The Pilbara region, in Western Australia, is set to be home to the first major iron ore mining operation in the country to be run entirely off renewable energy during the day.
On behalf of the Federal Government, the Australian Renewable Energy Agency (ARENA) has announced $24.2 million in funding to Alinta Energy Pilbara Finance Pty Ltd (Alinta) to develop its Solar Gas Hybrid project to power Fortescue Metals Group’s (Fortescue) Chichester mining hub.
As part of Alinta’s project, a 60MW solar PV facility will be constructed and approximately 60km of new transmission lines will link Fortescue’s Christmas Creek and Cloudbreak mines with the new solar farm.
The project will also see the transmission lines connect the Chichester Hub’s mines and Roy Hill to Alinta’s existing 145MW gas-fired Newman Power Station and its 35 MW/11 MWh battery storage system.
Fortescue is to be the offtaker of the project which will help to reduce the use of diesel by around 100 million litres annually, as the mines currently rely on diesel generators. This will allow up to 100 per cent of daytime energy requirements for the Chichester iron ore mining operations to be powered by renewable energy, with the remaining power requirements to be balanced with gas generation.
The project will highlight the benefits of integrating renewable energy into mining processes to displace current fossil fuel generation, and how renewable energy can help the mining sector reduce its emissions.
ARENA CEO, Darren Miller, said the project could unlock further investment in renewable energy in the mining sector and other remote and energy-intensive operations.
“Alinta’s project will demonstrate how renewable energy solutions can deliver critical energy requirements for major mining operations and help reduce emissions. This will also show how interconnection of loads and different generation and storage – including solar, battery storage and gas – can provide secure and reliable electricity,” Mr Miller said.
Alinta Energy Managing Director and CEO, Jeff Dimery, said that “working together, we are on the cusp of demonstrating that renewables can drive Australia’s economic powerhouses forward – even for remote and complex industrial applications.”
Fortescue CEO, Elizabeth Gaines, said, “This landmark project is a first on this scale for the Pilbara and will reduce carbon emissions from stationary generation by around 40 per cent at Fortescue’s Christmas Creek and Cloudbreak mining operations, while driving long-term sustainable cost reductions to maintain Fortescue’s global cost leadership position.”
The project is also expected to increase the security of energy supply in the region, with regional communities and pastoral stations expected to benefit from a reliable, local energy source.
Port Hedland and Karratha could also enjoy lower power prices, should the project be a catalyst for any future expansion of transmission connections in the Pilbara.
Minister for Resources and Northern Australia, Matt Canavan, said the NAIF loan would support development of the approximately $200 million project, and reaffirmed the Federal Government’s commitment to harnessing the enormous potential of Northern Australia.
“This NAIF loan will underpin more jobs for Australians and more productivity in the East Pilbara, creating more prosperity throughout the north,” Mr Canavan said.
“The loan is an investment in the jobs and industries of the region, boosting productivity in the East Pilbara and creating more prosperity throughout the north.
“The NAIF is really delivering for Western Australia, with 50 per cent of the projects currently in the due diligence phase of assessment being from the west.”
Minister for Energy and Emissions Reduction, Angus Taylor, said the project was in line with the government’s continued commitment to supporting the transition to a low-emissions economy while, at the same time, providing reliable, secure and affordable energy to industry and regional Australia.
“The project will highlight the benefits of integrating renewable energy into mining processes and demonstrate how renewable energy can help reduce emissions in the sector,” Mr Taylor said.
“The combination of solar and gas means the mining operation will have clean, secure and reliable energy supply from morning to night.
“Importantly, as mining operations move away from a reliance on diesel, and the costs for firmed renewable technologies decrease, electricity costs will fall and mines will become more competitive.”
Western Australia Senator, Dean Smith, said the announcement was a major boost for the Pilbara region and would generate valuable employment opportunities in Western Australia’s north.
“It’s an exciting project because it involves the sustainable diversification of energy generation, harnessing the abundant sunshine of the north to power operations and increasing energy supplies for mining operations,” Mr Smith said.
“New mine operators, local communities and pastoral interests will be able to tap into the network once it is established, helping us meet our national emissions reduction targets through low-emission renewable energy generation.”
NAIF will provide a loan facility of up to $90 million and ARENA will provide a $24.2 million grant to Alinta Energy for the Chichester Solar Gas Hybrid project.
Construction is expected to commence before the end of 2019 and be completed by mid-2021.
It is forecast the project will deliver public benefits of $221 million, and around 200 jobs are expected to be created at peak construction of the project.
Alinta has also outlined plans for Indigenous participation, procurement and employment in the project, as well as developing a strategy to support Indigenous training and education throughout the operations phase of the project.
The deal is subject to ratification by the Western Australian Government.
The NAIF is a Commonwealth Government $5 billion lending facility to finance projects with the governments of the Northern Territory, Queensland and Western Australia to achieve growth in the economies and populations of northern Australia.