The Extractive Industries and Society 2 (2015) 509–518

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The Extractive Industries and Society

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Original Article

The economic feasibility of renewable energy for off-grid mining

deployment
M.A. Escalante Soberanis, A. Alnaggar, W. Mérida *
Clean Energy Research Centre, University of British Columbia, 2360 East Mall, Vancouver, BC, Canada V6T 1Z3

A R T I C L E I N F O A B S T R A C T

Article history: As renewable energy technologies emerge, it is important to determine the economic feasibility of
Received 25 November 2014 introducing such technologies at mines. We present a case study of a mine in the Canadian territory of
Received in revised form 7 April 2015 Nunavut, where extreme climatic conditions exist. It was determined that nearly 47,500 L of diesel could
Available online 22 April 2015
be saved annually during the exploration phase with the proposed installations applied in the residential
facility of the mine. This represents a savings of approximately 10% in diesel consumption relative to the
Keywords: base case. Solar thermal technologies also were considered for the residential facility, with a payback
Remote communities
period of approximately 5 months. Simple energy efficiency strategies can have a payback period as
Renewable Energy
Nunavut
short as 2.3 months. Reductions in energy consumption and carbon dioxide emissions are estimated at
Off-grid facilities 25% by pursuing the proposed efficiency strategies. If the mining company invests in wind turbines for
Economic Feasibility the processing plant, approximately 35 million litres of diesel could be saved annually during the
extraction phase. In addition, 9.7% of the carbon dioxide emissions can be reduced during the exploration
phase and 50% during the extraction phase by utilizing renewable energy sources.
ß 2015 Elsevier Ltd. All rights reserved.

1. Introduction in the range of 171.7 million litres annually, of which 38%

In remote communities that typically lack access to conven-
tional transmission lines, power is often delivered by diesel
generators. Transport costs to remote sites increase the price of
diesel and, consequently, the final price of energy delivery
(Manchester et al., 2014). In such cases, environmental costs are
linked to the exclusive use of diesel generators to satisfy the
electricity demand.
A study (Arriaga et al., 2013) revealed that more than
175 communities in Northern Canada generate their own
electricity off-grid using diesel-fuel generators. According to the
authors, approximately 100,000 persons reside in these commu-
nities, and have an average energy cost of $1.3 USD per kWh. With
their increasing electricity demands, the replacement or upgrade
of current power generation systems becomes imminent, pre-
senting an opportunity for renewable energy sources.
The Canadian territory of Nunavut has a population 36,600
(Statistics Canada, 2014). According to the Government of
Nunavut, the territory’s total petroleum product consumption is
* Corresponding author. Tel.: +1 604 822 4189; fax: +1 604 822 2403.
E-mail addresses: mauricio.escalante@mech.ubc.ca (M.A. Escalante Soberanis),
ali.alnaggar@alumni.ubc.ca (A. Alnaggar), walter.merida@ubc.ca (W. Mérida).
corresponds to heat and 20% to electric consumption (The
Government of Nunavut, 2007). The largest share of consumption
is for transportation, at 42% of total petroleum-based consumption.
The purchase of petroleum products accounted for 20% of the
Government of Nunavut’s annual budget during the 2005–2006
fiscal year (The Government of Nunavut, 2007).[1_TD$IF] The government
has committed to providing economic incentives to both
communities and companies that adopt renewable sources and
improve their energy efficiency.
The Government of Canada previously provided incentives for
the deployment of renewable energy technologies in the country.
For example, the Wind Power Production Incentive offered one cent
(CAD) per kilowatt-hour for 10 years for wind-powered electrical
generation commissioned. This programme was discontinued on
31 March 2007 and replaced by a similar programme (Natural
Resources Canada, 2005).
The proportion of energy costs in mineral extraction and
processing accounts for approximately 15% and 19% of the
production costs for metals and non-metals, respectively
(Levesque et al., 2014). Mining extraction itself represents 60%
of total energy consumption (Natural Resources Canada, 2013).
The view here is that the introduction of renewable energy sources
would lower the costs identified by Natural Resources Canada
(NRCan). The implementation of the proposed measures could

http://dx.doi.org/10.1016/j.exis.2015.04.001
2214-790X/ß 2015 Elsevier Ltd. All rights reserved.
510 M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518

