RE Growth In Sub-Saharan Africa With Off-Grid Mines

Fitch Solutions Macro Research Sees Renewables, Mainly Solar PV & Wind, As A Solution To Powering Off-Grid Mines In Sub-Saharan Africa
12:37 PM (Beijing Time) - 20. February 2019
fitch mines

Among all the realized and announced on-site renewable energy projects for mines in Africa, Fitch Solutions Macro Research says solar dominates heavily compared to wind. (Source: Voltalia/Fitch Solutions)

Key Takeaways

  • An industry trend analysis from Fitch Solutions Macro Research sees the benefits renewables can provide off-grid mines in Sub-Saharan Africa
  • Unreliable power supply and insufficient transport infrastructure in regions of Sub-Saharan Africa will benefit from off-grid power supply coming from renewables, especially solar since the region has more sunshine than any other place on earth
  • Having renewables to power their operations also reduces their dependence on expensive and polluting diesel generated power
  • Better government policies and good corporate governance will be helpful to bring benefits of renewables to the mining industry in Sub-Saharan Africa

Unreliable traditional grid power supply, favourable climatic conditions and prevalence of off-grid remote mines builds up a business case for mining companies to invest in renewables in Sub-Saharan Africa (SSA), says Fitch Solutions Macro Research in its industry trend analysis on the subject. Several mining nations that remain highly dependent on hydropower will also benefit from renewables as climate changes lead to drought-like situation, bringing down hydropower plants output.

Among renewables, majorly solar and wind power, it is the former that stands a better chance of growth in SSA since Africa is rich in solar irradiation. Falling prices of solar speak for the benefits it brings.

This analysis is a follow-up on the analysts’ 2018 report on the forecast for mining companies globally preferring renewables, mainly PV and wind to improve their ESG standards along with the rapidly falling costs of these technologies (see Mining Industry To Go Solar PV & Wind).

What works in favour of renewables in the SSA region is the insufficient, unreliable power and transport infrastructure, which means several remotely located mines remain off-grid, remaining dependent on expensive diesel-generated power transported expensively as well.

The need to curb emissions in anticipation of the International Maritime Organization (IMO) introducing new emission standards in 2020 is likely to increase prices for imported diesel while pushing the demand for less polluting distillates to be shipped, will give another boost to the adoption of renewables.

Currently, all mines in the SSA that are powered by renewable energy, read solar or wind, are off-grid and hybrid combined with diesel or heavy fuel oil, and in some cases these have energy storage components, according to Fitch Solutions. Hybrid microgrids as decentralized power generation sources should work well in the case of off-grid mining companies, it suggests. At the same time, benefits of renewables also extend to grid-connected mining operations as these can guard against unreliability of grid power.

Poor corporate governance and financial management of the domestic power sectors hurt the business of mining companies, for instance the mismanagement in South African utility Eskom, according to Fitch Solutions. This also speaks for the need to have more renewables in the kitty.

Fitch Solutions recommends strong government policy support for renewables across the SSA region will be instrumental for it to fulfil its potential with regard to integrating clean-power across the mining sector in the coming years.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani