Power from the sun

2014 CASE STUDY:

Towards 15% solar power

Photovoltaics (PV), a means of generating electricity by harnessing the sun’s energy, is a technology which is gaining increasing acceptance as a clean source of electricity generation globally. George Ashworth, head of Sibanye’s solar power initiative, believes that PV power generation is eminently suited to South Africa, given the country’s latitude and solar exposure, and is becoming affordable due to the fast-rising cost and supply uncertainties of Eskom-provided grid power, as well as the rapidly falling price of solar panels.

Sibanye is aiming to build a PV plant, which will result in up to 15% of its electrical energy needs being derived from solar generation, thereby reducing and capping its consumption from and reliance on Eskom. Careful planning, incorporating and balancing the project’s technical, environmental, financial and security benefits, as well as costs, has been completed.

Financial viability

An initial and thorough pre-feasibility study has indicated that, at present, the project envisaged by Sibanye exceeds its project hurdle rates on an internal rate of return (IRR) basis.

As George explains, the cost curves – showing the cost of buying grid power and the cost of installing and maintaining PV equipment that works on free solar radiation – are near the point of intersection. The price of grid power will continue to rise while the capital cost of installing and maintaining solar power will continue to decline.

There comes a point where the difference between the two curves tips the advantage firmly in solar’s direction – a point where the IRR of solar cannot be ignored. How far ahead that might be will not only depend on Eskom’s prices and equipment costs but on the likely implementation of carbon taxes as well. Construction of a generation plant would take between six and nine months so formal permitting activities are already being initiated to reduce the regulatory lead time.

Power security

“Solar PV generation would at least partially insulate us from the worsening electricity security situation and the impact of load shedding,” Ben Potgieter, head of electrical engineering at Sibanye, points out.

Sibanye’s analysis indicates that, from a power-security standpoint and with a phased installation build-up, the Group could safely aim to generate 150MW of power from solar panels. That is equivalent to about 30% of its current peak power consumption during the day.

Even at the current price of the least expensive PV panels, the cost of installing the collectors and ancillary equipment (inverters, transformers and synchronisers), needed to convert direct current from the sun to usable alternating current needed by mine equipment, is projected to run at around R1 billion for every 50MW of installed capacity. As George has already noted, the forecast R3 billion capital requirement is already at a low enough level to make the project attractive for commissioning as early as 2017 or 2018.

Technical considerations

Serendipitously, Sibanye’s mines are located in South Africa. Their relative proximity to the Tropic of Capricorn and to the Equator means that best performance will be from solar panels that are adjusted to track the sun throughout the day on a single horizontal axis. That represents major potential capital and operating cost savings.

Ben says Sibanye does not expect to return power to the grid. He is emphatic – the Group will use all it generates, thereby capping the draw on the grid and flattening its diurnal demand peak. “Scheduling the Group’s power load to shift electricity use from hours of darkness into the daytime – the opposite of what we are doing today – may allow Sibanye to apply solar generation to assist Eskom in smoothing its supply requirements.”

Storage of energy to turn PV generation into base-load power may become viable in due course – energy storage is a field of rapid technology development, and the economics may open up the possibility to increase the penetration of solar generation into Sibanye’s energy mix. And this helps drive Sibanye’s solar planning.

How such a project might be funded has still to be decided. George is clear: “Any project will be subject to an open, competitive tender process. All funding options will be examined, including the possibility of third-party funding. Whatever equipment is decided upon, it will be ‘off-the-shelf’, well-proven technology to minimise project risk.”

Environmental benefits

Installed PV solar generating capacity of 150MW, as envisaged in Sibanye’s project, would reduce the Group’s carbon emissions by between 400,000tCO2e and 500,000tCO2e per annum in terms of the Greenhouse Gas (GHG) Protocol, developed by World Resources Institute and World Business Council on Sustainable Development, to which Sibanye adheres and which is directed at curbing GHG emissions.  This would represent a reduction of around 10% in Sibanye’s current Scope 2 carbon emissions (indirect GHG emissions from purchasing electricity, heat or steam).

Where will PV panels be installed on Sibanye’s properties? “We have selected a preferred site on land not suited to other activities and are embarking on the process of obtaining permits,” says Sibanye’s head of environmental management, Nico Gewers.

But the PV option is not the only solar option. In November 2014, Driefontein brought on stream a concentrated solar power (CSP) project to heat the liquids in its elution gold recovery plant. That project – similar to the use of solar power to heat domestic water – has capacity to replace an estimated 1,000MWh of electrical power consumption every year.

As South Africa is a developing country in terms of the Clean Development Mechanism of the United Nations Framework Convention on Climate Change, Driefontein’s CSP project helps, if only in a relatively minor way, to reduce the emissions of GHGs by the country’s coal-fired power stations.