deliver benefits not only to mining companies but also to the First These data are presented in Table 1, and they do not include the
Nations communities affected by activities. Aboriginal participa- breakdown of the consumption of the mining equipment located at
tion has been encouraged by NRCan as part of the Minerals and the facility, only the residential facility. It is shown only to compare
Metals Policy of the Government of Canada. the real diesel consumption with that expressed in our results;
The Diavik Diamond Mine is a case in point of successful they were not used as the input of our model. The residential
renewable energy technology deployment in the mining industry. facility accommodates a variable population ranging from 40 to
The company installed a wind farm consisting of four Enercon E70 127 people. The largest population was observed in the operation
wind turbines, with a total capacity of 9.2 MW, and an annual period of 2013, according to the collected data. Fuel consumption
production of 17 GWh. This represents 8.5% of the mine’s power history for 2014, the consumption per capita and the variable
needs (Diavik Diamond Mines Inc., 2014). Another successful monthly heating load were used to calculate the annual power
example is the nickel and copper Raglan mine in Northern Quebec. demand of the 2013 population profile. As a result, we obtained a
Considering an additional power generation requirement of almost model that works for an operational year from February to October
100%, a waste heat recovery scheme was applied to capture the and the largest population profile that has lived in the exploration
exhaust heat from their diesel generators. This measure reduced camp.
the foreseen installed power supply and its associated greenhouse Three generators are set up in the facility (two for main power
gas emissions by approximately 50% (Levesque et al., 2014). generation and one for emergencies). For the purpose of this study,
Our industrial partner, whose identity will not be disclosed, is a only the two main generators will be considered. The remote
mining company with a residential facility in North West Nunavut location will remain confidential, as will the equipment details.
and a processing plant scheduled to be built in the next 3 years. The heating system is the component of the residential facility that
Typically, the residential facility operates between February and consumes the most significant amount of energy. The vast majority
October and closes when there are extreme weather conditions. of heaters operate with electricity, and only a few of them operate
Management is interested in reducing diesel consumption by with propane and diesel.
including renewable sources in its energy budget. Our partner also Two diesel generators (G1 and G2) are considered in the study
plans to reduce generation costs by identifying ways to increase and their characteristics are detailed in Table 2. Load variability is
the efficiency of their residential facility. the range in which the operator controls the generator’s load,
The objective of this paper is to assess the economic feasibility depending on the power consumption. The average fuel efficiency
of deploying renewable energy sources at mines. Energy efficiency considered is valid for the load variability illustrated in the same
measures also are considered in an attempt to identify potential table. The company’s reported cost per litre of diesel, including
further savings in energy consumption. Typical climate constraints transportation, is approximately $2.94 in 2013 USD (Financial
of the regional study are considered to assess the feasibility of Markets Department, 2013), which is more than double the regular
installing photovoltaic modules and wind turbines at the study cost in urban areas as of August 2014 ($1.41 USD per litre,
site. Specifically, we analysed the economic feasibility of imple- according to Statistics Canada). We used USD as the study’s
menting two renewable energy sources: solar photovoltaics (PV) currency with the 2013 average exchange rate by the Bank of
and wind energy. We also included a bank of batteries for energy Canada of $1 USD equivalent to $1.03 CAD (Financial Markets
storage in the system. To analyse the feasibility of solar PV, wind Department, 2013). Considering the price per litre and the
energy and energy storage, we used the software package, Homer generator’s fuel efficiency illustrated in Table 2, the energy cost
Energy, developed by the National Renewable Energy Laboratory can be considered as $0.79 USD per kWh.
(NREL, USA) (National Renewable Energy Laboratory, 2014). The average daily peak power consumption in the remote
Findings from an additional study on solar thermal are included. community was found to be 238 kW, as illustrated in Fig. 1. The
This study aims to reduce diesel used to heat water for human seasonal profile is illustrated in Fig. 2, where the annual average
consumption. Energy efficiency strategies were also studied to energy consumption was calculated as 3047 kWh per day and
identify opportunities to reduce power consumption for lighting. 548 kW peak power consumption. These load profiles were
The remote facility does not have an energy storage system or an configured as the main loads in the software Homer Energy. For
energy monitoring system. For this reason, the analysis was carried the exploration phase, we did not consider part-load efficiency of
out using the average energy consumption data compiled for the diesel generators. We assumed the generators were running at
remote facilities in Canada (Natural Resources Canada, 2011), 80% all the time, as this is the normal operative condition in the
rather than the historic power consumption data. The mining
project is divided into two stages: (1) the exploration phase
(approximately 3 years in length); and (2) the extraction phase Table 1
(projected at 10 years). The interest rate considered in this study Sample of diesel consumed in the remote facility (year: 2014). We adjusted this
numbers to calculate the fuel consumption in 2013.
was 6%, but a sensitivity analysis considered a wider range.
April May June July
2. Exploration phase Average population [persons] 44 58 58 36
Generators [L] 35,206 30,628 16,778 4210
2.1. Methodology Heating [L] 8414 3948 2580 243
Incinerator [L] 12,653 9310 7276 1853
Monthly [L] 56,273 43,886 26,634 6306
The electric load at the camp was estimated based on the Daily average [L] 1876 1416 859 203
average consumption per person in remote off-grid Canadian
communities of 27.7 kWh per day (Natural Resources Canada,
2011), along with the daily load profile of an Alaskan camp which Table 2
was taken from the database of HOMER. In other words, we Characteristics of the two generators that supply the power in the study site.
rearranged the consumption in the case example provided by
Generator Power rating Load variability Average fuel efficiency
Homer and used the annual average for Canadian remote
[kW] [%] [kWh L1]
communities to ascertain the annual profile. The fuel consumption
G1 442 40–80 3.7
data of the remote community during the operation time of the
G2 400 40–80 3.7
exploration camp in 2014 were provided by our industrial partner.
[(Fig._2)TD$IG] M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518 511

