Jonathan Skeen | Managing Director | Commercial | SOLA | mail me |
During the 1990s and early 2000s, South African mines bought electricity from Eskom at regulated tariffs. These tariffs were globally competitive. Eskom prioritised the mines as their most important customers. Eskom faced few hurdles related to climate change concerns. Buyers had little choice, but the energy was cheap and reliable. There were few viable alternatives.
Since 2008, however, the landscape has become unrecognisable. Average annual tariff increases of 15% occurred. A dramatic drop in grid reliability followed. The rise of carbon laws and trade restrictions also took place. Independent power producers (IPPs) emerged. Energy traders and viable clean energy technologies followed.
South African mines now have more choices. However, they must solve an increasingly complex puzzle. They must secure their electricity supplies. Mines must also decarbonise and contain rising costs.
Cheap, clean and reliable energy
Many mines have moved quickly in recent years. They built their own solar energy plants at their operations. Others have bought wind or solar power from the grid. This was done under wheeling agreements with IPPs. However, as the generation capacity of wind and solar power increases, so does the complexity.
Integrating more variable power becomes harder. The challenge is to minimise waste. It is also important to balance supply and demand. As mines set increasingly aggressive decarbonisation goals, many energy companies have emerged. These companies offer creative solutions. They are based on the aggregation of demand and supply. They promise to solve the triple challenge of cheap, clean, and reliable energy.
But how do miners differentiate between real electrons and promises? How much certainty can they place in contracts? These contracts are several times longer than the provider has existed. How can mines choose solutions that will withstand competition from Eskom? There are also inevitable and unpredictable tariff and market changes.
The arrival of energy storage solutions
The arrival of compelling battery energy storage solutions is vital. As South African mines look to an unpredictable future, flexibility is key. Their ability to increase the flexibility of electrical demand and supply will be central. This will help achieve steep carbon goals. It must be done in a cost-effective and reliable manner.
Battery storage technologies have emerged as a pivotal technology. These technologies deliver a range of beneficial services. The services are available both via the grid and behind the meter.
The battery revolution bears the hallmarks of the solar revolution. Solar panel prices decreased by 90% from 2010 to 2023. Meanwhile, Eskom tariffs increased by more than five times. This drove the emergence of the thriving South African solar industry. Similarly, a 90% decrease in average battery storage prices has occurred over the last 15 years. Much of this happened in the past 24 months. This has driven rapid deployment of battery capacity around the world.
In the United States, installed battery capacity almost doubled in 2024. Much of this deployment shifted solar generation. This shift occurred from midday to evening peak demand periods.
In Australia, almost 8 gigawatts of large-scale batteries were under construction in 2024. Total capacity is expected to reach almost 20 gigawatts in the next few years.
Greater resilience and reliability
For South African mines, the emergence of low-cost, large batteries means greater potential savings. When coupled with solar PV, large-scale batteries improve the savings benefit. This improvement is around 20% under wheeling transactions.
Batteries enhance the generation profile. They increase usable clean energy volumes. They also deploy more clean energy during expensive peak demand periods. Similarly, behind-the-meter batteries can absorb low-cost energy. This energy is absorbed during off-peak periods. It is deployed during peak periods. This reduces grid consumption and saves costs.
Batteries are crucial for the economical integration of high levels of variable and wind energy on the network. They reduce wastage. They also reduce the high costs of fossil-fuel-based peaking plants. Batteries present immediate opportunities for South African mines. Mines can replace more fossil-fuel-based Eskom supply with clean energy supply contracts. These contracts can be on a wheeling basis and behind-the-meter.
Batteries increase the usability of solar energy. They allow energy to be stored and deployed. This deployment more exactly matches the users’ demand patterns. As battery costs continue to decrease, more capacity can be installed. More clean energy for mines can be shifted according to unique demand requirements. Clean energy for mines also offer greater resilience and reliability.
Eskom aims to implement sweeping changes to electricity tariff structures. The generation mix is evolving at an unprecedented rate. Flexibility has become the mining sector’s most valuable resource.
What’s next for clean energy in the mining sector?
Batteries can adapt to future changes in time-of-use periods and tariffs. They can be enhanced and augmented in the future. They can follow cost and market influences. Batteries also offer resilience against the so-called “duck-curve” effect. This effect occurs as surplus solar generation during daylight hours causes inefficiencies in the power system.
Globally, many mining operations are already embracing the storage revolution. Companies such as Anglo American, Fortescue Metals Group, BHP, and Glencore are using batteries. They are using batteries for securing electricity supplies. They are also increasing operational efficiencies. They are electrifying transport fleets to replace fossil fuels with clean electricity.
South African mines can now embrace the flexibility and resilience that come with clean energy through existing battery products. These products are both economical and proven. Battery storage will soon become a cornerstone of a competitive and sustainable mining sector in South Africa.