Renewable Energy and Mining
The perfect marriage
According to the World Bank’s ‘The Mineral Intensity of the Clean Energy Transition’ report, an estimated 3 billion t of minerals and metals will be required by 2050 for the implementation of wind, solar, and geothermic energy, along with energy storage, to limit the effect of global warming to within the 2°C mark as defined in the Paris Agreement. Production of minerals, such as lithium, graphite and cobalt could increase 500% by 2050. Consumption of copper, on the other hand, will almost double to around 50 million t/y by 2035, according to S&P Global. However, the more ambitious the climate targets, the more minerals will be needed for a clean energy transition. “Chile is the world’s largest producer of copper and second largest producer of lithium, contributing approximately 25% of the world's copper and a third of its lithium,” said Mark Wainwright, managing director at Turner and Townsend.
The Chilean mining industry has the responsibility to supply the international market with the necessary minerals while containing its effects on the environment in doing so, which requires that the entire value chain makes decisive progress in the reduction of greenhouse gas emissions. “Especially with the climate change crisis, we must be not only a mining country, but also a country at the cutting edge of responsible, sustainable mining,” President Gabriel Boric stated at the March 2024 inauguration of Antofagasta Minerals’ US$2 billion desalination plant for its flagship copper mine in Chile, Los Pelambres.
Energy generation is responsible for 77% of the country's emissions, according to the National Energy Policy, and the mining industry consumes 36% of this energy. To cut emissions, renewable energy will be a necessary alternative. However, mining is the enabler of the renewable energy sector, according to Minister of Mining, Aurora Williams: “A substantial number of mining operations in Chile are using renewable energies, which has enabled the development of significant energy projects in the north of the country. The mining industry accounts for about 30% of our national energy demand, especially in areas with resources like copper, lithium, and solar radiation— these synergies contribute to building a more sustainable mining industry.”
Watts up in Chile?
The current energy matrix is robust, according to Sergio del Campo, president of Sonnedix Chile and former Minister of Energy: “The Chilean electricity market has approximately 12,000 MW of hybrid renewable energy, with 7,000 MW under construction, predominantly solar. By 2025, this capacity is expected to reach approximately 19,000 MW, with 15,000 MW from solar sources.”
Following its US$556 million acquisition of a 416 MWp solar photovoltaic (PV) portfolio from Enel Chile in October 2023, Sonnedix became the country’s third-largest renewable energy provider with over 2.5 GW of controlled capacity. Globally, this was the firm’s biggest acquisition of operating assets to date. “Our portfolio in Chile stands as the largest within our global operations, reflecting the trust investors place in the Chilean electricity market. The country’s macroeconomic stability and attractive regulatory framework are also key pillars for national and international investments,” emphasized del Campo.
José Rodríguez Monje, general manager at Aggreko Chile echoed the sentiment: “Chile has been a pioneer in the renewable electricity market, and due to accessibility of renewable resources, the cost of energy is low in comparison to other jurisdictions.”
Chile pledged carbon neutrality by 2050 under its 2022 Climate Change Framework Law. To further support the transition to renewables Chile passed the Electric Tariff Stabilization Law in April 2024 to mitigate electricity price hikes by providing subsidies, ensuring affordable and stable energy costs for consumers. Both laws work together to support Chile’s transition to a low-carbon economy while protecting consumers from the financial impacts of this transition.
“Chile has prepared itself for forty years for the present moment. The country has the necessary miners, metallurgists, engineers, automation, knowledge, worldwide experience, and instrumentation to support increased mining activity.”
Mauricio Mazuela, General Manager, Hitachi Energy
Short-circuiting Chile’s renewable energy ambitions
In Chile, 70% of electricity is expected to come from renewables by 2030 and 96% by 2050. During the first trimester of 2024 renewable energy reached a record-breaking 41% of total electricity generation, according to the National Electric Coordinator. However, current permitting within the country may hinder its goals, according to María Teresa González Ramírez, country manager at Statkraft: “The current timelines for obtaining permits make it impossible to complete the necessary projects to replace coal. Current permit lead times can kill a project. Investments need certainty—if a permit is supposed to take six months, the state should confirm it in six months, not two years.”