Fig. 2. Seasonal profile of the power consumption.

residential facility. The power generation surplus is normally
discarded by our industrial partner.
Solar and wind resources were taken from the National
Aeronautics and Space Administration (NASA) webpage and the
database provided in RETScreen. The solar resource from NASA was
obtained at the exact location of the study site, expressed as a daily
average, but on a monthly basis. There was no public wind data
available for the exact location of the study site, so we took the data
from the nearest location in the database of the software
RETScreen, from NRCAN (Natural Resources Canada, 2014). We
set the monthly wind speed average equal to that at Robertson
Lake Airport, approximately 200 km of our study site. There is an
evident need for real data, and the installation of a meteorological
tower is being considered by our industrial partner. These
resources were used to calculate the economic feasibility of
including solar and wind technology in the company’s energy
budget. The averaged data are presented in Table 3.
The execution of the extraction phase depends on the
exploration results of the feasible conditions to build the mine.
For this reason, the options considered for the exploration phase
were solar energy and an energy storage system. Wind technology
was considered only for the extraction phase, where power
consumption would be considerably larger than during the
exploration phase. We are also interested in expanding our results
to small remote communities where the generation scale must be
planned according to the needs of the population.
2.2. Results
HOMER software takes the model inputs (technology options,
costs, resource availability) and simulates all possible system
configurations based on the hourly demand throughout the year
and the availability of the supply options. After the simulation
process, HOMER lists the most feasible configurations ordered by
cost-effectiveness. It is also able to perform sensitivity analyses for
resource availability and component costs. The objective of the
optimisation was to provide the technically feasible option with
the lowest net present cost (NPC).
The power described illustrated in Figs. 1 and 2 for the
exploration phase was evaluated under different schemes consid-
ering renewable and conventional power generation systems. The
[(Fig._1)TD$IG]
simulation results based on the options studied are illustrated in
Table 4 with the relevant costs involved in their deployment. As the
generators already exist in the facility, the capital cost of all the
schemes are equal to zero. We considered a variable population
with a maximum of 127 people throughout the operational period
between February and October.
The annualised capital cost in Table 4 is the sum of the
annualised capital, replacement and salvage values where
replacement is the replacement capital cost in the cases where
the equipment lifetime is shorter than the project lifetime. The
operating cost in the table includes the annual operation and
maintenance (O&M) costs as well as the annual fuel costs. The
same variables are shown in Table 5 for the extraction phase. The
diesel consumed for the scheme with only G1 and G2 in Table 4
was calculated as 491,132 L. We applied a quadratic fit to the data
illustrated in Table 1, adjusting the population to 96 persons,
which is the average of the population distribution we used for
2013. We set the second-order fit as it is expected that a diesel
consumption plot has a similar behaviour if we keep the
population constant. The equation of the trend line is as follows:
L ¼ 2036:8x2  35012x þ 150903; (1)
where L is the litres of diesel consumed, and x is the number of
the month, January through December are 1 through 12,
respectively. By extrapolating the data to a time period ranging
from February to October, the total diesel consumption adds
approximately 547,440 L. With this amount, we approximated an
error of 10.3% in our calculations for the scheme of the generators
alone, as illustrated in Table 4, compared to the actual recorded
data. This error indicates that our results are in good agreement
with the real data, and gives us a significant range of confidence in
our simulations.
A capital cost of $5000 USD per kW of photovoltaic generation
was considered in this study, calculated from information
provided elsewhere (Griffiths, 2013) and a 25-year operational
lifetime for the PV modules. HOMER calculates the results
considering both the operational lifetime of the equipment and
the project duration, and the salvage value. HOMER also calculates
Table 3
Solar and Wind resource assumed for the study site.

Month Clearness Daily radiation Wind speed

index [kWh m2] average [m s1]

January 0.394 0.110 6.3

February 0.504 0.710 6.4
March 0.556 2.100 6.3
April 0.558 3.900 6.2
[12_TD$IF]May 0.520 5.150 6.0
[13_TD$IF]June 0.486 5.540 5.2
[14_TD$IF]July 0.511 5.440 5.7
[15_TD$IF]August 0.467 3.760 6.2
[16_TD$IF]September 0.453 2.190 6.8
[17_TD$IF]October 0.473 0.980 7.0
[18_TD$IF]November 0.444 0.220 6.0
Fig. 1. Daily load profile in the residence. The data were taken from the profile
[19_TD$IF]December 0.319 0.020 5.8
example in Homer Energy applied to our case scenario.
512 M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518

[1_TD$IF]Table 4
Diesel consumption and costs of different power generation deployments for the exploration phase. The amounts are set to a 3-year project lifetime, 6% interest rate per year
and an average energy load of 3047 kWh per day.

