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$20m for 2nd power cable study

Edition 190_Daly

The State and Federal governments will jointly fund a $20 million business case study into a second Bass Strait electricity inter-connector that will be needed if Tasmania is to become the battery of the nation.

Earlier this year, the Prime Minister, Malcolm Turnbull, unveiled his battery of the nation concept involving up to $5 billion in infrastructure investment in Tasmania.

But the mega-project, with the prospect of 3,000 jobs, would not be feasible without a second undersea cable.

In November, Australia's Minister for Environment and Energy, Josh Frydenberg, said: “Preliminary findings from … work by Hydro Tasmania indicate a second inter-connector could enable Tasmania to expand its wind and hydro capabilities and add more power to the national grid, with a net benefit of $500 million.”

Mr Frydenberg leaked the decision to The Mercury on the eve of his meeting in Hobart with State energy ministers at the COAG Energy Council.

“As the next step, a business case study would examine and finalise the preferred route, optimum size, cost estimate, revenue investment test and financial model for a second inter-connector between Tasmania and Victoria," Mr Frydenberg said.

“This is the next step in tapping the potential of Tasmania to expand its substantial renewable energy base and provide even more affordable, reliable energy to the national grid.”

The existing 290km Basslink cable, which was placed on the market in November by its Singaporean owner Keppel Infrastructure Trust, cost $800 million to build before being commissioned in 2006.

John Tamblyn, a former Chairman of the Australian Energy Market Commission, estimated the cost of a second cable at up to $1.1 billion.

Basslink's failure during the winter of 2016 coincided with record low storage levels in Hydro Tasmania's dams and created a State electricity crisis.

The Tasmanian Government subsequently pledged to increase renewable generation in Tasmania by 1,000 megawatt/hours (MW) to enhance energy security.

Mr Frydenberg said the Federal Government was already investing in Tasmanian projects, including a feasibility study into 2,500MW of pumped hydro storage at 13 short-listed sites, a UTAS stocktake of the country’s tidal energy resources and a smart grid project on Bruny Island.

A few days before Mr Frydenberg's disclosure, Australia's Chief Scientist, Alan Finkel, had released a report that found pumped hydro to be a low-risk, low-impact technology, generally cheaper than battery storage and certainly cheaper than keeping coal-fired power plants on stand-by to back up renewable generation.

Dr Finkel's report was endorsed by the Australian Council of Learned Academies.

Pumped hydro is a system where water used to generate electricity is pumped back uphill to an elevated reservoir using cheap energy, such as wind.

It can then be run back downhill through turbines at opportune times, particularly when energy demand – and prices – are high.

Tasmania has about 2,050 potential pumped-hydro sites and studies have short-listed the best 13 of them, all in the west or north-west.

Hydro Tasmania has ruled out projects in World Heritage Areas and sites are being assessed for technical feasibility, topography, environmental sensitivity, land use constraints, road access, access to the power grid, proximity to existing renewable energy assets, construction risks and capital costs.

The President of the World Wind Energy Association, Peter Rae, said Tasmania’s potential had been discussed at recent United Nations climate talks in Germany.

“In Australia, Tasmania has the best situation to be able to provide pumped storage and I believe that was something which was talked about a great deal,” Mr Rae, a former Chairman of Hydro Tasmania, said.

He said fast-moving technological developments in the past 15 years had made wind and solar energy cheaper than it had been only a few years earlier.

Because of changing economics, private investors have announced new wind-energy projects at Wild Cattle Hill, Granville Harbour, Robbins Island/Jims Plains and Low Head.

The five projects involve investment of more than $2 billion, with around 410 turbines to be built, delivering more than 1,200 MW of new generation capacity.

The Australian Renewable Energy Agency (ARENA) has already committed up to $2.5 million towards feasibility studies on pumped hydro and the expansion of two existing hydro-electric power stations in Tasmania.

The Federal funding has been matched by Hydro Tasmania.

A third study focusing on expanding Tasmania’s role in supporting the National Electricity Market is being scoped.

ARENA's Chief Executive Officer, Ivor Frischknecht, said: “These feasibility studies are the first step towards significantly upgrading or replacing some of Tasmania’s existing power stations and introducing pumped-hydro energy storage.

“We could more than double Tasmania’s hydro capacity and power an additional 500,000 households. Tasmania could play a crucial role in helping to provide secure, reliable – and renewable – electricity for the National Energy Market.”

ARENA is also supporting interstate studies into Snowy Hydro 2.0, as well as pumped-hydro projects in Spencer Gulf, South Australia, and Kidston, Queensland.

The CEO of Hydro Tasmania, Steve Davy, said: “As Australia’s largest generator of renewable energy, Hydro has the skills and experience to drive an energy future that’s clean, reliable and affordable.

"With the support of ARENA, Hydro Tasmania is conducting pre-feasibility studies into the redevelopment of the Tarraleah Power Scheme and the augmentation of the Gordon Power Station."

Mr Davy said doubling Tasmania's renewable energy capacity would address three big challenges.

"It will lock in full energy security for Tasmania; help give Tasmanians some of the nation's cheapest power prices; and give us plenty of spare energy to support mainland Australia," he said.

Mr Davy said Hydro Tasmania would look into the case for making a bid for Basslink.

Tasmania's Minister for Resources, Guy Barnett, said the battery of the nation concept would deliver investment, growth and jobs, particularly in the regions.

"Tasmania does renewable energy really well," he said.

Earlier, Australian National University's Professor Andrew Blakers, a prominent proponent of pumped hydro, said Tasmania’s potential to contribute significantly to the national electricity network would be “utterly constrained” until there was a second inter-connector.

He said Tasmania, including King Island, had better wind power and pumped hydro possibilities than Victoria.

“The question is: ‘Is the wind power and pumped hydro potential in Victoria cheaper or more expensive than the wind power and pumped hydro in Tasmania when the cost of the inter-connector is added’," he said.

The $20 million business-case study will answer that question.

Meanwhile, annual reports released in October by Hydro Tasmania and Aurora Energy show the State-owned energy businesses to be in sound financial positions and ready for fresh challenges.

The Premier, Will Hodgman, said: "Clearly, 2015-16 was a difficult time for Tasmania’s energy businesses and the fact that both businesses have performed strongly in 2016-17 is welcomed."

Hydro Tasmania has restored its water storages to above 45 per cent and made an underlying profit of $20.1 million in 2016-17.

Aurora Energy recorded a profit of $19.4 million and delivered $35.4 million to State coffers.

Aurora Energy coordinated a successful $20 million Tasmanian Energy Efficiency Loan Scheme that provides no-interest finance of up to $10,000 for households and $40,000 for small businesses to invest in energy-efficient products.

Mr Hodgman, said the battery of the nation project would set Tasmania up for the next 100 years.

Footnote: The ARENA-funded project on Bruny Island is based on about 35 subsidised battery systems installed in homes with solar panels. A computerised system run by TasNetworks tells residents, in real time, the price they will be paid if they contribute their stored power to the Bruny Network at times of high demand. ARENA contributed nearly $3 million to the project in the hope that it would reduce diesel generation on the island in times of peak demand, while also providing a prototype for a possible national rollout of the concept.

Image courtesy of Hydro Tasmania

5 December 2017, Edition 190

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