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Hybrid Power - Hatch Leading the way
1.
2. 2 Hatch Energy
Hybrid Power
Generation
Delivering renewable energy for less than
the levelized cost of fossil fuels
Approximately one quarter of the cost of mining
is energy. Accordingly, much of the uncertainty
regarding a mining program’s future profitability is
related to contingencies associated with energy
costs. Eliminating these contingencies can offer
more certainty to shareholders, and if the price per
megawatt can be lowered along the way, return on
investment can also be improved. Nonetheless,
many mining companies are operating on the
premise that not much can be done to convert
variable energy costs into more manageable
fixed ones—especially since more and more
mining programs are being developed in remote,
underserviced areas. This reality often compels
companies to install captive thermal generating
assets to meet their power requirements, which
in turn exposes them to the logistical hurdles and
variable costs associated with acquiring a steady
stream of fossil fuels.
3. Hatch was responsible for project management, procurement and construction management for the first two cogeneration units
built on the Alcoa World Alumina Pinjarra refinery in Western Australia.
Hybrid Power 3
Renewable power, in the form of solar and
wind installations, is increasingly proposed as
an alternative for generating electricity in distant
locales, yet these sources too have their challenges
such as high upfront capital costs, intermittency, and
questions about the efficacy of novel technologies.
It’s no wonder then that most mining companies
are biting the bullet when it comes to energy and
profitability. They are accepting the variable costs
of fossil fuels, which are poised to rise over the long
run due to global economic growth, and forging
ahead with building captive thermal plants believing
that no preferable alternatives exist. However, the
sun is about to set on this antiquated view.
A new approach developed at Hatch is quickly
demonstrating that the profitability of mining
operations can be improved by integrating
renewable (solar and wind) with conventional
thermal (fossil fuel) generating facilities. This
hybridized approach delivers renewable power at a
cost that is less than the levelized cost of liquid fuels,
such as oil or diesel.
4. Hatch completed full EPCM services for the Kent Breeze wind power
project, which included the first installation of the GE 2.5xl machines
in North America
4 Hatch Energy
Intrinsic Value
Proposition: Be Seen
in a Better Light
Mining operations often encounter community
resistance due to the environmental stigma
associated with their activities. The intrinsic
value proposition of hybridized power generation
provides a strong counterpoint to this opposition
and helps to demonstrate a corporate commitment
to sustainability. In addition to the obvious benefits
of environmental stewardship and green energy
participation, renewable power assets typically
outlive the economic life of the resource extraction
process and form a legacy contribution to the
community. They also help to diversify the local
economy by providing sustainable and differentiated
employment opportunities. Renewable power may
also offer the potential for future monetization of
carbon credits.
Lower Energy Costs
Hatch’s approach to hybridization offers mining
clients a viable way to lower their energy costs while
addressing the main concerns associated with use of
renewable energy.
Flexible deal structures to remove the
burden of renewable CAPEX
Renewable assets have large upfront capital costs but
minimal operating expenses over their lifetimes. In
some instances, deals can be structured so that direct
capital investment is feasible, with paybacks typically
within 5-7 years. In others, the burden of renewable
CAPEX must be removed in order to create an
attractive alternative to fossil-fuel-fired generation.
Hatch designs and oversees the construction of
the renewable installation, which is financed,
owned and operated by the special-purpose
entity. Renewable energy is then delivered to the
mining company via a customized power purchase
agreement at a price that is lower than the levelized
cost of fossil fuels. In this way, the mining company
removes the burden of the renewable energy CAPEX
from its balance sheet, thus freeing up capital,
decreasing risk, and making the predictable, lower
cost of renewables more attractive than the variable
cost of fossil fuels. It also allows Hatch to remain
independent so it can deliver the most appropriate
and cost-effective energy solution available.
High-quality implementation and proven
technologies lower risks
Hatch designs and implements its hybridized
generation solutions with the same degree of
care and control that it brings to other types of
engineering projects—and indeed for which it is
widely recognized within the mining industry.
Our growing energy practice has an extensive
background in the delivery of renewable energy
assets including large, utility-scale wind and solar
installations. Accordingly, all of our proposed
solutions are vetted based on economic viability and
field history, and only technologies with extensive
track records are used for base case assumptions.
Smart installation design offsets the
most fossil fuels and ensures sufficient
energy supply
The intermittent nature of solar and wind
power often raises fears of energy deficiency
and subsequent operational disruptions. Smart
installation design that incorporates load shifting
and energy storage techniques ensures adequate
energy supply while lowering costs by offsetting
the maximum amount of fossil fuels. For instance,
Hatch’s resource measurement, tracking and
forecasting models are widely used in the renewable
market today. These models allow us to size the
renewable power capacities to address peak loads
during primary hours and to maintain sufficient
load at other times to allow for the efficient and
appropriate use of thermal assets. Our installation
designs also include energy storage through
compressed gas, water reservoirs, and other
methods, as well as time-shifting loads in a manner
that is transparent to the process, such as running
desalination facilities at off-peak hours.
7. Hatch is working on a hybrid wind-diesel integration study for the remote Inuit village of Kangiqsualujjuaq in Canada’s arctic north to minimize
energy costs and maximize the utilization of wind energy to offset diesel-fuel costs
Hatch acted as Owner’s Engineer for Peterborough Utilities Inc’s
10-MW Lily Lake solar farm, one of the first utility-scale solar farms
built in Ontario, Canada
Hybrid Power 7
Project Experience
Hybridization of renewable and traditional power
generating assets may be relatively new, but Hatch’s
reputation for high-quality engineering services
is not. Our track record in the renewable power
space reaches back nearly 100 years to the advent
of hydropower in North America, from which it
now extends across the development of major wind
and solar installations throughout the world. Our
global reach and longevity allow us to devise cost-
saving renewable energy solutions for our industrial
clients and deliver them with confidence. A list of
representative projects is available upon request.
Carry On (As If
We’re Not Here)
Due to its novelty and upfront resource
requirements, renewable energy projects can
sometimes be perceived as a distraction in the
context of a full-scale mining program. When Hatch
undertakes a renewable energy project, it does so
in a way that does not interfere with the company’s
program-management process. This means securing
independent resources and working unobtrusively,
thus avoiding internal competition and preserving
program integrity.
