Sunday, May 31, 2015

Fwd: Powering African Mines: What Role Will Renewables Play in Addressing Mining’s Current Power Crisis? - Renewable Energy World

Segment gaining momentum. If commodity prices come back it will boom.

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Date: Saturday, May 30, 2015
Subject: Powering African Mines: What Role Will Renewables Play in Addressing Mining's Current Power Crisis? - Renewable Energy World
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Powering African Mines: What Role Will Renewables Play in Addressing Mining's Current Power Crisis?

May 27, 2015

Anglo American Platinum is stepping up its investigation of renewables now that South Africa's main energy utility, Eskom, is experiencing energy shortfalls. "This is a very big challenge for us," says Gerhard van den Berg, the company's principal engineer, energy. "With Eskom having shortages and not being able to supply, we've run into what they call stage-two load curtailment."

To meet this curtailment, the mining giant has shed 65 megawatts — or 10 percent — of its load by keeping the mines running but closing down some operations, including furnaces and processing plants. "Renewables are the right thing to do because of the lack of capacity in the system at the moment," van den Berg says.

Although the appetite for renewables among African mines first originated with remote sites that relied on expensive diesel gensets for their power requirements, grid-tied mines are now keenly interested, as well. Gerhard Wernecke, senior project manager at Cronimet Mining Power Solutions, Ltd., points out that the power crises in South Africa, Namibia, Botswana, Zambia and Mozambique are tipping the balance towards renewables in many African markets.

"If African mining companies want to improve the security of supply they need, they have to look at their own generation capabilities and they need to look at generation capabilities in terms of a sustainable option," says Wernecke.

Reliability and Price

For mines coping with unreliable energy utilities, finding ways to meet their companies' energy needs is paramount. Nic Schoeman, general manager, technical services, for Acacia Mining, says that "the biggest challenge that we've got on our mine sites is the extremely poor quality from TANESCO."

Specifically, Schoeman explains that TANESCO, which is the electric supply company wholly owned by the government of Tanzania, is causing problems for Acacia in three ways: insufficient generation for current demand, a failure to upgrade transmission lines, and distribution problems. "This problem is difficult to cope with," emphasizes Schoeman.

Schoeman has commissioned studies on how renewables could help Acacia meet one of its mines' 40 MW energy needs, and has even completed a tender and identified a forerunner among solar providers.

Similarly, Shanta Mining Company, Ltd., consumes 24,000 megawatt hours of energy each year, and has installed a small pilot solar PV plant in order to assess the feasibility of undertaking a larger scale, hybrid scheme. Project Director Ian Fielding points out that Shanta is also exploring the feasibility of hydro-electric power because the mine operates near a river.

The energy problems confronting grid-tied mines in Africa are profound and growing. That said, Ian Curry, managing director of BR Energy, points out that South Africa is an anomaly within Africa for having 85-90% of its population connected to the electricity grid. He points out that most African countries have far less access to grid power, with some countries having access as low as 20 percent.

Another new development is the more competitive prices for solar and wind power. Anglo American's van den Berg is actively evaluating options. "We don't think cost will be a problem by the time we implement [solar energy]," he says. "Renewables are getting cheaper all the time because of simple supply and demand." 

Finally, many mines struggle with calculating the true expense of renewables projects. Shanta's Fielding points out that one of the greatest barriers to adoption of renewables is "obtaining an unbiased and comprehensive understanding of the real cost and suitability" of the various renewable energy solutions out there. Although there's no shortage of "enthusiastic salesmen" with renewables schemes, sorting through the options is no easy feat.

As a result, Shanta has carried out its own feasibility study to evaluate options and "determine the capital and operating cost of each." With a thorough understanding of the true life-cycle cost (LCC) of energy, Fielding can make a more informed decision.

Revisiting Long-Held Opinions

Compelling advantages for solar solutions within the African mining sector include an abundance of sunlight and the relative speed with which solar solutions can be implemented.

Jan Dewulf, senior investment officer at the International Finance Corp., points out that a solar solution can often be deployed within six months after a mine finalizes a deal. "If back-up power like diesel gensets are available, then the integration with solar power is an easy one and can bring quite a lot of advantages to mining companies," he says.

And while the intermittency problem that plagues solar and wind power providers has no magic-bullet solution, there are clever workarounds. Cronimet's Wernecke points out that "with renewables, storage will always be an issue. However, recent strides in storage technology have proven promising."

