The mining industry is finally starting to grasp the attractive business case for renewable energy, according to engineering consultancy Hatch global director for solar and wind Rob Lydan.
Although renewable developers are accustomed to rapid progress, Lydan urges them to understand that mining companies are enormous entities that change course very slowly.
Renewables developers need to resist the urge to make overly optimistic arguments or downplay negatives, instead demonstrating persistence and sincerity in explaining what their businesses have to offer in order to encourage mining companies to embrace solar and wind energy, according to an Energy and Mines report.
Role of renewable energy
Within the past year, the debate over what role renewable energy will play in the mining industry has deepened and matured, says Lydan.
One sign of this burgeoning maturity is which executives within mining companies are analysing renewable options, notes Energy and Mines.
Top decision makers are now engaging renewable energy stakeholders and practitioners.
Energy cost issues
“Clients are becoming more cognisant on a corporate operations level of the fact that they have energy costs issues that are affecting their operations,” says Lydan. “There’s a deeper understanding of the challenges out there.”
The number and types of mines evaluating renewable energy have expanded, and Lydan says there is now a broader base of clients interested in the topic.
In addition, mining companies are no longer confining themselves to pilot projects of roughly one or two megawatts, but are contemplating larger and more meaningful endeavours.
Renewable business case
“We’ve gone from a state where projects were being kicked off on a pilot basis and now we’re going through the evaluation of larger-sized projects,” says Lydan.
In order to successfully gain mining clients, renewable energy companies need to understand how mining companies are run and how they make business decisions.
Lydan emphasises the need for renewable energy companies to realistically projects costs when presenting their business case.
There are environmental hurdles that renewable providers contend with when building a plant or installing a turbine beside a mine, explains Lydan.
He says that just because a mine itself poses environmental risks doesn’t mean that putting up a wind turbine can be accomplished with little or no scrutiny.
“From a permitting standpoint, you have to go through the same studies to make sure you’re not worsening the environment in any way.”
Mining companies do not make decisions as quickly as renewable companies, and as such, results in missed opportunities.
Misconceptions by renewable providers
A renewable energy provider will believe that diesel has ‘won out’ over a solo plant or wind turbines, when, in fact, the mining concern is still evaluating its options and hasn’t rejected renewables at all, notes Lydan.
He says mining executives are not slow to act because they’re indecisive but rather because their companies tend to be huge enterprises, with operations in several countries.
Renewable-energy developers can do very little to hurry along mining companies, states Lydan, adding that decisions on this topic may be made faster once the market is better established.
Once the market matures there may be clearer mechanisms for selling renewable assets at the end of a project, thus creating a ‘well-established mechanism for salvage value’.
The existence of a salvage value for a solar or wind farm would change the whole equation, says Lydan.
It will still be many years before mining companies start developing mega-renewables plants but the projects they undertake will steadily increase in size, envisages Lydan.
“I’m impressed by the amount of interest that grown in the last year,” he says.
Lydan estimates that the move beyond the pilot stage will take place over the next three-to-five years.