Scheme Energy generated Annualised capital cost Operating cost COE [$ USD/kWh] Diesel consumption
[MWh/year] [$ USD per year] [$ USD per year] [L per year]

 442 kW diesel generator  15.8 $89,399 $1,360,494 $1.304 443,679

 400 kW diesel generator  1053.8
 100 kW solar PV  95.4
 0.43 MWh battery bank
 1097.7150 kW converter
 442 kW diesel generator  23.2 $41,073 $1,422,709 $1.316 466,490
 400 kW diesel generator  1135.2
 1.3 MWh battery bank
 100 kW converter
 442 kW diesel generator  62.8 $18,376 $1,494,212 $1.327 491,132
 1097.7400 kW diesel generator  1097.7

the operative hours of the diesel generators and the load
variability when the rest of the equipment is operational. The
capital cost involved in the installation of an AC/DC converter was
calculated from information provided previously in the available
literature (Rehman et al., 2011) at approximately $200 USD per
kW. The results presented in Table 4 indicate that the purchase of
photovoltaic equipment involves a power generation cost
reduction of approximately 1.76% relative to the current scheme
(diesel generators operating alone).
The power generation system does not currently have a
storage system to balance the demand and supply sides during
peak and off-peak hours. For this reason, the sole inclusion of a
battery bank will bring a reduction of 5% in the diesel
consumption, due to the rescheduling of the generator’s
operation. Fig. 3 illustrates typical periods of charging and
discharging of the battery bank considered in the first scenario of
Table 4. From the two existing generators, G2 would be
operational for most of the power generation schemes considered
in Table 4. Generator G1 would remain as a backup generator in
case of unexpected replacement or emergency events. It can also
be observed that the batteries are able to supply the low demand
overnight, while G2 generates low power. This period is identified
by the discharging period of the batteries in the plot. During the
day, the batteries will charge from the power supplied by G2 and
the PV system. The capital cost considered for a Trojan L16P
battery bank is $351 USD per kWh (Rastler, 2010). The Trojan
L16P is a wet deep-cycle lead-acid battery with a maximum depth
of discharge of 30%. The cost of a separate building to contain the
battery bank is not considered in the study, as the residential
facility had space available for this purpose.
The illustrated savings for the energy storage and PV systems
implementation are reduced by the increased capital costs. For
example, the commercial price of the Trojan L16P battery is
approximately $160 USD per kWh, which is less than half that set
for our simulations. This difference is due mainly to transportation
costs to remote areas.
The cost of electricity (COE) in the residential facility operating
only with the diesel generators is $1.33 USD per kWh. The COE
operating with 100 kW of solar PV and the battery bank is $1.30
USD per kWh, which means $0.03 USD per kWh reduction when
renewable technologies and energy storage are introduced.
Considering the average energy consumption per capita in the
territory of Nunavut, these savings can be interpreted as
approximately $303.32 USD per person per year. The amount of
carbon dioxide released to the atmosphere is slightly reduced
when renewable sources are substituted for conventional genera-
tion. Based on an emission factor of 0.7 kg CO2 per kWh of output
power (Office of Air Quality Planning and Standards, 1995), the two
diesel generators operating alone release approximately 1271 ton
of carbon dioxide to the atmosphere per year. The carbon dioxide
released in the first configuration in Table 4 (PV and batteries) is
approximately 1148 ton per year. This represents a reduction of
approximately 9.7% in the carbon dioxide emissions currently
produced by the residential facility.
A sensitivity analysis that accounts for variations in the solar PV
power generation capacity reveals that the optimum installation is

Table 5
Diesel consumption and costs of different power generation deployments for the extraction phase. The amounts are based on a 10-year project lifetime at 6% interest rate per
year.

Scheme Energy generated Annualised capital cost Operating cost COE [$/kWh] Diesel consumption
[GWh/year] [$ USD per year] [$ USD per year] [L per year]

 20 MW diesel generator  70.0 $19,048,642 $113,263,690 0.657 36,093,492

 10 MW diesel generator  35.7
 Ten 3.3 MW wind turbines  121.2
 43 MWh battery bank
MW converter
 20 MW diesel generator  95.3 $8,793,558 $154,622,128 0.821 48,963,296
 11 MW diesel generator  50.3
 Five 3.3 MW wind turbines  60.5
 43 MWh battery bank
 MW converter
 25 MW diesel generator  183.2 $13,193,596 $207,400,785 1.095 68,898,856
 11 MW diesel generator  21.6
 43 MWh battery bank
MW Converter
 30 MW diesel generator  193.4 $12,950,083 $220,186,069 1.157 72,971,648
 MW diesel generator  8.1
[(Fig._3)TD$IG] M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518 513

JUL 15 JUL 16 AC Primary Load 100 kW. This assumption is based on the information captured in
400 400 G2
Fig. 4 (left), where the NPC presents its minimum value relative to
AC Primary Load (kW)

350 Generator alone 350

the other schemes. With a capacity larger than 100 kW, the NPC
300 300 value of the diesel generators and battery bank becomes more
250 250 attractive than a PV configuration. The initial capital cost of a PV
installation is considerably larger than that of a battery bank alone,
200 200
but PV slightly reduces the operating cost of the residential facility
150 150
and the overall NPC. The right graph in Fig. 4 illustrates the
100 100 sensitivity of NPC when both the PV size and interest rates are
50 50 varied at an average energy consumption of 3047 kWh per day.
MM USD is equivalent to millions of USD. Although higher interest
0 0
12 AM 12 PM 12 AM 12 PM 12 AM rates lead to lower NPC, the COE is larger because the negative cash
End Time flow increases every year. If the interest rate is larger than 15%, the
JUL 15 JUL 16 AC Primary Load two diesel generators and a battery bank with converter become
400 G2 the best option. The optimality of the 100-kW PV size system is
Battery State of Charge
350 PV and batteries
AC Primary Load (kW)