He notes that while the price of lithium batteries has started to come down, other challenges remain. "Our concern with batteries are the warranties," he says.  "If you step out of the line to the slightest degree, you won't be able to cash in on your guarantee. Having said that, we do see the value that batteries pose and we are working on clever ways to incorporate them into our value proposition."

Manuel Duggal, managing director of MCD International Energy, points out that batteries add considerable cost to the renewables equation. He estimates that running a diesel-fired power plant in east Africa costs around 40 cents a kilowatt hour, while running a solar plant only when the sun is shining costs 22-24 cents a kilowatt hour. However, running that same solar plant 24/7 using battery storage would cost 58 cents per kilowatt hour.

Finally, the steep decline in the price of oil is affecting African mining companies' appetite for renewables. 

For Shanta, which has historically supplied all energy through its island power plant, lower oil prices do play a sizable role in making decisions about renewable energy going forward. "Yes," says Fielding, "lower oil prices have impacted greatly upon the viability of renewables, where they supplement base load island power plants at off-grid mines, as the total cost of the renewable energy must compete with the variable cost (i.e., fuel cost) of the island power plant."

For other mines, however, the effects of lower oil prices are relatively minor.

Curry points out that delivery costs constitute a huge part of the overall energy equation and so the net effect of lower oil prices isn't as dramatic as some might imagine.

What's more, lower oil prices might persist a year or two, but the energy challenges that African mines face are ongoing. "For the time being, solar is less attractive than it was a couple of years ago with the higher oil prices," says Duggal. "But if you look at long-term trends, the price of oil really is only going to go up, isn't it?" 

Financing Options

"Mining power generation is not a core business for mines," says Cronimet's Wernecke. "The biggest stumbling block is basically financing the plants on the mine's balance sheet. That is why we generally opt to offer our clients a fully financed, risk-wrapped PPA as a solution."

Richard Brody, vice president, business development and sales, for Primus Power, points out that while renewables may be less expensive than relying on diesel gensets, some mines balk at the up-front capital costs.

For reasons like this, Anglo American's van den Berg is exploring IPPs and is eager to find ones "fairly close to the current Eskom price point."

Acacia's Schoeman is also hoping to work with an IPP and pay a per-kilowatt-hour rate that's comparable to local utility charges. That said, he has found that negotiating financing can be a tricky business: "Often, you don't know what the bottom-line costs are until you get far down the road — and then you have to do a U-turn because you find it's coming out too expensive."

BR Energy's Curry points out that the scale of the projects currently being undertaken by African mines can make them less bankable. When it comes to "raising debt to finance these projects with a single offtaker such as a mine, the financing institutions are not falling all over themselves to come to the party," he says.

What's more, IFC's Dewulf points out that "there's quite a lot of work still to be done on the cultural level." He characterizes mining as a conservative industry that resists change.

Dewulf also detects a fundamental mismatch between mining companies and solar and wind developers: While mining companies are pushing developers for lower prices, mines are reluctant to commit to contracts that extend beyond five years.

What the Future Holds

Although a number of unknowns are affecting the outlook for renewables among African mines, many of these unknowns stem from the fact that renewables are relative newcomers to the market.

"One of the biggest obstacles is proving that the technologies are dependable and can save money and result in cleaner power, while meeting the same standards for reliability that these mines absolutely need," says Primus's Brody. "It's important to remember that it's still early days."

MCD's Duggal agrees: "People come to solar and say: 'I want a solar Ferrari.' We're not building solar Ferraris yet. We're building Model Ts." He concludes: "There are still more evolutionary steps between where renewables are now and where they're going to be."

The issues raised in this article will be discussed at the Renewables and Mining Summit and Exhibition, Johannesburg July 1-2, 2015. Join mine energy decision-makers and renewables developers for two days of networking and information sharing.‎
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Monty Bannerman
ArcStar Energy
+1 646.402.5076
www.arcstarenergy.com

Wednesday, May 27, 2015

Bloomberg: The Tanker Market Is Sending a Big Warning to Oil Bulls

Bloomberg - The Tanker Market Is Sending a Big Warning to Oil Bulls http://bloom.bg/1AuZqQt

Tuesday, May 19, 2015

Friday, May 15, 2015

Fwd: Robust, Mature Wind Business

Read cost of production of wind vs. gas.

