Why are the miners taking up renewables?

Jo Nova explains the weekend news that mining companies are using more renewables. We have to have a renewable energy target to force fossil fuels out of business and increase the cost of power.

A better headline would be: Renewable targets make electricity so expensive miners are forced to switch to renewables.

The money quote:

“Emily Alford is a principal consultant at Oakley Greenwood … [she] told The Weekend Australian that solar generation cost about $200 a megawatt hour five years ago, and had dropped to about $70-$80 now.”

Compare that to 53 year old Hazelwood coal power which was selling electricity for $30/MWh in it’s last month of operation. When brown coal stations set the price in Victoria they were winning bids at prices like $13/MWh. The cheapest electricity in the world comes from 30 year old brown coal plants.

The $70-$80 estimate is artificially low. Unreliable power makes the other baseload generators more expensive, adding $30/MWh to gas generators for example. Because the back up generators have to be there, not earning money while solar feeds in, they have to charge more to recoup those costs in a shorter working period. Doh. So add that cost to solar, not the gas.

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18 Responses to Why are the miners taking up renewables?

  1. Crossie

    Why are the miners taking up renewables?

    Several reasons: money, money money and approval from their peers.

    Government subsidies are distorting the entire economy of power generation making it far easier to go along with the green agenda. One company taking advantage of subsidies leads all the other ones to follow suit, hey it’s free money.

    The managers of coal companies are social creatures just like everyone else and they want to be lauded for saving the planet. Science doesn’t even come into it, science is for little people they employ and expect to make it work.

  2. For those miners in remote locations, renewables with a diesel generator makes sense. Anywhere else is a costly duplication of transmission infrastructure for a lower reliability of supply.

  3. Aynsley Kellow

    Alans is correct – solar can compete with diesel off-grid.

    I have an article in the issue of Quadrant due out next week that deals with the integration costs of renewables – costs that are usually just ignored by the advocates, who state the Levellised Cost of Energy. The acknowledged costs include back-up, extra transmission requirements with low capacity factors, and the cost imposed on reliable generators through reduced capital utilisation. The literature estimates these as at least 50% of generation costs, which puts their true cost well above ultrasupercritical coal. (USC can reduce GHG emissions by 25% over conventional black coal – the Paris target – and 40% over brown coal).

    As to unsubsidised costs, the US company Lazard (Google it) gives regular estimates for unsubsidised renewables. Their most recent estimate (November 2018) is $US43-131/MWh for solar, or $A61.92-188.64/MWh converted at the most recent estimate for Purchasing Power Parity (PPP) of $A1.44 to $US1. The estimate for wind is $US34-73/MWh, or $A48.96-105.12 @PPP of 1.44.

  4. RobK

    The RET large scale certificates apply to miners. As mentioned above; a variety of situations prevails in the case of “miners”. I was unable to read the entire Weekend Australian article refered go in Jonova’s link but this link: https://www.ausimmbulletin.com/feature/future-mining-renewables/ puts a little meat on the bones of the headline.

    The amount of renewables in the mining sector’s electricity mix is low at approximately 2.5 per cent of the renewable energy used globally. The mining sector accounts for roughly ten per cent of Australia’s total energy use. Its energy is mainly supplied by diesel (41 per cent), natural gas (33 per cent) and grid electricity (21 per cent). Energy is primarily consumed as electricity for operations and as diesel for vehicles and machinery. Yet renewable resources have the potential to provide a large portion of the energy consumed by the mining sector at or below the cost of traditional diesel generators or grid power. This represents an opportunity to both reduce costs and reduce the carbon footprint of the sector. A white paper by the Australian Renewable Energy Agency (ARENA) released in 2017, titled Renewable Energy in the Australian Mining Sector, suggests that renewable energy can greatly benefit the mining industry and should help to shape the future of the mining sector in Australia. Some of ARENA’s early work was in remote area renewables. One such example is Sandfire’s DeGrussa mine, 900 km north of Perth, which installed a hybrid solar/battery system that is the largest of its kind in the world.

    One should note that the eastern goldfields of WA built a private gas pipeline from the NW of the state decades ago. These RE ventures are subsidized in a high cost energy environment. All already have backup.

  5. Bruce of Newcastle

    Two reasons. Firstly, increasingly the middle and upper management of the larger miners are becoming a phalanx of slick suited elites with MBAs rather than the old promoted knock around types. The latter seem to be more sceptical of climate stuff than the former.

