RMI, BHP Identify Half a Gigagwatt of Legacy Mine Site Renewable Power Capacity

Looking for ways to reduce their carbon and environmental “footprints”, the world’s leading mining companies are evaluating and investing in solar, wind, other renewable energy and energy storage technology and systems to power operating mines. A prospective wealth of opportunities exist to do the same at inactive, decommissioned mine sites as well, according to the Rocky Mountain Institute’s (RMI) Sunshine for Mines group.

The concentration of toxic metals, ore, contaminated water and decimated landscapes that originate as a result of mining not only carries substantial monetary costs to remedy and poses threats to human and environmental health and safety, it limits, if not eliminates, options for subsequent, productive use. The declining cost and improving performance of solar photovoltaic (PV), wind power and energy storage technologies and systems, along with favorable government policy and market regulatory changes, is opening up opportunities for mining companies to breathe “second life” into decommissioned, legacy mine sites and those undergoing remediation,” however, RMI’s Sunshine for Mines says.

Joining with BHP, the world’s second largest mining corporation, RMI Sunshine for Mines used the new, proprietary turnkey methodology it has developed to evaluate prospects for solar, wind, other alternative energy and energy storage resources, technologies and systems to be deployed at decommissioned BHP mine sites across Canada and the US. The results are encouraging. “Using the methodology, RMI identified significant potential for redevelopment and a clear subset of sites with a collective potential of over 0.5 GW (gigawatts),” RMI Sunshine for Mines highlighted in a recent blog post.

Installing Solar at Mines
Installing solar at mines reduces carbon emissions at the gigaton scale and demonstrates sustainable mining practices. | Source: RMI

Abandoned Mines: Known unknowns pose threats to human, environmental health and safety

Once the decision is made to shut down, or decommission, a mine site, it does the accounting and financial equivalent of a 180º change in course, shifting from being a capital asset to a long-term liability – at least that’s the way it has been and continues to be. Typically, the terms of modern mining concessions and contracts stipulate that mining companies maintain these legacy mine sites so that they do not pose threats or risks to local populations or the ecosystems upon which they depend. In addition, they are typically obligated to restore decommissioned mine sites to a healthy environmental state, a process dubbed remediation.

The cost of failing to do so strikes deep and lasts long. Nineteen people died and nearby towns were inundated with flood waters after the tailings dam at the Samarco iron ore mine in Brazil burst on November 5, 2015. A purpose-built pond, or small lake, tailings dams hold back water into which mining waste is deposited. The mix often includes toxic heavy metals, strong acids and bases.

Sludge from Samarco’s tailings pond flowed into the Rio Doce, one of Brazil’s principal rivers, killing aquatic and other forms of riparian life and contaminating freshwater for hundreds of kilometers before flowing out into the Atlantic Ocean, Reuters News reported.

The two mine owners, BHP and Vale, have committed approximately US$1 billion to remediation and compensation since. The two companies are committed to allocate an additional $1.1 billion (RRI36 billion) come 2018 under the terms of an agreement signed with Brazilian Federal and State governments in March 2016.

There are more than 60,000 abandoned mines in Australia, BHP’s home country, according to the results of a study undertaken by the Australia Institute. Australia Institute found a lack of reliable data on Australia’s mining activity, while state government agencies were only able to find one instance of a decommissioned mine that had been fully rehabilitated over the past 10 years.

Furthermore, data and statistics on Australia’s abandoned mines are few and far between, raising concerns about the extent and degree to which they pose unrecognized, avoidable risks and threats to human and environmental health and safety, an ABC News report highlights.

Deploying solar, other renewable energy and/or modern energy storage systems at abandoned mine sites could reduce mining companies’ remediation costs significantly while also accelerating the remediation process, according to RMI’s Sunshine for Mines’ growing body of work in this area.

Lazard Levelized Cost of Energy Study
Lazard compared the levelized cost of electricity (LCOE) for solar, gas peaking and diesel generation found at remote, off-grid mining sites, and exposed significant advantages for renewable energy generation.

Converting legacy mining liabilities into assets

Lack of awareness, or conventional skepticism, regarding the costs, returns and reliability of relatively new renewable energy technologies, such as the latest digitally networked solar PV and battery-based energy storage systems, can result in consideration of them being stifled before they are even given a chance, however, Sunshine for Mines points out.

The reality, though, is that innovative renewable energy and storage solutions can establish a sustainable revenue stream, transforming legacy sites from liabilities into assets,

Sunshine for Mines’ Tegan Campia writes in a Nov. 13 blog post. “Developing renewable energy at legacy, as well as operating, mine sites highlights a very large opportunity.”

Sunshine for Mines is an off-shoot of RMI’s broader-based initiative to promote and foster renewable energy use and energy efficiency across the energy-intensive industrial and manufacturing sectors, Program Manager Paolo Natali explained in an interview.

“The overarching goal is to identify practical solutions that lead to ‘decarbonization’. We started out working with Gold Fields, a South African mining company, whereby we proved the initial concept and expanded from there,” Natali told Solar Magazine.

