Sun. Jul 3rd, 2022

Panelists, in a recent discussion, revealed that mining companies had increased their use of renewable energy. This is because the use of renewable energy to generate electricity in bulk is inexpensive. The discussion took place on a digital event known as the Africa Mining Forum. The discussion’s goal was to study the reason for the mining industry’s inclination towards renewable sources of energy and compare the various models available.

The panelists were Kwafi Ampofo, a metal analyst at BloombergNEF, and Solomon Asamoah, CEO of Ghana Infrastructure Investment Fund. The two were moderated by Claire Volkwyn, Editor-at-large for Smart Energy International. According to Ampofo, four factors are influencing this shift to renewable energy. “First is the fact that electricity demand from the mining sector in itself is growing in quantum,” he said. The second factor is the mining industry’s zeal for reliable sources of energy. “What I mean by that is you almost always find mines in very remote places around the world. Places where, if you are lucky, you get a grid, and if you are not lucky, you will be off the grid,” explained Ampofo.

The third reason is the need to reduce carbon emissions by non-renewable energy sources. Companies are targeting to cut down on their emissions. Shifting to renewable sources will cut the emissions to 50%. The final factor is the business side of the use of renewable energy. It is cheap to generate bulk electricity from renewable sources. “In terms of appetite, the economics of renewable energy now makes business sense. Every year we develop this model and look at the least cost of electricity generation for almost every country in the world and what we are seeing is that 76% of the global economy, the cost of generating bulk electricity, renewable energy is now the cheapest,” Ampofo explained.

On the other hand, Solomon Asamoah noted how development finance institutions (DFIs) have led to this shift by making the renewable energy sector a priority in their financing. “DFIs are making renewables and climate financing key parts of their criteria before they will provide financing to companies and many private lenders have also followed those routes with the Equator Principles etc.,” he said. “I think the next big step you are going to see is that the oil companies themselves are going to play an increasingly large role in the renewable space and I suspect they will also provide very attractive financing. It might seem counterintuitive, but I think they’ve got the message that their future is not as an oil company but as an energy company,” added Asamoah.

According to a report published by Bloomberg, by 2050, renewable energy will supply 56% of overall energy requirements globally. This will be especially from wind and solar energy. Mining companies have adopted several financial models to ensure a reliable supply of energy. These include building their off-grid, renewable power source, power purchase agreements (PPA), an Independent Power Producer (IPP) licenses.

By Adam