100
Battery State of Charge (%)
PV Power only valid under a 6% interest rate and the system of diesel
300 generators and battery bank is optimum for higher rates. The
250 bottom graph of Fig. 4 illustrates the savings of each PV system size
80
200 per kW installed at the four interest rates studied. We calculated
150
the difference between the NPC of each PV system and the NPC of
60 each option without PV, and then we divided this difference by the
100
individual PV size corresponding to each difference. The lowest
50
interest rate analysed represents the only economically feasible
0 40
option to install PV systems in the study site in terms of the amount
-50 saved in power generation.
12 AM 12 PM 12 AM 12 PM 12 AM
End Time Given the conditions of the present residential facility (load
profile, populations and overall costs), our results do not position a
Fig. 3. Two-day example of the supply side’s schedules of operation of the schemes PV installation as an attractive option for remote communities.
with only the generators (top) and with PV and batteries (bottom). Periods of low
They rather provide feasible scenarios for its implementation in
power generation for generator G2 is observed when the batteries supply the
demand.
communities with larger load profiles. Fig. 5 illustrates the
sensitivity analysis that varies the primary load and diesel price

[(Fig._4)TD$IG]
O&M and Initial Capital ($ MM USD)

2.5 4.00 4.0

Net Present Cost ($ MM USD)

O&M and Initial Capital 3.98

Initial Capital
2.0 3.96 3.8 6%
Net Present Cost
NPC ($ MM USD)

3.94 10%
1.5 3.92 3.6
3.90
15%
1.0 3.88 3.4
3.86
0.5 3.84 20%
3.2
3.82
0.0 3.80 3.0
0 100 200 300 400 0 100 200 300 400
PV Size (kW) PV Size (kW)

600
400
Feasible
Savings per kW ($ USD/kW)

200
0
6%
-200
-400 No PV
-600 10%
-800
-1000
15%
-1200
-1400 Not
-1600 Feasible 20%
-1800
0 100 200 300 400
PV Size (kW)

Fig. 4. Left: Costs involved in a residential facility that includes both solar PV and conventional sources at 6% interest. Right: NPC values with varying interest rates. For rates
above 10%, PV implementation becomes unfeasible. Bottom: Cost of photovoltaic generation per kilowatt installed, compared to the case without PV generation.
[(Fig._5)TD$IG]
514 M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518

Fig. 5. Surface plots of the sensitivity results with varying diesel price and a primary load at a fixed interest rate of 6%. O&M and capital costs are multiplied by factors of 1,
1.5 and 2 for the top, middle and bottom sections of the figure, respectively.

