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Low oil prices and renewables at mines

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World Coal,

Low oil prices are changing the cost dynamics of electricity generation at off-grid mining sites, according to energy consultancy, THEnergy.

Traditionally, off-grid mine sites have relied on expensive diesel gensets for power, accounting for a large proportion of mining costs. In this business case, solar-diesel hybrid systems offered mines the opportunity to reduce energy costs considerably.

But is this still the case with the current low oil prices? THEnergy asked 14 industry experts from the mining and solar industries to re-evaluate the business case for solar-diesel hybrid systems. This found that, while low oil prices do reduce retail diesel prices, this is only one factor in the final cost to the mine: transport costs, theft and taxes play as important a role in determining the final cost of the fuel.

This being the case, the vast majority of the solar – as well as wind – plants at off-grid mine sites are “still extremely profitable,” said THEnergy in a press release. “Even with today’s oil prices, costs from solar are regularly 50 – 60% lower that diesel electricity at remote locations.”

The sharp decline in oil prices, however, has reduced mining companies’ focus on electricity prices, as well as challenging the assumption of ever-increasing diesel prices incorporated in many hybrid business cases, taking some of the momentum out of the spread of solar-diesel power plants in the mining industry, concluded THEnergy.

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