2) 20 ha of dedicate land
3) 6MW of lithium battery storage
4) Loan AUD 21m with a return of about 5.5%[2] Rio Tinto is receiving praise and criticism for is recently announced decision to expand its use of solar power to supplement / replace diesel generation. [3] IT WORKS GLOBALLY TOO Last year, we were in Cyprus, a team from Tabatinga were reviewing a copper project when we noted that the smelting operation was substantially relying on solar power. We asked the CFO why? His response was simple – we pay €140 a GWh for power. We only take what we cannot produce ourselves. Rio Tinto has been a leader in the adoption of new technologies and working smarter – most of us remember the adoption of autonomous vehicles in the iron ore mines of Western Australia. It is important to remember that in 2015 Rio Tinto partnered with First Solar Inc ((NASDAQ: FSLR) and the Australian Renewable Energy Agency (ARENA) to build the Weipa Solar Plant – this reduced the diesel burn by 600,000 litres pa and reducing CO2.by 1600 tonnes pa. [4] Rio Tinto’s contribution was a long term PPA (purchase power agreement). What tips the scale for Rio Tinto in so many deals is it has an internal price of carbon (i.e.; an emissions charge).[5] This model has been in place since 1998. This rate is not generally disclosed and like other assumptions changes with time. The big news is Rio Tinto is now looking at applying this at twenty (20) locations. WHY IS WORKING FOR RIO TINTO AND GLOBALLY For Rio Tinto what have been the sound commercial drivers 1) Falling cost and rising efficiencies of solar technology 2) Many of their operations have excellent levels of sun for solar technology. 3) It costs them little capital and the PPA reflects a loan investment cost of less than 6%. The loans are sourced from policy dollars including export credits. They give a PPA but not on Balance Sheet. 4) An internal cost of carbon, which reflects the company’s views, but does go to the bottom line. 5) Rising price of clean low sulphur diesel and its cartage cost to site. 6) Litigation fears for not doing so.[6] But as Emily Alford said to The Weekend Australian: “… solar generation cost about $200 a megawatt hour (installed capacity) five years ago, and had now dropped to about $70-80 now.”[7] When all else fails Economic 101 wins!
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