effective employment of solar pv minigrids in african mining
TRANSCRIPT
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Employing Solar PV in African Mining
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The Mission of GG Energy
STABLE POWER AT STABLE PRICES!
Generating needed & affordable power Targeting long-term contracts directly with
bankable private customers in the African Industrial & Mining Sectors
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GG Energy Credentials
• Track record of 150 MW installed and operating renewable energy projects
• 100 plus MW under development in the Mining Sector
• Financed over $350 million sustainable energy projects
• Founding Sponsor of US Power Africa Initiative
• Working relationships with global technology leaders
• Financial Strength – Commitments in excess of $400MM for initial projects
• Sponsors of African Energy & Mining Forum
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Increasing Demand for Power At Mines
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Source: World Bank – The Power of the Mine
• Forecast Demand CAGR of 5.6% to 2020 • Continuous growth in South Africa • Increasing growth in Sub Saharan Africa
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Macro Challenges to Power at Mines
Mining in Africa suffers from Macro issues: availability, quality and pricing:
• Declining Hydro levels
• Where gas is available - Slow integration of domestic natural gas supply:
o Little attention to national policy
o High cost of extraction
o Glut of supply limits price and market potential
• Overall move towards Cost reflective tariffs
• Potential Introduction of Carbon Tax – impacting expanded use of coal
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Unstable Power...
Power Issues Facing Mines in Africa
Poor grid maintenance and distribution leads to erratic voltage levels and power availability.
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Intermittent Outages…
Power Issues Facing Mines in Africa
Power availability issues are agnostic to grid availability especially in core mining countries... South African issues are no less acute.
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Escalating Pricing Uncertainty!
Power Issues Facing Mines in Africa
* Simple linear extrapolation based on approved annual average tariff increases
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Overcoming the Power Crisis at the Mines
In sum, Africa is engulfed in Long-term structural issues leading to:
Unstable Power
Intermittent Outages
Escalating Pricing Uncertainty
Mines seek Power Reliability and Quality, which for many reasons is not fully present in Africa.
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Why Go Solar?
Important Reasons for deploying Solar PV at Mines:
1. Reduce risk of power loss from supply disruptions;
2. High potential to reduce and stabilize electricity costs;
3. Reduce carbon emissions;
4. Enable Mines to repurpose land used;
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5. Opportunities for cooperation with neighboring industries/communities.
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Powering Mines with Solar PV
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Off-Grid
• Long-term pricing hedge
• Thermal-Solar Hybrid for lower cost of power
• Baseload with Energy Storage
• Rapid Deployment
On-Grid
• Long-term pricing hedge
• Load Balancing
• Rapid Deployment
Weak-Grid
• Long-term pricing hedge
• Load Balancing
• Grid Stabilization
• N2 Baseload with Energy Storage
• Thermal-Solar Hybrid for lower cost of power
• Rapid Deployment
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Winning plan for Solar PV
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• Fast and flexible deployment • Provide for Long-term pricing hedge • Road map to succeed in deployment of Solar PV:
a. Technical Challenges b. Commercial Issues c. Regulatory statutes
Structure for success!
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Overcoming the Technical Challenge Customized Solar PV solutions must provide for:
Power Reliability and Quality Ensure continuous operation and performance
MAINTAIN MINE SAFETY!
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On-Grid Applications:
• Meet Load Shedding needs
• Ability to maintain power over tie-line controls
• Support Gen-sets for Black Start during power failure (Island Mode)
Hybrid Solutions for Off-Grid Applications:
• 24/7 Solution
• Conventional Power base
• Solar PV provide 60 to 80% of load
• Utilize storage for load balancing and minimize spinning reserve requirement
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Complete Micro-Grid Solution
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GG Energy and CAT provide integrated Power Solution for 24/7 efficient operation: • Diesel/HFO Generators • Solar PV Power Modules • Battery Storage • Hybrid Controller
Minimize Fuel Consumption Seamless integration Reduced emissions
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Solving the Commercial issues • IFRS treatment of PPA or Lease arrangements on
Balance Sheet
• Capital Costs – Inverse relationship between Solar PV and Conventional Power
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• Pay upfront – Solar PV Take-or-Pay Framework vs. Pay-as-you-go for Conventional
• Life of Mine – often shorter pay-back period than Solar PV project!
• Potentially Stronger Business Case for Solar PV/Hybrid systems in remote, off-grid locations! Shorter Life of Mine; Offsetting higher priced fuels
• Consider using Mining company subsidiary SPV structure for Power company – becomes a self-production venture.
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Effective Financial Structures • Balance risk allocation to those best able to manage it!
o Contract/Termination Risk – according to source of default
o Construction Risk – seek strong EPC to backup
o Payment Risk – possibly include ultimate off-taker coverage
• PPA Payments – target to Levelized cost of electricity and expected cost of power
• Separate Availability (capacity) and Minimum Output payments
• Optimize debt sources – Integrate DFI lending and ECA coverage for longer tenure and lower cost
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How Making Renewables work
Work Cooperatively – IPP and Mine are not adversaries!
• Focus on Grid Parity – Seek integrated solutions priced to meet customers long-term power costs
• Investigate Lease Models – Match commitment to buy power consumed
• Expand off-take group – sell to mining consortium/ regional power pools
• Include sustainability and environmental issues in cost-benefit analysis
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FOCUS ON THE LONG TERM!
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Thinking “out of the Box”
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Tender for Partners not Projects!
• Saves time and costs on all sides
• Work cooperatively for the most cost-effective solution and approach
Secondary Off-takers – Look for
local off-taker opportunities to backup primary
PPA
Establish a joint-venture with the IPP:
• Self-production Model
• Overcomes regulatory and commercial hurdles
• Mitigate potential tax/balance sheet implications
Bring in Utility as a partner:
• Direct PPA between IPP and Utility
• Mine can provide guaranteed off-take
• Utility provides load balancing
• Grid benefits from stabilization from Solar PV
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Closing Words
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• Long-term structural issues impacting Energy supplies and pricing;
• Mines have to be proactive and bold in sourcing alternative power sources;
• Solar PV is the fastest clean energy source that can deployed at Mines;
• Cooperation between the IPP and the Mine in early stages of a project is critical to successful and beneficial implementation of Solar PV Solutions at Mines -
• Collaboration is the Best way to overcome:
Regulatory obstacles
Technical issues
Commercial challenges
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Questions and Follow Up
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Ira Green Managing Partner
GG Energy Holdings LLC Tel +1 646 443-0513