Andrew Forrest’s Fortescue has announced plans to invest US$680 million ($A952 million) developing a new off-grid renewable energy system to meet growing demand for fossil-free power from data centres and other industry.
The new investment is over and above the $6.2 billion it will spend to eliminate fossil fuels from its huge iron ore mines in the Pilbara, by supplying green energy for power and for electric transport and mining equipment.
And, as flagged last week when the concept was first raised, the new off-grid renewable grid – dubbed the Pilbara Green Energy Project – will likely grow from the 200 megawatts (MW) of firmed power planned in the first phase to multiple gigawatts beyond 2030.
CEO Dino Otranto says the “market is hot” for green power, particularly from data centres developers who want to build as soon as possible, and are hungry for green electrons.
Fortescue is already building 1.2 gigawatts (GW) of solar, 600 MW of wind, and 4-5 gigawatt hours (GWh) battery storage, connected through the addition of 620km of transmission lines to power its mining operations.
It expects to eliminate fossil fuels from those iron ore operations by 2030, and has hinted it could reach that target even earlier, depending on the speed of the rollout of the giant 240 tonne electric haul trucks – more than 300 of them that will start later this year.
It expects to complete the renewable energy supply system by 2028, and is currently building a major 440 MW solar farm at Solomon Airport and will start construction on the 133 MW Nullagine wind project this year.
“Fortescue is already demonstrating in the Pilbara that heavy industry can operate on a fully integrated renewable grid – eliminating fossil fuels while improving cost, reliability and control,” Forrest, the company’s executive chairman, said in a statement.
“We are now extending this model to new customers, particularly data centres, helping meet one of the fastest growing sources of demand in the world.
“This is about replicating our Decarbonisation Green Grid, delivering new green electrons at a scale and speed to market not able to be replicated by fossil fuel.
“It enables a pathway for new industries to operate fossil fuel free, cheaper and faster than traditional alternatives.”
Fortescue and Forrest have been much criticised for their now deflated green hydrogen dreams, but if they get this right on green electrons, it will one of the most significant developments in the green transition in Australia, or anywhere in the world.
Otranto told analysts in a media briefing following the announcement for what amounts to be an extension of the largest behind the metre green grid in the world underlines the fact that there is an insatiable demand for green grids at the moment. and the company is looking to take advantage of that.
“We build out networks faster and cheaper than anyone else. Now, the value potential is pretty eye-watering for us.”
Fortescue flagged the potential for such projects last week when it talked of its ability to build new 100 per cent green grid for $2.5 billion, comprising some 2 GW of wind and solar capacity and 4 GWh of battery storage.
That would indicate “firmed supply capacity” of around 600 MW or more. The first stage of the new green grid announced on Friday is for 200 MW of firmed power, and Fortescue sees a pathway to a multi-gigawatt expansion beyond 2030.
Based on two sets of capacity numbers provided by Fortescue in its quarterly reports and the new green grid announcement, it appears that the first stage of that 200 MW of firmed power will be met by around 300 MW of solar, 200 MW of wind, and up to a gigawatt hour of battery storage.
Otranto cited Microsoft’s new announcement on Thursday that it will spend $25 billion on AI infrastructure, security and skills in Australia as a sign of the surging interest in green electrons.
Many data centres proposals are focusing on gas as a quick, but not necessarily low cost or clean solution, such as this 790 MW one announced by Finnish group Wärtsilä on Thursday, and Otranto says the hunger for low cost, clean electrons that can be delivered quickly is huge.
“Like I said, the market for behind-the-meter green electrons for data centres and hyperscalers is hot at the moment and they’re really incentivised by time to market,” Otranto said.
“So that’s what we have here. We build our networks faster – to a lot of criticism from you (analysts) – a lot faster and cheaper than anyone else, I think now the value potential is pretty high.”
Fortescue also expects the first hot metal to be produced at its Green Metal Project at Christmas Creek in the June quarter, with reduction technology pathways currently being explored.
“The build-out of our green grid is well underway, with 630MW of solar and 133MW of wind generation under construction,” Otranto said in a statement accompanying the March quarter production data.
“As we bring this online, we’re fundamentally reshaping how we power our operations by cutting our reliance on fossil fuels, at a time when energy supply is increasingly uncertain.
“On green metal, the team is focused on delivering first hot metal at Christmas Creek later this financial year, which is a critical milestone for the Project. It provides a clear proof point on the process and allows us to begin product testing as we assess the most competitive and scalable pathway to green iron.”
See also: “Makes no sense:” Fortescue launches major campaign to slash diesel tax rebates for big miners
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