Call it the largest recycling project ever conceived. A group of engineers are looking to build a hydroelectric plant in Mineville, NY out of the existing underground tunnels in an old iron mine. The underground hydro plant would not be a conventional power generation tool though – instead it would serve as a unique form of large capacity energy storage and provide a new use for an otherwise abandoned asset.
Located in New York’s Adirondack mountains, the mine is centuries old and strategically located in the state to enable it to produce iron for use by a broad segment of industry there. That strategic location also makes it perfect for a hydro plant according to the engineers. The Mineville complex produced iron ore for the first revolutionary war naval battle on nearby Lake Champlain, and it continued to produce more ore for two centuries until it was finally shuttered in 1971.
The basic idea for a hydro storage facility is straightforward. The mine’s tunnels have already been flooded with water over the centuries. If half of that water is pumped out, then the remaining water sitting in the lower half of the tunnels can be used as a source of energy storage for renewable power generation sources such as solar and wind. When there is extra unused solar power, turbines located in the mine can pump water to the top half of the mine. Later when that energy needs to be used, the water is released, and as it flows to the bottom half of the mine, the turbines spin generating power.
It is a unique and clever system that makes use of a neglected asset. The business model is just as different though. According to Jim Besha, head of Albany Engineering Corp, and an engineer working on the project “Today, everyone's recognizing that a critical part of our energy infrastructure is going to be storage … You can think of it (the mine) as a bank. If someone has excess solar energy, they would pay a fee to store it overnight.”
Currently energy storage generally works one of two ways – either a producer of power buys a battery and stores it at their site for use when needed, or a consumer buys a battery and stores it at their home for use. The Mineville project represents a third option – a new form of SAAS – in this case, storage as a service. Related: Why High Risk Energy Investors Are Looking To Iraq
The Mineville project could be a template for use by dozens of abandoned mines around the country. Unfortunately, it is probably also an uphill battle. The Mineville Pumped Storage project has been being touted for years, and it is still an idea on a drawing board rather than under construction.
Part of the issue is that developing the project is an expensive proposition. Typically, new power plants (renewable or conventional) are developed only after they have firm power purchasing commitments in place from large users (or an approved monopoly for an area to sell to consumers). Without such financial guarantees, banks are unwilling to lend the funds to complete the construction.
In the case of the Mineville project, because it’s going to be difficult to get a long-term economic commitment to the project, funding has to come from somewhere else. The best choice for the funding is probably municipal bonds. The project should clearly qualify for conduit financing through a municipal entity, and then it could be operated as a private asset by a private company. At this stage though, the focus seems to be on getting state backing for the project – unfortunately politicians are risk averse and thus rarely willing to back new ideas right out of gate no matter how good those ideas may be.
By Michael McDonald of Oilprice.com
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