After years of developing solar power plants for governments and utility companies, Santa Monica’s SolarReserve has a new customer in mind: Australian mining companies.
The company last week opened an office in Perth, Western Australia, where it hopes the firms in the largely undeveloped region will trade their diesel generators for solar power. In contrast with its business in the United States, Spain and South Africa, the company thinks its pitch will work without the help of renewable power mandates.
Tom Georgis, SolarReserve’s senior vice president of development, said remote mines now rely on power from diesel generators, meaning mining companies must pay to have diesel fuel trucked hundreds of miles into the Outback. Thanks to the country’s abundant sunshine, SolarReserve can sell power for less than the cost of producing power with diesel.
“It’s just a pure economic driver,” he said. “It’s not dependent on any renewable energy requirements. It makes economic sense for them.”
Even so, SolarReserve’s entry into Australia comes as the nation’s mining industry has been hit hard by slumping commodity prices and weaker demand from China. Publicly traded Melbourne gold and copper miner Newcrest Mining Ltd. lost $5.3 billion for the year ended June 30. Several other public mining firms lost big, too. London research firm Business Monitor recently reported that a 10-year boom in Australian mining is over and forecast slow growth in the years ahead.
“With China’s economy on course for a rude slowdown over the coming years, Australia’s mining sector is set to suffer the painful spillover effects of a sharp investment slowdown,” Business Monitor reported.
But Georgis said commodity prices will eventually climb again and that big mining firms are still planning on opening mines. What’s more, SolarReserve can sell power cheaply enough that mining companies looking to cut costs should be interested.
“If we can offer them a lower-cost solution, we give them an economic advantage,” he said.
He estimated electricity from diesel generators could cost around $300 per megawatt hour, accounting for the cost of fuel, trucking and generators. SolarReserve has agreed to sell power from its plant in Tonopah, Nev., to a utility for less than half that – $135 per megawatt hour.
SolarReserve plants use thousands of mirrors to concentrate the sun’s rays to a tower that heats molten salt, which then boils water and creates steam that powers a turbine. Once heated, the salt stays hot for hours, allowing a company plant to keep producing power after the sun goes down.
A 100 megawatt power plant, one big enough to power a large mining operation, would cost about $750 million, but mining companies wouldn’t pay that upfront. SolarReserve would have the mining company sign a long-term contract to buy power, Georgis said, then finance the construction and operation of the plant.
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