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Date: May 11, 2015 10:07 AM
Subject: Robust, Mature Wind Business
To: "Monty Bannerman" <mbannerman@arcstarenergy.com>
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EnergyBiz
View from the TOP
May 11, 2015
Weekly interview with industry leaders.


 
 

Robust, Mature Wind Business


Vestas - Hungry Yet Humble



Chris Brown has been steering Vestas Wind System's North American operations as it pivots to thrive in a more mature wind industry by being both hungrier and humble. He joined the company in late 2012.

Brown has known challenges, having served as chief operating officer for the City of Detroit, which filed for bankruptcy in 2013. Earlier, he was executive vice president of DTE Energy, running the non-regulated side of the business and trading.

EnergyCentral sat down with Brown for an extended conversation about his company and the future of wind energy. His comments, edited for length and style, follow.


EnergyCentral: What is the state of wind generation in America today?

BROWN:    We're going to probably see some of our highest manufacturing and construction of wind projects in the next two years. We've had kind of record orders in 2013 and we're on pretty good track for 2014. We're driving the cost of energy down. You can't produce electricity at a gas generation plant at below $20 a megawatt-hour. If you include the production tax credit value to the third party investor and look at $40 or $45 per megawatt-hour, that's economic in 75 to 80% of the jurisdictions in the United States. There are places in California where PV is probably beating wind. I'm not worried about that competition. I'm thinking about what's going to be the future of the U.S. Environmental Protection Agency 111-D regulations on greenhouse gas emissions. Where does that go as we go forward? How does the Southeast look at power? Do we take the windy areas of the country and provide transmission in large scale? What's next in generation?

EnergyCentral: What innovations are you looking at in your business?

BROWN:     We've peeled off service and said that's a separate business. Service on the asset management side has continued to grow. 

EnergyCentral: What are some of the negative perceptions of wind generation?

BROWN:    There is a perception perhaps that wind is not cheap.  That's a wrong perception, too. Every energy source has been incentivized. If we start to make a level playing field, wind can compete with anything.  Unfortunately, wind tax subsidies have to be renewed every two years.  But if you look the next 10 years of run-life, we're still decreasing our costs. Other generation industries aren't. Those industries are actually going up in cost as a result of mine issues, violations or potential carbon taxes.

EnergyCentral: Does wind still need to have a production tax credit?

BROWN:    I would certainly be in favor of not having a PTC if we have a level playing field. Let's have that debate about what the national energy policy is. Are there incentives for nuclear or are there incentives for solar? Do we need certain subsidies in certain regions? Let's not say, "Okay, we'll do a two-year extension but we won't review the other mechanisms."

EnergyCentral: Let's say we get a level playing field. How much will wind generation grow as a percentage of total power generation?

BROWN:    In Denmark, I think, wind is at about 30 percent. In most jurisdictions in the United States we are at 6 or 7 percent, maybe going to 8 percent of generation production. Xcel Energy, based out of Minneapolis and Colorado, are at 30 percent. Wind blows from Texas all the way up to Minnesota. Let's figure out how to get the most productive yield out of that. Some policymakers may say the amount of wind ought to be 22 percent in California. Really? It ought to be, "Here's where we can get the 38 percent penetration because it's economic when the wind is at 9 meters a second.  And in the states that don't have any wind but they have sun, okay, let's use solar." Maybe they don't have either and need to use nuclear. But we haven't had that conversation. It's been very public utility commission and state-centric.

EnergyCentral: What's been your biggest problem with the last few years at Vestas?

BROWN:    Currently it's getting enough qualified manufacturing talent in our factories.

EnergyCentral: You've downsized and now you can't find the employees?

BROWN:    Yes, we're been really challenged to get the numbers to ramp back up. We're aiming to have 2,800 employees in Colorado at our four factories. 

EnergyCentral: Who are you biggest customers: utilities or independent power producers?

BROWN:    Well, it's both. We also supply to developers, people that are selling to utilities. We sell to pretty much everybody. 

EnergyCentral: Is transmission being built at the pace that you'd like to see?

BROWN:    In some jurisdictions it is and in some it isn't. The Anschutz Exploration Corporation is interested in building a large wind generation facility in Wyoming that puts power into California. That requires transmission. Clean Line Energy is trying to put power into the Southeast and Northeast, but from Oklahoma windy areas.

