Renewables head off grid, but wind farms last longer than many mines, and that’s a problem

Western Australian mines are breaking records as onsite renewables and batteries crowd out fossil fuels, but for wind developers they aren’t always the best solution because mine lives often don’t match up with project needs.

The state is creeping up the list of investors’ preferred renewables locations in Australia thanks to its uber-quick approvals processes, but the small market means big energy developers are eyeing the mining industry for demand.

“Western Australia is fantastic in many respects. A lot of that is around the ability to develop large scale resource projects and have large scale load requirements,” says Sam Pearce, chief of super fund-owned, Perth-HQ’d Collgar Renewables.

“[However] most resource developments will have a mine life issue that may not match what’s required for an offtake for a large-scale wind project to have enough tenor in it, to get an appropriate debt structure and appropriate capital structure.

“The reserves that are available for the mine to develop really set the length of time that a customer is willing to commit to.

“That then really sets the challenge for us as a developer of a project to try and find a product that can match into that.”

It’s not the only mismatch between what mine owners need and what renewable energy projects can offer, he told the Australia Wind Energy conference in Melbourne this week. 

The miners that are breaking the records, Liontown Resources, Bellevue Gold and Lynas Gold, with Fortescue looking to follow with several solar and wind projects under construction, have all built onsite generators to replace diesel and gas.

Bellevue in particular said in June that its remote gold mine, which has an average load of around 12.5 megawatts (MW), completed 155 consecutive hours running entirely on renewables, and with “engines off.”

Its average renewable share is well above the 80 per cent it targeted, often reaching into the 90 pct range on a monthly basis, and an average 93.8 per cent over February.

It’s that level of reliability that large loads in Western Australia’s mining sector are looking for from their electricity arrangements, Pearce says.

“Some big smelters… their cost of energy pales in comparison to the loss of revenue that might come from a large gold mine, for example, shutting down for 12 hours because they didn’t have the battery charged up appropriately,” he says.

“Physical firming becomes really important to them in that circumstance, and that then leads to [the question of], if we’re going to have to pay for onsite generation, why are we paying for generation from elsewhere as well?”

Western Australia is closing its last coal power stations by 2030, which adds to the “whirlpool of issues” in the state that developers and miners are trying to work around – not least an unsophisticated energy finance market.  

Pearce says financial derivatives, which long-term corporate electricity buyer Telstra uses to hedge its energy risk, “is not evident at all in the WEM.”

“It’s a physical market. There’s really no financial overlay on it,” he says.

“There isn’t much by way of financial derivatives sitting over the top of the bilateral type of arrangements, which tend to dominate the West Australian market, so that’s an area that I think would really be worthwhile exploring.”

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