    Second, they all want to avoid being eaten by the green leopard, which takes the hindmost first.

  6. As I keep saying, if renewables are competitive, remove all subsidies. That includes solar for homes. Every media article etc now affirms the former, so why do we still have the latter?

  7. Iva Right

    Big mining, like every other business in Australia, is too scared to rock the boat lest the incoming labor/greens government exacts payback. Only a complete fool believes any of the climate costings and business leaders aren’t fools. Simply scared and compliant.

  8. Aynsley Kellow

    bemused: one of the really stupid things governments are doing is continuing to subsidise rooftop solar, which is cheaper (just) than grid electricity, and needs no subsidy.
    It still has integration costs, however, as most householders want back-up at night and when the sun don’t shine, which means the network must have unused capacity. It has no inertia, so is not very stable – when a cloud comes over a neighbourhood, output drops suddenly and the grid has to respond quickly.
    Of course, they might wish to install batteries, but they provide expensive back-up, and insurance companies are beginning to recognise the fire risk and insist they are housed in fireproof locations. The recent self-immolation of the Tesla in Shanghai is a useful omen.
    Subsidising batteries (as Shorten proposes) simply increases the distributive injustice, as the poor will still not be able to afford them, so he will end up subsidising the affluent.

  9. Aynsley Kellow

    I should add that the experience of the 20% of households with rooftop solar probably influences their regard for grid solar – they think it is cheap (but it is not).

  10. BoyfromTottenham

    “Emily Alford is a principal consultant at Oakley Greenwood … [she] told The Weekend Australian that solar generation cost about $200 a megawatt hour five years ago, and had dropped to about $70-$80 now.” Is this the unsubsidised or the subsidised cost? With the ‘free’ LRET certificates being given to every ‘renewables generator’ currently being worth about A$37.50 for each MWH sent to the grid ( – good news, down from over A$85.00 last May), the $70-$80 ‘cost’ could actually be between $107.50 and $117.50. And of course did Oakley Greenwood take account of the hidden costs of ‘renewables’, such as the cost of connection to the grid, stabilisation measures, etc.?

  11. John Constantine

    Huge transnational companies with huge compliance class departments love the regulatory burden that crushes smaller competition.

    Crony socialism means survival of those that can afford to carry the parasites.

    Comrades.

  12. Davefromweewaa

    Inveiglement.
    We are being bribed in pennies and robbed in pounds but no-one knows!
    …and what John said.

  13. Dr Faustus

    For those miners in remote locations, renewables with a diesel generator makes sense. Anywhere else is a costly duplication of transmission infrastructure for a lower reliability of supply.

    This is correct.
    For a remote mine using diesel generation, depending on factors such as scale, fuel delivery/holding costs, and genset ownership/O&M arrangements, the marginal cost of generating electricity is in the rough range of $300 to $450/MWh (excise-free basis). Having the diesel gensets ready to run as backup, renewables at ~$120+/MW make economic sense for some loads.

  14. Rafe Champion

    Some loads for limited times. Backup is the key!

  15. Dr Faustus:

    For those miners in remote locations, renewables with a diesel generator makes sense. Anywhere else is a costly duplication of transmission infrastructure for a lower reliability of supply.

    I’ll bet the accountants would love to have a bank of mini nukes running those mines.

  16. Farmer Gez

    The solar doesn’t actually feed into the grid.
    It can only feed a local 240v shared transformer network, so the coal and gas is needed at all times to keep the high voltage grid primed.
    It’s a farce.

  17. Dr Faustus

    Some loads for limited times. Backup is the key!

    Indeed. I chose my words carefully.

    Perhaps think of it as an upscaled version of those instances where remote electrical devices – radio beacons, navigation lights, and so on – are most economically supplied by a PV panel.

  18. Squirrel

    The more rules we have (particularly when money is somehow attached to those rules), the more opportunity there is for the smartypants to game the rules – with the added satisfaction of outsmarting the public sector plonkers who dream up and administer the rules.

    Of course, over time, some of the plonkers manage to metamorphose into smartypants gamers, but that’s just part of the game, too, isn’t it…..

    All of this is terribly jolly for those who are being paid very nicely to be players in the system, it’s also a really good way of squandering the wealth (so much of it inherited, not earned) of the nation which, once gone, will be gone for good – at which point the smarties will move on to other games elsewhere.

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