Fortescue Signs First Customer for Pilbara Green Grid Power Supply
Australian mining powerhouse Fortescue has made significant strides by signing its inaugural power purchase agreement (PPA) to provide clean electricity from its extensive new Green Grid in the Pilbara region. This marks a crucial milestone in Fortescue’s ambition to position itself as a key energy supplier for various industries.
As the world’s fourth-largest iron ore producer, Fortescue is in the process of developing multiple gigawatts of wind, solar, and battery storage systems aimed at phasing out fossil fuels within its mining activities. Additionally, the company is creating surplus capacity to deliver reliable green electricity to external clients, which include other mining companies, data centres, and eco-friendly steel manufacturers.
Power Purchase Agreement Details
This Wednesday, Fortescue announced it has entered a long-term PPA with lithium producer PLS Group, providing a minimum of 325 gigawatt-hours (GWh) of power annually. This amount of energy corresponds to approximately 100 megawatts (MW) of wind and solar output, dependent on the specific energy mix utilised.
As part of its expansion efforts, Fortescue is constructing 2.4 gigawatts of wind and solar energy capacity, supported by up to 5 GWh of battery storage. This is designed to satisfy an average demand of 800 MW for what will be its fully electric mining operations, while also leaving behind 200 MW for additional needs.
Infrastructure Development for the Pilgangoora Mine
The energy supplied through this deal will power the Pilgangoora lithium hard rock mine, which is currently undergoing a £1.9 billion expansion. It is anticipated that the energy supply will begin around 2029, coinciding with the completion of the Green Grid.
To facilitate this agreement, Fortescue will construct a transmission line spanning approximately 25 kilometres at 220kV to connect its Green Grid to the Pilgangoora operations. PLS will finance the entire transmission line and own a section of 20 kilometres, with Fortescue owning the remainder.
This new infrastructure builds on Fortescue’s ambitious initiative to extend its transmission network throughout the Pilbara, having already constructed around 550 of the planned 660 kilometres.
A Vision for Renewable Energy
Earlier this year, Fortescue highlighted that its Green Grid aims to become the “world’s first” replicable green grid, promoting the elimination of diesel and other fossil fuels in large-scale industrial applications. Currently, over 1.3 gigawatts (GW) of solar and wind energy, alongside more than 1 GWh of battery storage, is either operational or in the construction phase in the Pilbara.
Regarding the initiative, Fortescue Metals CEO, Dino Otranto, remarked, “We commenced the Green Grid project for our own operations, but noticed a robust demand for affordable, green, and reliable power throughout the Pilbara, as well as a chance to offer energy solutions to other customers.”
He emphasised, “Cost. Climate. Control. That summarises the rationale behind the Green Grid. Last year alone, we consumed 680 million litres of diesel, and every 10-cent increase in diesel prices escalates our annual expenditures by nearly US$70 million.”
“Shifting from diesel to renewable energy enhances our competitiveness, lowers emissions, shields us from unpredictable fossil fuel pricing, and grants us improved control over our energy consumption,” he added.
PLS Group’s Perspective
Dale Henderson, managing director and CEO of PLS, expressed his congratulations to Fortescue for their pioneering efforts in developing the Green Grid, stating they are pleased to partner as the first external customer. He noted that the arrangement is anticipated to yield substantially lower emissions and significant cost benefits, estimated at around $20 per tonne.
“This agreement will provide lower-cost, lower-emissions power to our long-standing Pilgangoora operation, thereby bolstering our competitive edge within the global lithium market,” Henderson stated.
