27 November 2018
This interview, by Melodie Michel, originally appeared in ENERGYANDMINES Issue 4 (pgs. 16-23), published on 7 November 2018.
As the cost and performance of Distributed Energy Resources (DER) keep improving, it’s no longer a matter of whether mines should integrate DER, but what type and in what configuration. To determine that, Tristan Jackson, Director, Smart & Distributed Energy at Advisian, explains that location is a key consideration - and that specialized software can solve the problem of determining the optimal energy system, for any given location, while achieving an attractive payback period.
One challenge with mines, says Jackson, is that they tend to have a shorter time horizon for the energy investment they’re willing to make, as compared to other infrastructure. This is because mining in general ramps up and down quite quickly with changes in the commodity markets, and mine sites may have uncertain reserves. In contrast, facilities like hospitals, university campuses, or even military bases plan to stay in place for a long time, and can more easily accept longer payback periods for energy infrastructure. In contrast, mines tend to not look beyond five years.
“Due to the volatility of the industry and uncertainty of reserves at a given site, mining companies usually look for very short payback periods from onsite energy systems, while renewables or systems like microgrids typically have payback periods of more than five years, when considering only the market value of electricity,” he adds.
Even with the dramatic price drops achieved by the renewable energy and DER sectors in recent years – such as cost reductions for batteries of about 80% over the past seven years – and the performance improvements in various energy storage and microgrid technologies, the payback period, looking only at energy, may remain longer than five years. However, as Jackson notes, this simplified calculation often omits crucial information that can significantly change the Levelized Cost Of Energy (LCOE): that is, the value of reliability.
Determining reliability costs
Jackson gives the example of a recent project Advisian completed which involved assessing energy storage for a mine. Located at the end of a long transmission line, in a lighting-prone area, the site suffers regular power interruptions. “What we’ve shown in our study is that the frequency and duration of outages they were experiencing over the year was costing them in the millions of dollars of lost production,” Jackson reports. “So when you account for the value of improved reliability provided by onsite energy assets, and being able to operate without interruptions, that can shorten the payback period to under two years.”
Image source: Verve
Depending on where they are located, mines using conventional, fuel-only power generation can also face high fuel transportation costs and fuel supply reliability issues. Jackson explains that some mines in Canada, which rely on trucking in diesel, have recently experienced such a freeze-out in the winter that roads become impassable, and they had to turn to bringing the diesel in helicopters, at an extremely high cost. Factoring in the risk of fuel supply insecurity, costs incurred when roads are impassable, or lost production when transmission lines get struck by lightning, can dramatically shorten the payback period of an on-site renewable plus storage system, he notes.
When it comes to choosing the right system, location again plays an important part. “We have done energy systems involving wind energy, storage, and conventional engine backup in places as harsh as Antarctica,” comments Jackson. “The temperatures going down and the sun being unavailable for part of the year doesn’t mean you can’t do a hybrid energy system with a significant portion of the generation coming from renewable, locally available resources. It just changes the mix of technologies.”
Another issue to consider, adds Jackson, is the way extreme temperatures affect conventional battery storage. Most lithium-ion chemistries and lead-acid batteries do not do well at temperatures far below 0°C or far above 40°C. In those cases, other energy storage technologies, including flywheel or compressed air energy storage, or other battery chemistries, may be a better option.
“In extreme environments, it can be more expensive or more technically difficult to achieve locally self-supporting power supplies, but that doesn’t mean it can’t be done,” adds Jackson. “But more important than going 100% renewable, including a portion of renewable generation and energy storage technologies along with conventional generators almost always presents cost advantages over a straight fuel-based power system, even in harsh conditions.”
Technology for accuracy
In the process of choosing the right system for a mine, certain software applications can make all the difference, notes Jackson. In August this year, Advisian signed an exclusive partnership with XENDEE, a technology company that developed an advanced toolkit for microgrid and distributed energy system design and optimization. As Jackson notes, the software makes it possible to achieve a 90% reduction results time and costs for energy system feasibility studies and design.
“We can take a load profile [that is, the energy use data of a mine], the amount and type of energy demanded by any facility, and based on that and where it is on the map, we can very quickly assemble the optimal set of technologies. Typically, the pre-engineering studies for this could take weeks to months, and we’re able to do them in hours to days,” explains Jackson. “This is the world’s most advanced end-to-end integrated platform for the technical and economic optimization of distributed energy systems.”
For example, adds Jackson, a mining client in Latin America was recently looking to assess the efficiency and cost-effectiveness of different energy systems. Specifically, building a transmission line versus investing in a 5 MW hydro dam; or integrating solar panels with with gas engines and energy storage. As Jackson reports, considering factors like reliability, the value of lost production in the event of interruption, and weather conditions, Advisian - with the help of the XENDEE software - was able to quickly determine that solar combined with gas engines and storage was the right option, reports Jackson. Additionally, Jackson adds, Advisian were able to identify the optimal type and sizing of each of these three technologies, and gave a projection of upfront and lifetime aggregated costs.
In 2017, the XENDEE software was used to design a remote standalone system that would be installed over a five-mile radius, comparing solar, storage, and two types of diesel generators, Jackson adds. In part, the study aimed to determine how best to mitigate the effects of weather conditions such as fast-moving clouds, which can affect the power output from PV panels.
“Going in, we thought by placing the solar centrally and putting batteries near by, we could achieve the best overall costs and efficiencies, but that turned out not to be the case,” he says. “What we found instead was that distributing the solar installations into several different arrays spread over the five-mile radius helped mitigate the weather conditions more cost-effectively.”
The study also revealed that batteries were uneconomical for this site, given the costs of the batteries at that time. “The results of the optimization study were somewhat surprising, not something we would have guessed without XENDEE to support decision-making,” concludes Jackson.
Learn more about how we can plan, build, and run your customized energy system, or to schedule your initial free assessment, contact Tristan Jackson: email@example.com.