A Mining Perspective on the Potential of Renewable Electricity Sources For Operations in South Africa Part I—The Research Approach and Internal Evaluation Process

"The business performance of mining corporations in South Africa is adversely affected by the constantly increasing electricity costs. The most commonly used power sources are the national utility supplier via a grid connection, and on-site diesel generators. Previous research has identified the renewable sources of solar photovoltaic (PV), onshore wind, and geothermal energy in hybrid versions with current sources as possible opportunities to counteract rising electricity costs. To provide a clear understanding of the new, developing market of renewable energy sources, this research is divided into two papers. This first paper investigates the internal business structure of mining corporations in order to evaluate electricity generating sources. The multi-criteria decision analysis (MCDA) method is selected as the most suitable approach for this. The paper identifies the criteria used by mining corporations to evaluate possible electricity generation sources for self-generation by means of the corporations’ own investment. Four mining corporations with several mining locations were interviewed. The interviews revealed both new and identical evaluation criteria when the findings were compared to earlier MCDA adaptations analysed in the literature review. The second paper (Part 2) combines current knowledge about the external macroeconomic environment with the findings about the internal environment described here. MCDA is adapted in Part 2 and implemented to analyse and compare current to hybrid renewable sources from the perspective of mines. IntroductionMining corporations in South Africa are currently adversely affected by increasing electricity prices. Electricity is supplied mainly by Eskom1 and, especially in remote locations, by on-site diesel generators (Boyse et al., 2014). Electricity price increases, emanating from diesel price hikes and Eskom, have escalated the total operational expenditure on electricity by the largest mining corporations from 8% to 20% of total operating costs in the past seven years (EIUG, 2015). The reliability of electricity supplied by Eskom has decreased drastically (Govender, 2008), and the prices will increase annually by at least 13% until 2018 (Numbi et al., 2014; Eskom, 2015b). In addition, the South African government plans to introduce a carbon tax on greenhouse gas emissions (Alton et al., 2014)."