Solar-diesel-hybrid power plants at mines: Opportunities for external investors
The business case for renewable energy projects in mining is very positive, especially for remote locations. Nevertheless, the number of solar and wind installations that have already been built does not reflect this fact. One of the main reasons is that for renewable energy projects the vast majority of the expenses are investment costs that occur when the project is built. The energy bill has to be paid beforehand and is not proportional to consumption as diesel based electricity. In addition, many mining companies operate with rather short pay-back periods, renewable energy projects are very often long-term investments. Traditionally, they are calculated for investment horizons of 20-25 years. This is another misfit for renewable energy projects and the mining industry.
Renewable energy investors are used to these longer pay-back periods. They invest in projects that are long-term, low risk and they expect, as well, lower returns. Normally their projects are based on feed-in-tariffs (FiTs) or long-term power agreements (PPA) and are connected to the grid. Grid-connection is important because it consists of an alternative in case the FiT is withdrawn or the PPA is ended. The latter mainly happens when the contract partner files for insolvency.
The methodology employed in the study is expert interviews. A total of 21 interviews was conducted with experts from the financial / investment, mining and renewable energy sectors.