Many features of a typical IPP arrangement lower the risk profile for the mining company by transferring risks to the Independent Power Provider.
Here we detail the 9 top reasons why mining operators should engage a specialist mining power company (or IPP) to deliver their power supply:
Lower Specification Risk– Because an IPP owns the power station, they have a vested interest in ensuring that the specification is optimal and are typically prepared to invest more in an optimal solution – and one that will last. EPC contracts, on the other hand, may incorporate cheaper, less efficient equipment which is only exposed a few years down the track, by which time the contractor has well and truly moved on.
Expertise– Carefully selected, an IPP brings significant expertise and experience to remote power generation in a mining environment. With varying loads and a 24/7 requirement, the often harsh climate of an operating mine will throw up challenges that an experienced IPP will know how to handle. A reputable IPP will utilise the latest technologies and proven techniques and to deliver a reliable, efficient and economical power supply 24/7. This allows the miner to focus on what they’re best at, rather than worrying about becoming a power station operator as well.
Capital Expenditure– Power rental is a highly economical solution which funds the power station capital cost 100%, without a hefty capital outlay. The IPP company takes full responsibility for all of the capital required to build the power station, taking capital expenditure requirements away from the miner.
Fuel Efficiency– Experienced IPP companies will provide a fuel guarantee to their mining client (who supplies the fuel). This puts a cap on the cost of fuel consumption per kWh. If exceeded, the miner deducts the cost of the additional fuel from the monthly bill. Furthermore, experienced IPP’s have custom modifications that they make to power generation equipment which improves the fuel efficiency above that achieved by off-the-shelf equipment placed into harsh mining environments.
Limited Outages– Most IPP contracts contain time-based liquidated damages for outages. Not only does this incentivise the IPP to avoid outagesat all costs, but if they happen to experience one it is in their interest to do whatever it takes to rectify the situation as quickly as possible.
No Voiding of Warranties– Whilst new equipment comes with OEM warranties, situations that occur in mining environments requiring modifications can unexpectedly void OEM warranties. This risk is completely avoided by using an IPP.
Maintenance and Rebuilds– IPP’s take full responsibility for supplying oil and parts, as well as conducting scheduled servicing and costly major rebuilds. This helps to ensure that the equipment functions at optimal levels and costly downtime is kept to a minimum, or prevented altogether.
No Exposure to Equipment Failure Costs– Rotating equipment can suffer from catastrophic failures from time to time. Under an IPP model, this risk is borne by the IPP company and not the miner.
Industry Developments– IPP’s are forced to keep up with industry developments and provide the latest in technology offerings to their customers. As a non-core activity, it is unlikely that mining companies will monitor developments in the power generation industry.
If you are seeking a reliable IPP for your mining operation, contact the team at KPS Power Africa today.