under three capital cost and O&M multipliers to determine the to determine whether a better resource is feasible with higher
optimum option for each range of variation. It is observed that interest rates or not.
higher loads lead to more feasible scenarios where PV is preferred, Fig. 6 illustrates a tornado chart quantifying the impact of five
rather than just diesel generators. However, the renewable option main parameters on the overall COE at the study site. As shown,
is not attractive if the capital costs are increased by at least 50%, the diesel price is the main factor that affects the economics of
indicating that current costs are already in the limit of becoming the project. It also illustrates that an increase of up to 50% in the
economically unfeasible. primary load will bring significant reductions in the COE. Our
results also indicate that a PV system of any size becomes
2.3. Variations in energy consumption at different interest rates [(Fig._6)TD$IG]
The results shown earlier were calculated using an average Cost of Electricity ($USD)
energy consumption of 3047 kWh per day. Variation of the interest $0.40 $0.90 $1.40 $1.90
rates and average energy consumption values were analysed to
determine the best option for each parameter combination. For the Diesel Price ($/L) $0.72 $1.90
exploration phase, a surface plot is illustrated in Fig. 6, where
interest rates of 6%, 10%, 15% and 20% were considered. The option Primary Load (kWh/day) $1.10 $1.77
of a 100-kW PV array becomes feasible at interest rates of 6% and
below. Energy supplied by diesel generators alone becomes the Capital Cost PV $1.24 $1.42
best option when interest rates are above 10% and the energy
demand is below 5000 kWh per day. If the interest rate stays below Interest Rate (%) $1.30 $1.36 -50%
10%, the best option will consistently have a 100-kW PV array in
the residential facility. Under these conditions, the option of Mine Life (Yr) $1.30 $1.33 50%
installing PV modules becomes unattractive for economic systems
with higher interest rates in their financial markets. However, the Fig. 6. Tornado chart of five parameters’ impact on the COE for the exploration
solar resource and electric demand conditions must be reassessed phase. COE of base case was calculated as $1.327 USD.
 M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518
unfeasible when the load exceeds 6000 kWh per day, and different
conditions must be met in terms of the diesel generator sizes
and battery bank. The base COE was calculated at an interest rate of
10% to comprise a wider range in this parameter and to illustrate
its impact on the COE. The same value of interest rate is illustrated
for the tornado chart of the wind turbine deployment.
The main expense in our calculations corresponds to the battery
bank. Reducing the costs of energy storage is a critical point when
the introduction of renewable energy technologies in remote areas
is assessed. These high costs can be reduced with more efficient
energy storage systems and significant savings in transportation
costs.
2.4. Solar thermal
Solar thermal evacuated collectors were considered for this
stage of the study due to their high energy capture and high outlet
temperature (approximately 95 8C). Commercial evacuated solar
thermal heaters can generate approximately 1.47–13.19 kWh per
day per collector, depending on the ambient temperature and sky
clearness (Xu et al., 2012). One example of this capacity can be the
Thermomax HP450 collector model sold by the company Kingspan
Solar. That capacity is equivalent to saving 1–3.7 L of diesel per day
per collector. Considering the carbon dioxide emission per litre of
diesel calculated in our simulations, the savings are equivalent to
0.1–0.3 ton of carbon dioxide per year per collector. A 10-collector
system is suggested, with an initial investment of $14,560.00 USD.
The payback period can be as short as 150 days of use, considering
the diesel cost and an operating period from February to October.
The payback period can be as long as 555 operative days of the
mine, saving 1 L per day of diesel. This time is equivalent to more
than 2 operative years between February and October, which is still
in the range of the residence’s operative life.
3. Extraction phase
3.1. Methodology
A constant power generation of 23 MW will be required to
supply the power needs of the mine’s processing plant and
residence during the extraction phase. The demand will reach the
total power consumption when the processing plant enters into
operations, between 2018 and 2019. This means that the mine’s
power consumption will be 50 times higher than in the residential
facility, where all of the exploration tasks will be carried out. The
load profile will change to a constant load throughout the day all
year long, because the mining plant operations will be continuous.
The annual variability in the residential facility’s power consump-
tion will be insignificant compared to the continuous power
demand of the mining machinery. This phase would require large
power generation and energy storage systems. Under these
conditions, wind energy becomes an ideal candidate to supply
the future power demand of the site under study when the
processing plant becomes operational. We analysed the option of
installing a wind farm to reduce diesel consumption and the
consequent costs of fuel transportation, engine operation, and
engine maintenance.
For this part of the study, wind speed average data in Table 3
were considered to make the simulations in HOMER software. The
wind speed averages were measured at a 10-m height, and the
annual average is considered as wind class 5, according to the Jain’s
classification (Jain, 2011). The scale is defined by seven classes,
with 1 as the lowest potential and 7 as the highest. Class 5 is
considered ‘Excellent’ by the previously mentioned author. Three
possible scenarios were considered: diesel generators, storage
515
system and wind turbines. The wind speed correction at the
turbine’s hub height was considered by the software.
3.2. Results
Table 5 presents some of the results obtained in the simulations
performed by HOMER software. The introduction of large-scale
wind turbines in the system shows significant fuel and economic
savings. The capacity factor used for the wind farm deployment
was set at approximately 41.9%, because HOMER calculates the
best scenario given the wind conditions and the technical
information provided by the turbine manufacturer. If wind energy
is not considered for the final project, it is expected that a battery
bank alone can bring reductions in the fuel consumption of more
than 4 million litres of diesel per year. This reduction represents a
savings of more than $100,000,000 USD in the NPC.
Wind energy-related costs illustrated in Table 5 were extrapo-
lated from the amounts provided in the literature (Rehman et al.,
2011), where ten 3.3 MW wind turbines were considered for a wind
farm. Because the costs from the electric infrastructure and the
AC/DC converter were considered separately, we calculated the
difference between them. The final cost of the electric infrastructure
was set at $1,008,185 USD per turbine. Based on the information
provided in the same reference (Rehman et al., 2011), we set the
capital cost of a 3.3-MW wind turbine at $3,085,500 USD.
We also considered that the transportation costs doubled the
capital costs of the deployment, similar to diesel transportation. In
this way, the total cost for each wind turbine deployment,
including the electric infrastructure (excluding the converter), was
set at approximately 8,200,000 USD. We interpolated this value for
an initial deployment of five wind turbines and then for 15, 20,
25 and 30 turbines, as illustrated in Fig. 7. Although a deployment
of 30 wind turbines lacks technical feasibility in our case study, the
plot is merely illustrative and provides an economic scenario for
such option. The annualised capital cost illustrated in Table 5
positions the deployment of five wind turbines as one of the best
options for the extraction phase.
The left side of Fig. 7 illustrates a tendency to have a minimum
NPC cost of approximately $850,000,000 USD as the number of
wind turbines increases. However, the larger the wind deploy-
ment, the more stability issues will arise. We do not address the
stability constraints of the wind farm installation, as this is out of
our scope. The O&M costs involved those related to the entire
system, including both conventional and renewable equipment.
Reduction in the use of the diesel generators results in a decrease of
O&M costs, thus it explains the inverse proportionality between
the number of turbines and the mentioned costs. This is a result of
lower O&M costs of the wind turbines than the analogous costs of
the generators plus the actual diesel price.
The right side of Fig. 7 shows the energy participation of the
wind power generation deployment. Our results indicate that 50%
of the energy would be generated from wind energy if 10 wind
turbines are considered, and 30% with 5 wind turbines. The largest
increment is observed when 10 wind turbines are installed,
compared to 5. It represents an increase of approximately 40%
relative to the energy produced by 5 wind turbines, but only an
approximate 10% increase is observed when 15 wind turbines are
deployed. An analogous decrease occurs with the diesel consump-
tion, having its largest reduction when 10 wind turbines are
installed. From the same plot, we also infer that the maximum
energy fraction supplied by a wind farm should not be larger than
70% for economic optimality.
Because we varied the interest rate with the number of installed
wind turbines, the NPC decreased when the interest rate increased,
as illustrated in Fig. 8. However, the overall cost of electricity
increased, making the project more expensive. The wind farm
[(Fig._7)TD$IG]
516 M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518

