By Ryan Dube
CALAMA, Chile--The three industrial boilers at the state-owned
Codelco mine high in the mountains here once consumed 67,000
barrels of diesel a year to turn out shiny copper sheets for
export. Now, the job is powered by nearly 3,000 solar panels that
take advantage of the Atacama Desert's cloudless blue sky.
As the cost of solar and wind power declines, renewable energy
has become increasingly attractive to power-hungry mining
companies. Nowhere, though, is it more prevalent than in
resource-rich Chile, where companies have been pioneering
alternatives to conventional power after years of shouldering some
of the world's highest energy costs.
Here at the Codelco mine, named after the late Chilean poet
Gabriela Mistral, a thermosolar plant run by Chile's Energia Llaima
SpA and Denmark's Arcon-Sunmark has replaced about 80% of the
diesel that Codelco previously trucked up 8,700 feet to the mine.
Copper produced by Corporación Nacional del Cobre de Chile, or
Codelco, the world's biggest producer of the metal, goes to China
and other global markets.
"This blue sky makes me happy," said plant manager Rodrigo
Aravena, as he inspected rows of panels, shining in the sun and
installed over an area the size of eight football fields. "It means
we are generating more, and it is much better for business."
Ernst & Young recently estimated that mines in Latin
America--a region that produces copper, iron ore, oil and coal used
world-wide--will invest more than $1 billion in renewable energy
projects by 2022, up from $37 million in 2013. Much of that
development will be in this sliver of a country, which produces a
third of the world's copper.
Electricity prices for Chilean mining companies doubled in the
last decade to about $100 per megawatt hour, according to the
Santiago-based Mining Council industry group, an amount that is
twice as much as neighboring Peru. Chile is overly dependent on
energy imports, while Peru taps a large, inexpensive domestic
supply of hydropower and natural gas.
Solar- and wind-power companies say they can provide power to
mines for as little as $80 per megawatt hour, still costly in Peru
and other countries, but competitive in Chile.
"The scale of what is happening in Chile is currently unique in
the world," said Mike Elliott, Ernst & Young's head mining
analyst. "It's occurring in Chile because the economics just make
sense, while in many other countries it doesn't yet make the same
commercial sense."
President Michelle Bachelet is encouraging alternatives to
natural gas, coal and diesel imports, with the government aiming
for 20% of total electricity capacity to come from renewables by
2025. In May, renewables could generate 2,273 megawatts in Chile,
about 11% of electricity capacity, according to Cifes, a government
agency that promotes sustainable energy. Last year, Chile added
982MW of renewable capacity to its power grid, compared with 244MW
added in 2013.
The government's energy agenda means mining companies need to
increasingly rely on renewables. In the north power grid, about 90%
of consumption comes from industry, most of which are mining
companies. And the state copper commission, Cochilco, expects
copper mining companies to double electricity consumption over the
next 10 years, when companies are projected to invest $74 billion
expanding mines or building new ones.
"Unlike in developed countries where the main driver of
renewable energy development has been the reduction of
greenhouse-gas emissions, that isn't the principal driver here, but
rather energy security and competitive prices," said Fernando
Hentzschel, the director of development and technology at
Cifes.
Chile reconsidered its energy policies after 2004, when
Argentina's decision to curb natural-gas exports to meet its own
demand caused a power crisis here. Plans for coal-fired plants and
hydroelectric dams in Chile's deeply forested south were canceled
because of community opposition and protests by environmentalists.
The government briefly considered nuclear energy, but shelved that
option after Japan's Fukushima meltdown in 2011.
The Atacama's blue sky emerged as an alternative.
Solar radiation levels in the Atacama are some of the highest
anywhere, making it ideal for producing solar power.
"You have to be very careful. We use sunscreen every time we go
out and we always use sunglasses," said Sebastián Carmona,
Codelco's head of external affairs at Gabriela Mistral.
Renewables still have limitations for mining companies, and few
experts believe they will completely replace conventional energy
soon. Companies require a steady supply of power to mine 24 hours a
day, and solar and wind can be intermittent.
"If you are producing [energy] eight hours, that is an issue,"
said Carlos Barrera, the Latin American vice president for
SunEdison Inc., a U.S.-based firm that supplies solar power to
Chilean iron-ore company Compañía de Acero del Pacífico. "With
those eight hours, you can still reduce the cost of mining in a big
way, but obviously that is not the full solution required."
At Gabriela Mistral, Codelco still uses diesel when it needs
extra power for generating heat at night, when temperatures in the
Atacama can drop below freezing.
Other mines are trying both wind and solar to provide a more
stable energy supply. Last year, Antofagasta Minerals' Los
Pelambres copper mine began receiving about 20% of its power from
50 wind turbines operated nearby by California-based Pattern Energy
Group Inc. Antofagasta now plans to receive solar power from
SunEdison.
"A lot of times the stronger winds are not when it is the peak
sunny times," said Hunter Armistead, Pattern's vice president of
business development. "If you add the two types of generation
profiles together, you end up with a much more stable profile of
generation for selling that to the mine."
Indeed, here in southern Chile, winds can be so strong that they
can overpower and even shut down turbines, said Dominic Duffy, the
chief operating officer of Mandalay Resources Corp., which will
start receiving power from a wind farm this year at its Cerro Bayo
mine in the Patagonia region.
"The wind is constant, all-year round," he said. "It's good we
aren't the first doing this project as we've seen the issues of
having too strong wind conditions."
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