WASHINGTON – Over the past 18 months, Goldcorp, based in Vancouver, has built the organisational infrastructure to manage its energy demands far more efficiently, explained corporate energy manager Flyn McCarthy.

He discussed how Goldcorp measured energy costs and the various options under consideration now that renewable energy could compete with grid pricing in an increasing number of locations.

Q. Can you update us on what your organisation is doing to address energy costs and supply concerns on both the corporate and operational levels?

A. At Goldcorp, we’ve been focusing on energy costs over the last year and a half. The senior management team recognises that energy is a critical area of focus and it is a top priority in terms of cost-saving opportunities. At the corporate level, we are building a management programme for energy demand and supply and developing our internal capacity around energy supply management. We realise that energy costs are minimised when supply is closely matched with demand. So our critical path has been focused on improving corporate supply management.

At the site level, dedicated energy managers focus on understanding the operation’s demand for power, diesel, natural gas and propane, and ensure supply contracts are best suited to meet the demand. They are becoming more involved with understanding the demand profiles and responding accordingly to demand-side management programmes. A critical success factor has been the improvements to our global adjustment programme, which is a demand-side programme, put out by the Ontario Power Authority. The success of this programme has motivated us to do more.

Q. Currently, how much of your operating costs is related to energy?

A. On a company-wide average, energy is approximately 20% of our all-in costs.

Q. How far out do you currently project energy costs as part of operating expenses for a particular mine? Do you look at the estimated life of a mine or at a business cycle?

A. It depends on the mine. In regions where the risk associated with energy is high, we project it for the life of the mine. And in regions where the risk is deemed lower, we typically project five years out.

Q. Do you set targets to reduce costs? And if so, how do you calculate these targets?

A. We have company-wide targets of 15% efficiency improvement by 2016. And we calculate that based on a business-as-usual projection…. We have had those targets since 2011 as part of our energy strategy.

Q. What new energy solutions like renewables integration are you exploring to help address energy challenges?

A. All of our sites are grid-connected so renewables have not played a large role in our operations to date. We see renewables starting to play a larger role in our energy equation because in many of the regions where we operate renewables can now compete with grid prices. We’re looking at options for wind and solar, primarily in Central and South America.

Q. Can you tell me more about the process for investigating and developing new energy solutions? Who directs projects like that? And how are new projects approved?

A. All sites are reviewed for new energy solutions on an annual basis as part of Goldcorp’s energy management programme. Once an energy solution is identified, the energy team will work with the project development team to develop the business case for the project. Typically these energy projects are large. We have a global investment framework that we use to guide the process for energy projects.

Q. How do you get final approval?

A. It depends on the size. The leadership team approves small- to mid-sized projects; while the board of directors ultimately approves large-scale projects.

Q. What would help you to ensure the best energy solutions for your operations? What types of information would be useful?

A. Case studies are the most useful as they help illustrate the existing potential of various technologies. Every technology can be an opportunity. We need to understand the performance of the various technologies to help narrow the choices and make the best decisions.

Flyn McCarthy will be presenting at the Renewables and Mining Summit, October 15 to 16, Toronto.