EnergyCentral: What is your view of microgrids?

BROWN:    They are not enough. They may be sufficient in 50 years, but they're not sufficient now. 

EnergyCentral: There is a move toward microgrids to increase reliability.

BROWN:    There is a lot of hype around battery and storage technology. Elon Musk wants to put in a $5 billion dollar facility. That's fine, but what percentage is that going to be of the total installed generating capacity in the United States? Very small. 

EnergyCentral: What do you think state regulators least understand about wind?

BROWN:    The cost of wind energy. It is coming down. It will continue to come down. There's a perception that we're still in the 1980s and 1990s of 40 cents per kilowatt-hour. It's just not true. That's where I don't think the regulators have totally embraced it. Some of the regulators totally get it.

EnergyCentral: What kind of business innovations are you seeing?

BROWN:    The financial side of the business is starting to mature. You see it with yield cos. There are great companies that are saying, "We're going to pay this much of a yield out, and we're going to distribute it all to shareholders and they're going to get it straightaway." I think that as an instrument has been very effective for people that are developing projects in the wind space. They've gotten to scale, and they've gotten to a return for their investors that's been material. If you didn't have the scale of what we're doing now, you could have a yield co. A yield co has to have assets to feed. 

EnergyCentral: Any other innovations?

BROWN:    We're now saying we will guarantee megawatt-hours at a price. We didn't do that 10 years ago. Now we're financially underwriting these contracts. That's different.

EnergyCentral: Do you see an opportunity to bring wind power to the 1.5 billion people without electricity?

BROWN:       Yes; "Wind for Prosperity" is a program we've been working hard at for quite some time. If you're paying 52 cents a kilowatt-hour for diesel generation and you're having pirates steal the diesel generation, and you're polluting your local environment, how do you figure out how to put a smaller generating facility in and be economical? How do you take some of the inefficient installed wind capacity that you have in mature markets and transfer them to emerging markets? There's a real opportunity in some of the emerging markets.

EnergyCentral: What's the Vestas' corporate culture today, and has it changed over the years?

BROWN:    We're learning how to compete. I'd say we're trying to be hungrier and more humble. I think that in the past we were growing revenue without profitable growth. We are going to change the world, and we're going to do it in a way where it can make money. When you see the variability of energy and demand going up and down, it required us to be much more mature. So we've grown up some. We've become better business people. We've  gotten closer to the knitting of our business. I think we've been more commercial. Three of the values that are important to us are accountability, collaboration and simplicity. We've tried to make the business simple to understand. We used to have some pretty lofty revenue and profit targets. We've been humbled on some of that. When you get kicked, you got to get up and say, okay, here's how you're going to make it happen on a day-to-day basis. I think we've increased maybe that little bit of fear, and that's been good.

  
Robust, Mature Wind Business   

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Wednesday, May 13, 2015

Inside Costa Rica MobileThose who fail to protect environment face divine wrath: Pope Francis » Inside Costa Rica

Francis cranks up the heat.  And with him, you know what kind of heat he is talking about.

http://insidecostarica.com/2015/05/13/fail-protect-environment-face-divine-wrath-pope-francis/

Fwd: The Fantasy of Electric Rates: Time to Educate Ratepayers

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From: "Rebecca Van Nichols" <rvan@tnag.net>
Date: May 13, 2015 12:57 AM
Subject: The Fantasy of Electric Rates: Time to Educate Ratepayers
To: <mbannerman@arcstarenergy.com>
Cc:


The Fantasy of Electric Rates: Time to Educate Ratepayers

Scott Sklar, The Stella Group 
May 11, 2015  |  9 Comments

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Many electric utilities are flexing their political muscles against solar net metering and state renewable portfolio standards (RPS). Their main issue is that other consumers are subsidizing solar (and renewables), particularly pointing to lower-income consumers. I have already written about the numerous studies that disprove those allegations, but that is not what this article is about.

There are several fantasies about electricity rates, and it is time to address "ratepayers subsidizing solar." The corollary is "at no other time do ratepayers subsidize other ratepayers."  I am here to tell you, dear readers, that this belief is hogwash. Cross-ratepayer subsidies occur every single day in every utility service territory.