Sunshine for Mines expanded its strategic objective to encompass overall sustainability in the mining sector. So far, that has included enhancing its proprietary mine site renewable energy investment assessment methodology to include legacy mines and energy storage, as well as wind, solar and other alternative renewable energy resources.

The partnership with BHP, which began around the beginning of 2017, afforded RMI Sunshine for Mines an ideal opportunity to test and prove its unproven, new methodology in the field. Sunshine for Mines lays out the proprietary methodology itself in a recently published Insight Brief, “A Second Life for Legacy Mining Sites.”

RMI Legacy Mine Site Workflow
RMI legacy mine site workflow. Click here to enlarge. | Source: Sunshine for Mines - A Second Life for Legacy Mining Sites

Sunshine for Mines: Expanding markets, and horizons

Applying the methodology across 22 BHP legacy mine sites in North America, RMI identified a particularly promising subset of sites with a collective renewable power generation potential of more than 500 megawatts (MW). Solar PV emerged as the single largest opportunity. A few sites stood out as being well suited for wind power development. The Sunshine for Mines team also explored, and in some cases recommended, making use of various energy storage technologies – pumped hydro and lithium-ion battery-based energy storage among them.

Sunshine for Mines then ranked opportunities in the subset by overall value according to variables included in the methodology’s “scorecard” system. Doing so made it easier for BHP to prioritize activities and take actions to take advantage of the ones management deemed most attractive.

Natali declined to say how many, or which, those were for reasons of agreed-to confidentiality and non-disclosure.

RMI Sunshine for Mines Sample Resource Map
RMI Sunshine for Mines Sample Resource Map | Source: Sunshine for Mines - A Second Life for Legacy Mining Sites

Local climate and geography were key factors for all the site evaluations. “There is a clear distinction between what can and cannot be done on any given site simply due to [renewable energy] resource availability,” Natali elaborated. “Generally speaking, solar resources look better the further south you go, while wind energy tends to predominate at the Canadian sites.”

Most of the US mines Sunshine for Mines has evaluated to date are located in the Southwest and Mountain States. The vast area includes White Sands National Monument, part of the Chihuahua Desert that lies in New Mexico, as well as Death Valley in eastern California. Hence, the Southwest was one of the first parts of the country singled out for large, utility-scale solar power project development.

Monetizing solar and stored energy

Solar power capacity across the area in which Sunshine for Mines has worked with mine owners – in Arizona, Colorado, Nevada, New Mexico and Utah – has continued to increase as more and more home and building owners, commercial and industrial companies and public sector entities have decided to become solar energy producers. All that new renewable power generation capacity has exerted substantial downward pressure on electricity market prices across the southwestern US.

More particularly, that’s the situation in California, where the so-called “Duck Curve” has emerged and oversupply of solar electricity to the grid during peak daily periods of solar generation – from around 12 noon to 2 PM – has become a more common occurrence, Natali pointed out. Solar power production dispatched to the grid in California increasingly drives daily spot electricity market prices into negative territory, which means that utility customers can actually get paid to consumer grid energy.

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“It’s not as easy to monetize solar PV in the southwestern US as it once was, so we have to come up with other, cost-effective solutions,” Natali said. “That includes using energy storage technology and hybrid facilities equipped with solar PV and energy storage capacity so as to shift energy generation by a few hours in order to serve early evening, peak-period grid demand.”

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Access to electricity markets with pricing schemes and mechanisms that enable renewable and stored energy producers to sell power to utilities and grid operators consistently at average prices high enough to provide attractive returns on capital was another key factor in the mine site renewable energy assessments. Electricity markets in most of the states Sunshine for Mines has worked are regulated. California’s is not.

California’s government and industry leaders have made and continue to make pioneering efforts to deregulate its energy market, a core facet of its efforts to spur development of renewable energy resources, reduce greenhouse gas emissions and establish itself as a global leader and hub for renewable energy and clean tech innovation and business development. All in all, that makes the Golden State the most advantageous market for emissions-free electricity in the region, and the first market renewable energy producers look towards.

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“Generally speaking, the closer a site is to CAISO (California Independent Systems Operator), the easier it is to reach and access a market. But a lot still depends on what the transmission arrangements look like,” Natali summed up.

Turning to the costs of producing solar electricity at mine sites in the southwest, Natali said they believe it’s possible to deliver a mining legacy site solar project for $30/MWh or lower and have seen non-mining hybrid solar and storage projects in Arizona for under $45/MWh. Again citing confidentiality agreements with BHP, he declined to any indication that resulted from Sunshine for Mines’ assessment of BHP’s 22 legacy mine sites.

Natali cautioned that any and all these figures, which he gave extemporaneously, are very specific and hence very limited in terms of making sound generalizations.

More fundamentally, the fact that legacy mine site maintenance and remediation costs their owners large sums of money on an annual basis lends supports to proposals that promise to reduce those expenditures by one means or another – by reducing costs or producing revenue streams.

“It becomes easier to reach investment return thresholds when you start from negative territory,” Natali said. “In general, mining cos think cost-effectiveness and profitability first, and that’s the way we approach the problem. We propose cost-effective solutions.” comment↓


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