Statkraft’s hydroelectric project in the Pilmaiquén River was delayed 2 years, costing the company an extra US$50 million due to delays in obtaining an archaeological characterization permit from the National Monument Council. “The state, civil society, and the private sector must decide which projects are needed to replace coal. To replace the 5 GW of coal currently supporting the grid, the country needs to install 15 GW of renewable energy capacity.” González continued.
Transmission infrastructure is another obstacle for the industry said del Campo: “Given Chile’s elongated geography, building new transmission lines is challenging, especially due to environmental and land acquisition hurdles. The transmission system cannot keep up with the rapid adoption of renewable energies, as reflected in projects like Kimal-Lo Aguirre, which is already a year behind schedule.”
Kimal-Lo Aguirre is a 1,342 km transmission line capable of transporting 3,000 MW from the country’s north, where most renewable energy is generated, to Santiago, the country’s capital.
“Energy storage is part of the solution to this situation”, del Campo continued. “Minister Diego Pardow's energy transition plan emphasizes energy storage to address transmission system investment gaps and speed up transmission development. Therefore, several energy-generating companies are conducting analyses on energy storage technology, and there is a growing interest among potential customers in adopting this technology.”
“Chile has experienced a surge in renewable energy projects, with over 90% of recent developments focusing on wind, solar, and storage. This trend positions the country for a future of competitive energy prices and international market competitiveness.”
Sergio del Campo, President, Sonnedix Chile
The BESS-t way forward
Energy storage solutions are the gateway to ubiquitous renewable energy use in the mining sector. “Large mining companies have such large energy demands, that they mainly acquire this energy through large Power Purchase Agreements (PPA). However, the backup plants of their critical processes can easily and quickly be changed to renewable energy sources,” stated Rodríguez Monje, continuing: “The batteries are already offered on the market. We are in discussions for a project to implement a 4 or 5 MW capacity system. The project involves Battery Energy Storage Systems (BESS) technology, which helps to manage variability and ensure a steady supply of electricity.”
BESS are attractive in Chile said Francisco Caballero, business line manager power and light South America at Atlas Copco: “they can be portable, making them exceptionally innovative while eliminating fuel consumption, emissions, and reducing noise levels. This adaptability is particularly appealing given Chile's diverse geography, ranging from sea level to altitudes of almost 4,500 meters.”
BESS technology is taking hold to make better use of the existing transmission infrastructure. In April 2024, the National Electricity Coordinator authorized the start of operations at the largest battery-based energy storage system in Latin America. This plant, named BESS Coya and owned by ENGIE Chile, has storage capacity of 638 MWh, with 139 MW of installed capacity. The plant will mitigate 65,642 t/y of CO2 emissions and uses lithium batteries to store renewable energy.
Lithium batteries, though, may not be the best option. “They only deliver energy for five hours”, said Felipe Schneider, general manager at BASF. “BASF has a solution that allows continuous energy supply, which is a sodium-sulfur battery. They deliver energy for six-eight hours. During the day operations can be run with solar energy, and the supply can be maintained with our batteries during the night. Sodium and sulfur are both abundant elements and the batteries have a use life of 20 years, making them a perfect sustainable alternative” he continued.
Chile’s path to a renewable energy future is fraught with challenges but equally filled with opportunities. By addressing regulatory inefficiencies and investing in advanced storage technologies, Chile can achieve its ambitious energy goals and set a precedent for other nations.
“The energy transition relies on minerals produced in Chile; wind turbines need copper, and electromobility requires lithium. The demand for these minerals will increase, driving further energy demand. In Chile, renewable energy and mining are the perfect marriage.”
María Teresa González Ramírez, Country Manager, Statkraft
Article header image courtesy of Promet