regions of the world: North and South America, Africa and Europe. It appears that conditions in many countries may be ripe for mines to take the necessary steps down the road of sustainability.
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