ENVIRONMENT Tue 29/07/2014

Cost-effective energy options for mining

Francisco Chueco*, 19 May 2010
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WATER is essential to the mining industry and the extraction and pumping of water from wells to the mines uses significant energy.

To supply their industrial requirements many mining companies operate water wells using diesel engines and overhead lines to supply their industrial needs. The power of the pumping systems ranges from a few kilowatts (kW) up to megawatts (MW). The pumping systems are usually powered by overhead power lines connected to the nearest grid; in some cases, diesel engines at the pumping site are installed and the system is fed routinely with fuel.

Solar radiation in northern Chile is among the best in the world, and under certain conditions, photovoltaic (PV) solutions could be a more economic option than traditional power sources. Solar PV systems are commonly used for stand-alone applications and are commercially available with capacities ranging between below one kW up to several hundred kW. Solar PV systems require low maintenance and are well suited to remote locations. Due to northern Chile’s geographical position and high levels of sunshine all year-round, PV stand-alone systems and PV-diesel hybrid systems could mean a cost-effective solution for some pumping projects in this region.

At present, the photovoltaic solar power market is being developed for projects connected to the conventional power network (grid connected). Nevertheless, in remote areas, photovoltaic autonomous applications and hybrid systems cover a range of needs.

There are two independent power systems in northern Chile: the Interconnected System of Grand North (SING) and the Central Interconnected System (SIC). Electrical energy costs increased dramatically in 2008 for several reasons in both systems, accentuated by droughts caused by the meteorological phenomenon of “La Niña” and the decrease in gas imports.

There are two types of customers. Firstly, the regulated customers with contracted power equal to or less than 2MW, who pay for energy depending on the bus price of the substation, which is updated half-yearly by the National Commission of Energy (CNE), depending on the marginal costs. However, from 2010, the bus price will be based on distribution company tenders, as established by Law 20.018.

The second type is non-regulated customers or free consumers; large energy consumers, such as mining companies. The electricity price is different in every case, as a private contract between the electrical and mining company is established. The price is usually indexed to the marginal costs of generation.

Fuel cost
The final cost for mining companies is different for each client. The price trend is on the rise; in the past nine years, the diesel price has varied from US33c/litre to $US1.38/litre (a variation of 419%). This variability is an important factor in the operational costs for the users.

Mines in northern Chile are located at sea level and up to thousands of metres above sea level (masl). This represents favourable conditions for PV systems because solar radiation increases with altitude. The maximum temperatures are moderate, which is favourable for the performance ratio of photovoltaic modules.

Mining companies are interested in integrating renewable energies in their operations, which can avoid other problems and provide independence of electricity and fuel costs. The main disadvantage of the PV solution is the initial high investment, however, there are other advantages, such as avoiding the costs and impacts of:
- fuel truck transit and associated risks;
- bureaucracy, due to environmental impact declarations for crossing protected areas with overhead power lines or fuel transport; and
- insurance contracts or other associated problems due to intervening transmission grids and crossing private property

SKM developed a calculation tool to evaluate the pumping system for any head, daily volume of water and hours of operation. It also evaluates the equipment needed for every project, based on diesel engines, connection to the electrical network or stand alone PV system. The system obtains the Present Value of Costs (PVC) for the useful life of the project, calculates the difference of this value between every type of project and identifies the most profitable solution. The tool allows for different variables to be modified. Here the following variables are considered:
- 24 hours of pumping per day;
Information associated with Calama's city (solar radiation, temperature, tilted angle of the modules at 30 degrees, FT);
Global co-efficient of losses of 15%;
Inverter efficiency of 90%;
One day of autonomy of the subsystem of storage of energy;
Depth of discharge of the batteries of 70%;
Estimated cost of $US1.50/Wp for the thin-film modules

The calculation tool uses standard cost investment values of any equipment and analyses a large number of projects for wide-ranging variables. One axis shows the difference between the PVC of two possible solutions; the other shows a range of pumping powers (kW), distances to the electrical grid (km) and electricity prices (USD/MWh) or fuel prices (USD/litre). It can determine the cost-effective limits by comparing each solution. It can also obtain estimates of initial investment costs and the annual operational costs of each project, and calculate the PVC.

The user can change many parameters to get results in a particular area or in the proximity of a particular electrical grid to consider variations in energy and fuel costs.

For small pumping systems with long distances from the well to the existing grid, the PV solution is more cost-effective. As the distance increases, the pumping power at which the PV solution is more cost-effective is higher. For instance, when the pumping power is 20kW and the distance from the well to the existing grid is greater than 8.5km, the PV solution is more cost-effective than a 13.2kV grid extension project.

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Difference in PVC 23kV grid extension and photovoltaic solution.

Obviously, at higher prices of electricity, the PV solution is more cost effective in more cases. Even if energy is free of charge, the PV solution is economically better than a grid connection up to 4.3kW. If the price of electricity is $US350/MWh, PV would be more cost effective up to 27kW of pumping power.

A PV solution is more cost-effective than a 23kV grid extension project up to 85kW of pumping power and 27km from the well to the existing grid. Where the well is 20km from the nearest grid, even if energy is cost free, a PV solution is economically better than a grid connection up to 24kW. At a given distance, as the PV modules are cheaper, the range of pumping power for which the PV option is advisable is greater. But even if the photovoltaic modules were cost free, for pumping powers higher than 215kW it is more profitable the extension of the grid.

Photovoltaic vs diesel engines
At sites where the grid extension is not feasible, it is possible to power the pumping systems with a diesel engine or with photovoltaic systems. When the diesel fuel price exceeds $US1.20/litre (and considering the solar irradiation in the area of Calama), PV systems are more cost-effective for pumping power between 0-125kW.

SKM analysed every voltage level versus diesel engines. For example, when a well is placed at 30km from an overhead line of 66kV, the projects with diesel systems up to 1.35MW imply lower PVC (with prices of fuel and electricity being US85c/l and $US250/MWh). If the electricity cost is higher than this value it will be more profitable to install diesel systems.

Electrification systems in remote areas are essential for the mining industry in northern Chile. At present, studies have been completed for mining companies in northern of Chile to adopt new approaches to power water pumping systems.

The software tool developed has proven to be a good tool for obtaining estimates of investment and annual operation of photovoltaic stand-alone projects, grid extension and fuel generators for pumping systems in northern Chile. It demonstrated that PV solutions can be a more cost-effective solution than diesel engines or grid extensions to power small pumping systems. For large-scale pumping systems, the diesel engines or grid extensions are generally more cost-effective solutions; however, fuel and energy prices and decreasing PV costs move the cost-effectiveness limits and it is imperative to pay attention to the evolution of these variables.

With these results, it is possible to give advice quickly about the most cost-effective solution for many projects and concentrate efforts on the most productive wells and the best powering option from an economic point of view. Importantly, the tool developed to examine these different options is useful for other cases.

*Francisco Chueco is an industrial engineer, specialising in electrical power systems and with a Masters in Renewable Energy, based in Sinclair Knight Merz’s Santiago office. This article forms the basis of a paper accepted for presentation at the Mining Innovation Conference to be held in Santiago, Chile, in June 2010. It is reproduced here with SKM’s permission. Chueco undertook a project within SKM’s technology & innovation program, in collaboration with the Centre of Research for Energy Resources and Consumption (CIRCE) at Zaragoza University in Spain, to investigate alternative energy sources for mines in northern Chile.




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