Running a remote lithium mine entirely off-grid using standalone renewables power for up to five consecutive days is one of NAB client Zenith Energy’s landmark transition achievements.

The hybrid power project supplies energy to the Kathleen Valley mining operation for Liontown Resources using wind, solar and battery, with support from traditional thermal generation fuelled by gas engines only when needed.

“The project is built to take advantage of the weather conditions in remote Western Australia, where there’s an abundance of renewable energy sources,” says Zenith Energy’s Chief Financial Officer Tim Cipolloni.

“To date, we’ve been able to achieve about 85 per cent renewables usage consistently across the board. That’s quite a game changer for the reduction in emissions.”

The mine sits on the lands of the Tjiwarl traditional owners, about 680km northeast of Perth, and runs on a combination of solar in the day, the area’s wind at night, with battery storage as backup during the shoulder periods.

Image: Kathleen Valley Turbines

Power of integration

The key innovation to making this hybrid system work comes with the sophisticated integration controls, which switch generation sources automatically to optimise and secure supply.

“The better you can integrate, the better you can automate,” Cipolloni says. “The control systems allow you to get that high penetration of renewables, which ultimately leads to fewer emissions and reduced cost for the customer because they are spending less on fuel for thermal generation.

“When the conditions are right, we’ve been able to run at 100 per cent renewables for a period of up to five days, which is a pretty phenomenal outcome.”

Cipolloni says the support from NAB has been instrumental in the success of Zenith Energy’s market-leading, but capital-intensive projects, which are effectively like building four power stations in one.

At Kathleen Valley there is a total of about 96MW of generation for what is in fact a 20MW load demand. The renewable supply is made up of 17MW of solar, 30MW of wind, and a 17MW/20 MWh battery energy storage system (BESS), which enables “engine off” capabilities. Support comes from thermal generation of 26.4MW gas and 5MW diesel when it’s needed[i].

Image: Kathleen Valley Storage

Generating value

Cipolloni says the finance structures for projects like these are underpinned by long-term power purchase agreements that typically run 15 years or more with creditworthy counterparties, which supports an efficient cost of capital. This gives the end customer a secure, cost-effective power supply with reduced emissions as well as protection from potentially volatile fuel price risk.

“NAB certainly had the vision to support us, and worked with us to make sure we could deliver as our business has grown,” he says.

Most recently Zenith Energy completed a A$1.9 billion refinancing and upsizing of its existing debt facilities, with NAB acting as joint green loan coordinator and leading lender.

NAB’s Perth-based Director of Energy, Utilities and Infrastructure, Ritika Chopra, says Zenith Energy is playing a leading part in decarbonising the sector as a whole as well as their own business.

“NAB certainly understands the capital intensity and challenges involved in building and operating these projects, as well as their importance for the energy transition in Australia,” Chopra says.

“The resources sector is well-known as being ‘hard-to-abate’ and it’s fantastic to see the level of innovation and industry leadership being applied to these hybrid solutions, especially in remote areas.

“NAB is pleased to be supporting such initiative by providing innovative funding and sustainable finance expertise on this growth journey.”

Community engagement

With the Kathleen Valley operation sitting on traditional owner lands, the successful engagement with the Tjiwarl Indigenous community has been a significant highlight.

Zenith Energy helped develop a majority Indigenous-owned joint venture with Tjiwarl to provide power and power-related services in the area to help develop local business opportunities.

Cipolloni says the initiative helps train and promote members of the community in the energy sector, with a pathway to jobs at the company’s hybrid power stations on Country.

“We’re extremely proud of this community achievement and see it as a culturally significant and economically empowering relationship for the sector,” he says.

Cipolloni also sees the success of these hybrid power projects as providing an industry blueprint for an efficient decarbonisation of the sector.

“We’ve really opened the door and led the way on a path that will ultimately transform the mining industry to one of lower emissions which is good for everyone – both in Australia and globally.”

[1] Kathleen Valley