Diesel Consumption (MM L per year)

300 1650 70 0.7

O&M and Initial Capital ($ MM USD)

Net Present Cost ($ MM USD)

270 O&M Costs 65
1500 0.6
Initial Capital 60

Renewable Fraction
240 Net Present Cost
55 0.5
210 1350
50
Diesel 0.4
180
1200 45 Renewable Fraction
150 40 0.3
120 1050 35
0.2
90 30
900 25 0.1
60
20
30 750 0.0
0 5 10 15 20 25 30 0 5 10 15 20 25 30
Number of Turbines Number of Turbines

Fig. 7. Left: Costs involved in a power generation plant that includes both wind energy and conventional sources. Right: Diesel consumption for the same power plant relative

[(Fig._8)TD$IG]
to the number of wind turbines included in it, and the wind farm participation in the power generation.

1.8

Savings per kW ($ USD/kW)

25000 6%
1.6

15%
NPC ($ BB USD)

1.4 20000
6%
1.2 10% 10%
15% 15000
20%
1.0 20%

0.8 10000

0.6
5000

0.4
0 5 10 15 20 25 30 5 10 15 20 25 30

Number of Turbines Number of Turbines

Fig. 8. Left: NPC variation with different values of the interest rate. The installation of 10 wind turbines exhibits the highest rate of change in the NPC at all interest rates. Right:
Savings per kW installed of wind-generated power.

consisting of five wind turbines is exhibited as the best option at special attention to the heat flow and air flow in and out of
different interest rates because the difference in the NPC (savings) buildings especially with the extreme cold conditions in
decreases when more turbines are added. northern communities. Investing in proper insulation to limit
The right graph of Fig. 8 illustrates the calculated savings that heat flow reduces the heating demand of buildings. Our
every installed kilowatt of wind power represents. These savings industrial partner will install insulated walls in the buildings,
were calculated by subtracting the NPC at all wind turbine consisting of R-32 in the outer walls, R-40 under the floors and
deployment cases from the NPC without wind generation. This R-60 in the ceiling.
difference was divided by the installed power of each wind turbine Heat recovery solutions present a great potential for saving
deployment and the results are illustrated in the right graph of energy in northern communities with high energy consumption
Fig. 8. It is observed that the largest amount was calculated for the caused by the extreme cold conditions and the resultant heating
deployment of five wind turbines at all interest rates. This is also load. One form of heat recovery is generator heat recovery (GHR).
why five wind turbines are considered as the best option to
generate a fraction of the plant’s power consumption. [(Fig._9)TD$IG]
In the tornado chart illustrated in Fig. 9, diesel price is the main
Cost of Electricity ($USD)
factor impacting the economics of the extraction phase. The other
parameters have a very low impact compared to that of diesel $0.30 $0.50 $0.70 $0.90 $1.10
price, considering a deployment of 10 wind turbines. We adjusted
the interest rate of the base case to 10% in order to include a wider Diesel Price ($/L) $0.41 $0.94
interest rate range to impact on the COE. We also included the
variation in the O&M costs because those are significantly higher Capital Cost $0.64 $0.71
for a wind farm deployment than for a PV installation. Diesel price -50%
is the parameter whose variations affect more the overall COE, as Interest Rate (%) $0.65 $0.70
50%
illustrated in both Figs. 6 and 9. These parameters are directly
proportional and they have approximate constant rate of 1 to 1. Mine Life (Yr) $0.67 $0.70

