Renewable Energy for BHP Billiton: Framework and Application to BHP Billiton's Global Assets

CSS Publication Number: 
CSS08-02
Abstract: 

Context and Need for Study
Two major factors have generated global interest in the development of renewable energy among corporations:

  • The scientific, political, and societal consensus around the fact of global warming, its human causes, and its potential catastrophic impacts.
  • The tightening supply, surging demand, and subsequent soaring prices of certain fossil fuels and concerns about energy security.

These factors have motivated escalating government action to reduce greenhouse gas emissions and diversify energy portfolios. Furthermore, mounting activism around these issues has led to an increase in corporate social responsibility and sustainability initiatives. 

This context has spurred corporations to consider reducing their greenhouse gas emissions and intensity through energy efficiency initiatives, renewable energy projects, and greenhouse gas (GHG) emission reduction projects.

These external factors, combined with a variety of regional, and industry-specific factors have led global metals and mining company BHP Billiton to evaluate opportunities for the adoption of renewable energy. These factors include:

  • BHP Billiton's significant energy demand
  • The importance of energy to BHP Billiton's costs and revenues
  • BHP Billiton's position as the industry leader
  • The company's climate change policy and specific GHG emissions reduction targets
  • BHP Billiton's desire to comply with legislative requirements for renewable energy
  • BHP Billiton's need to manage its reputation and enhance its 'license to operate'

These factors, combined with the company's relative inexperience with renewables, and the need to consider the application of a broad range of emerging renewable energy technologies across a diverse set of global assets, have motivated our study.

Purpose
In fall 2006, Paul Doetsch and Steven Antalics of BHP Billiton engaged the School of Natural
Resources and Environment Masters Project team to develop a general framework or process for:

  1. Evaluating the potential for the adoption of renewable energy across a the range of operational assets, and
  2. Identifying the most promising renewable energy technologies and project concepts for these assets.

This report articulates the resulting framework, which is essentially a seven-step process for evaluating the potential for renewable energy at a given asset, identifying specific appropriate technologies based on goals and available resources, and formulating project concepts based on the technologies which show the most promise for serving an asset's needs and management's goals. It serves as a "how to" for management seeking to identify potential renewable energy projects for an asset.

Scope
The emphasis of our study is on renewable solutions for generating electricity from wind, solar, and biomass. Our framework is, however, may be expanded to include a broader set of renewable energy resources and technologies, such as biofuels.

The emphasis on renewable electricity stemmed primarily from the fundamental differences between supporting electricity production versus fuel production, the complexity of biofuel production, and the number of intermediaries required for BHP Billiton to support a biofuel project. Our detailed examination of different renewable technologies confirmed that electricity generation is a more relevant and integral application of renewable energy technology for most industrial operations.

However, at the request of our client, the team assessed biofuel production in our site evaluation of the Corridor Sands asset. Biofuels were not explicitly included in our framework.

Finally, the framework focuses on the identification of renewable energy electricity generation at scales of greater than five MW capacity. We have chosen this focus on larger scale electricity generation because our aim has been to find technologies that can have potential to make a significant, measurable impact on the fossil fuel consumption and carbon emissions of an industrial facility. Our framework can, however, be used to evaluate smaller scale systems.

Process
Our framework emerged from the process of conducting two renewable energy assessments for BHP Billiton assets. The goal of these assessments was to identify the most promising renewable energy technologies for each asset. First, we conducted an assessment of the proposed Corridor Sands mine in southern Mozambique, with an emphasis on technological viability, low-cost economics, and identifying opportunities for livelihood development, as prioritized by Corridor Sands management. Next, we evaluated the Escondida copper mine and related assets in northern Chile, and considered-in addition to technology and economics-the pending regulatory requirements, the geopolitics of energy and renewable energy in the region, and implications for BHP Billiton's 'license to operate.'

From these analyses, we have developed preliminary recommendations of technologies and project concepts that demonstrate potential to serve the needs and goals of the assets, and for which we believe BHP Billiton should proceed to commission more detailed pre-feasibility assessments. We have also identified the principal drivers and goals at each asset which have led the assets to consider the adoption of renewable energy.

Research Areas: 
Publication Type: 
Master's Thesis
Full Citation: 
Bandyopadhyay, Priyanka, Anthony Gross, Michael Hartley, Jeffrey Lebrun, Ali Moazed. 2008. Renewable Energy for BHP Billiton: Framework and Application to BHP Billiton’s Global Assets. Master's Thesis, University of Michigan, Ann Arbor: 1-198.
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Publication Status: 
Published