Fantasy One: There Is One Electric Rate

In many states, residential ratepayers have one homogenized rate, and commercial/industrial/institutional (CII) ratepayers have a series of electric sub-rates called demand charges (rates increase over a certain level of electric use), peak and season rates, and in de-regulated states "spot" or "ratchet" rates (which are time-specific rates) and some even have time-of-use (TOU) rates.  So in states where residential customers have a singular rate, those CII ratepayers subsidize residential rates.

Fantasy Two: There Are No Cross-rate Subsidies

Every utility in their service area allows large industrial, commercial, and institutional customers receive lower electric rates. In fact, these large players negotiate with the electric utility on what rate they expect when they move a facility or building into an area. The larger they are, the lower electric rates they get.

According to the Energy Information Administration, 2014 electric utility rates for New England stand at 17.98/kWh for residential while commercial is 14.04/kWh and industrial is 10.97/kWh, which is the only electric rate that went down from the year prior.  Pacific coast rates are at 13.81/kWh for residential and 8.51/kWh for industrial, while West South Central states are at 11.01/kWh for residential, 8.17/kWh for commercial and 5.75/kWh for industrial.

In fact there is a whole industry of consultants that represent companies to negotiate lower electric rates with their electric utilities. One such consultant advertises: "Our energy consultants routinely negotiate with utilities to generate savings for companies. These negotiations extend beyond tariff rates into other utility opportunities, incentives and programs that involve: obtaining preferable contract terms and developing specialized rates."

Manuals for officials from commercial and industry that move or open new facilities routinely state: "Electricity price negotiations: In contrast to negotiating your interconnection agreement, you may have more bargaining flexibility in negotiating your price for electricity.  In some locations, all electricity prices will be defined by pre-determined tariff rates. However, ideally you'll find a "negotiated rate tariff," which lays out the structure of the agreement but leaves blanks for the actual prices. This means the door is open for you to negotiate on price." 

February 2014 story in Business reported:

Florida Power & Light Co. received the go-ahead from regulators Tuesday to negotiate discounted rates for industrial and commercial customers with a load of 2 megawatts or more in hopes of bringing more large power users to its territory. State regulators unanimously approved what's known as a commercial/industrial service rider that gives FPL the flexibility to negotiate prices with customers within those parameters. Those eligible would either be companies are at risk of leaving FPL's territory for less expensive service outside of Florida or firms weighing locating in Florida versus other states.

The bottom line is that when these large energy users receive lower negotiated rates — and this happens in every utility service territory — guess who is subsidizing the richest ratepayers in the world? Answer: Other ratepayers, usually small business and residential ratepayers.

Fantasy Three: Utilities Can Strong Arm the Political Process for Electric Rates 

On April 17th, The Texas Senate has voted to eliminate the state's RPS and its Competitive Renewable Energy Zone (CREZ) program, two initiatives that were instrumental in driving a huge growth of wind power and an expanding market for solar, as well. 

While only one House of the Texas legislature acted so far this year, Kansas repealed its RPS in the state legislature this year. Midwest Energy news reported, "It's the fourth consecutive year that renewable-energy opponents such as Wichita-based Koch Industries and the Kansas Chamber of Commerce have attempted to downsize or eliminate the requirement that investor-owned utilities derive increasing proportions of their energy from renewable sources." 

Bottom line: Due to flatter consumer demand and much higher consumer adoption of energy efficiency and on-site electrical generation, the old electric utility model is taking a licking. Most electric utilities are frantically using their political clout, just as MaBell did to stall deregulation and cellular. 

But while large industrial and commercial ratepayers get huge electric rate reductions subsidized by other ratepayers, does anyone hear a call for standby charges due to rate shifts to other customers? No.  Only solar users receive that designation is some states due to a very sophisticated campaign by electric utilities.

I personally have no problem with large electric users or solar users benefitting from their clout or personal entrepreneurism.  But I do strongly object to policymakers and regulators focusing on the smallest side of the rate shift, rather than the largest – and implementing fees (standby charges) to address the much smaller impact on rates than the large users.

Many legislatures and regulatory commissions are falling for this dual standard on the guise that they need to make the standard electric utility model viable. But in fact, their job should be focused on what's best for all ratepayers to provide reliable, clean, and affordable (over the long term) from their electricity delivery system. Sadly, most are failing that consumer/ratepayer test. And it's our job as electric ratepayers to put our foot down on shifting penalties to energy savers rather than a more flexible, agile, electric delivery system we all deserve.

Lead image: Fantasy book. Credit: Shutterstock

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