3.3. Energy efficiency: heating and heat recovery O&M ($) $0.66 $0.69

In Canada, space heating accounts for 63% of the total energy Fig. 9. Tornado chart of five parameters’ impact on the COE for the extraction phase.
use within a residential facility, according to NRCan. This dictates COE of base case was calculated as $0.674 USD.
 M.A.E. Soberanis et al. / The Extractive Industries and Society 2 (2015) 509–518
Diesel fuel has an energy density of 10.7 kWh per litre and most
diesel generators, including the ones in this study, convert only
35% of the energy content in the fuel to electricity (Hengst et al.,
2010). The remaining 65% is emitted in different ways including as
waste heat. There are two commercial types of GHR: water jacket
heat recovery and heat recovery from exhaust gas. In water jacket
heat recovery, a diesel generator is placed in a bath filled with a
coolant (commonly water) and the heat from the generator is
transferred to the water and then directed to another application
such as space heating. This is a proven technology that is
commonly used in northern communities such as in Alaska.
Recovering heat from the exhaust gas of the generator is proven to
be cost-effective with large generators. It is recommended that our
industrial partner use heat recovery in waste incinerators to
capture the exhaust heat from the incineration of waste and divert
it to other heating applications. Using a Rankine Cycle with glycol–
water as the working fluid, waste heat can be recovered from the
diesel engine exhaust and used to displace diesel used in space
heating. According to another reference (Hossain and Bari, 2013),
this system can increase the generator set’s fuel efficiency by
around 12%. This would reduce the fuel consumption by around
59,000 L/year or $173,000 USD/year in the exploration phase base
case and by around 8,757,000 L/year or $25,746,000 USD/year in
the extraction phase base case.
3.4. Summary and conclusion
Our results indicate that the installation of a PV system in a
remote community is economically feasible when the energy
consumption is within a certain range. In our specific study, a PV
installation is economically feasible if the primary load is in the
range of 3000–6000 kWh per day, approximately. The implemen-
tation of this technology can bring yearly savings of almost
50,000 L of diesel per year and supply approximately 9% of total
energy consumption. The installation of wind turbines for the
extraction phase can bring even larger savings due to the high
energy demands of the processing plant. A wind farm deployment
of 5–10 wind turbines can supply between 30% and 40% of the total
plant’s power demand, saving between 25 and 35 million litres of
diesel annually. The environmental benefits of not burning such an
amount of fuel are very important in terms of greenhouse gas
emission. It is very important to highlight the negative impact that
a large renewable source penetration in a remote grid can have on
the supply-side stability. From a strictly economic perspective, the
total savings in a renewable energy project must be reassessed
depending on the diesel price variations throughout the year. This
will determine the option that will bring the highest revenue to the
consumer.
We did not account for issues with electric lines, as they are out
of this study’s scope. However, during the implementation of
renewable technology, special attention must be focused on the
effects that an intermittent power source will have. State-of-the-
art regulators with fast response and constant renewable source
monitoring are tools that can mitigate the influence of unexpected
variations in the renewable power supply. The economic values
calculated in this study may be affected by the measures taken to
address the aforementioned problems.
The COE for the remote community reported in this study is
estimated at $1.30 USD per kWh if solar PV modules are
implemented. We estimated savings of approximately $0.03
USD per kWh in a residential remote facility. This also
represents a reduction of approximately 1.76% in the COE
estimated for the current configuration in the site under study.
The estimated cost with the implementation of renewable
energy is also similar to the reported subsidised average COE in
the literature, set at approximately $1.3 USD per kWh. Adding
517
the corresponding subsidies to the proposed COE will bring
attractive revenue opportunities to the power suppliers. The
estimated savings for an exploration site are approximately
$37,000 USD for 3 years of operation, considering an average
population of 96 persons every operative year and a 100-kW PV
installation. The installation of a PV array for the exploration
phase is the most suitable option when the interest rate value is
below 10%.
In the case of the extraction phase, the wind farm is the
optimum option, even at interest rates up to 30%. In the case of the
wind deployment, it proves to be the best option at a wide range of
interest rates, having a more attractive NPC than diesel generators
alone. The savings are expected to be larger when the population
and energy demand increase during the extraction works with a
wind farm installation with 16.5 MW of nominal capacity. The
calculated savings for a processing plant and residential facility
with a demand of 23 MW on a continuous basis are approximately
$403 MM USD for 10 years of operations. A 33% reduction of the
carbon dioxide emissions during the extraction phase can be
achieved with the operation of a wind farm. We also considered
the added expenses of transportation, which doubled the capital
costs of the wind turbines and the energy storage systems
compared to average installation sites.
Payback periods of 6 and 2 months are expected when solar
thermal technology and energy efficiency strategies are consid-
ered, respectively. The proposed efforts in energy efficiency and
solar thermal heating can lower the COE by saving approximately
0.83 MWh per person per year when it is combined with
renewable power generation. The proposed implementations also
bring environmental benefits and reduce the mine’s total carbon
dioxide emissions by approximately 125 ton per year. Extending
these power generation strategies to different remote communi-
ties in the territory of Nunavut can bring reductions of
approximately 9.7% in carbon dioxide emissions. As the energy
demand of current remote communities increase, the opportunity
to include PV systems in their energy budget becomes more
attractive.
Acknowledgements
The authors wish to thank the industrial partner for the
facilitation of the data for the study. We also acknowledge the
Natural Sciences and Engineering Research Council of Canada
(NSERC) for providing financial support for this research[40_TD$IF] (469664
2014), We especially thank the reviewer and editor for their
comments and insights, which enriched the present paper.
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