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Tasmania bows to fossil fuel lobby as it turns to yet more gas/diesel

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It seems that the fossil fuel industry has got what it wanted from the Tasmanian government – a commitment to install yet more gas and diesel plants and put a freeze on any initiatives to encourage more renewable energy.

On the same day that the main coal generation lobby urged the government to take no hasty long-term action in response to its unprecedented energy crisis, the government fell into line, announcing plans for “dual fuel” – gas and diesel – generation plants and commissioning a report on future actions that will take 12 months to complete.

Energy minister Matthew Groom’s statement on energy security included no reference to increased renewables: hopes for an increase to feed-in tariffs to boost the uptake of rooftop solar were dashed, despite solar (6c/kWh) being a fraction of the cost of gas or diesel (30c/kWh). There was no mention of adding more wind farms, despite Groom’s protestations a week earlier that he “liked” renewables.

Instead, Groom announced the government would look to further boost its fossil fuel reserves. The entirety of the government’s “longer-term supply options” revolve around gas and diesel, including installing 25MW dual fuel generating units and more stand alone gas units. But it’s not even sure where it can source the fuel.

This comes on top of the 200MW of diesel generation that has been imported, at huge installation and fuel-burning costs, to supplement the 368MW of gas-fired generation that has been brought back into service following the loss of the main interconnector cable to the mainland, and the slump in hydropower dam levels to record lows.

This, of course, is how the coal lobby would want it. The Australian Energy Council, which represents AGL Energy, Origin Energy and EnergyAustralia, along with most other coal generators, is urging the government to take its time, and is arguing against a second cable to the mainland.

The coal lobby is well placed to benefit from indecision. Should the Basslink be repaired in late May, as is now currently scheduled, the brown coal generators will be called on to supply at least half of Tasmania’s electricity needs while the hydro output is curtailed to allow dam levels to be restored.

Groom says renewables depend on second Basslink

The prospect of a second cable across Bass Strait, both to increase security and to offer an economic driver for more renewables to be built in Tasmania and exported to Victoria – as has been proposed for several years – would provide more competition for the major brown coal generators.

But that idea appears to have been punted down the road, possibly because Groom and his government have so far found no support for the $1 billion proposal in Canberra, where the Coalition is struggling with big deficits and a reluctance to provide funds to renewable energy.

Tasmania has appointed a task force of three to deliver an interim report on the state’s energy options in six months and a final report in 12 months time. It will be led by Geoff Willis, a former chief executive of Hydro Tasmania.

Willis, it should be said, is a big supporter of renewable energy, or at least he was when he was running the state utility. In 2006, he expressed major disappointment when the Howard government pulled the pin on the then mandatory renewable energy target, as the current Coalition has effectively done with the current target.

Willis had hoped to build more than 1,000MW of wind energy, and suggested that the Howard decision on the MRET would cut that down to less than 500MW. As it turns out, Tasmania has only built 310MW of wind energy to date, and would find that extra capacity mighty handy right now.

Groom appeared to indicate that any further renewable energy generation in Tasmania would be dependent on a second cable, and that would be dependent on federal assistance.

“The Tasmanian Government remains committed to pursuing the case for a second Basslink interconnector, but it must be recognised as national infrastructure, and Tasmania must not be left to foot the bill,” he said in his statement.

“The facilitation of substantial further renewable development will depend on it,” he said.

The Greens argued that Tasmania needed to make sure it was self-sufficient in renewable energy before it entertained a new cable.

One idea could be to follow in the footsteps of Brazil, which is also experiencing power supply issues because of their own drought that has reduced dam levels.

Brazil is heavily dependent on hydro, but is now building 10MW of floating solar plants on two hydro electric dams – the first stage array switched on last Friday at the Balbina hydroelectric plant in the Amazon is said to be the first ever use of floating solar on hydro plants.

Meanwhile, wholesale electricity prices trade consistently just below $300/MWh, a seven fold increase from the average before the crisis, and when the state was not relying on gas and diesel.

Some major energy users have offered to reduce demand, with a total of 135MW coming from three major users, and possibly more from a fourth.

Despite this, Groom also made no mention of energy efficiency measures, apart from suggesting that “the government continues to encourage the wider community to take their usual steps in acting responsibly to conserve energy.”  

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  • John P

    The Libs are at least consistent. As sure as you install a Liberal administration, you know you will get the very best ideas from the 19th century!

  • suthnsun

    Bitterly disappointing and incomprehensible approach. Second Basslink is a waste of time until suitable pre-conditions are met. 1) dam storages are nearly ‘normal’ full. 2) renewables are producing well above half normal energy draw. 3)electrification of transport strategy is in place and renewables are still on track to deliver more than half. 4) higher return uses for high altitude water storages ie. for agriculture, have been fully explored and provisioned. 5) prices on NEM can be discretionally accessed at nett prices above the fit consistently.
    6)majority energy flow is ex Tas via Basslink1.
    Only then would basslink2 be remotely worth considering.(that will be many years hence)

  • Glen S

    Stupid, outdated and shortsighted thinking from the Liberals as always. I am dreading my electricity bills going forward.

  • BsrKr11

    John Perkins is right- these fossil fuel corporations are economic hit men, jackals who will rip your arm off if you don’t do as requested…..

  • lin

    It would not be acceptable to the Fossils to have an Australian state demonstrate that 100% renewable was possible and cheaper, would it? The other states might get ideas.

  • Thylacine

    To say disappointing would be an understatement but nevertheless to be expected from this backward looking government. What is missing is the discussion or recommendations made by the State energy producer, whatever they call themselves these days. They still have interests in wind farms they haven’t already sold to Chinese interests and I see no reason why, with their expertise, they cannot invest in wind energy again. Being an island state, wave energy too must be a no brainer. Talk back radio today was all in favour of increasing feedback tariffs to encourage rooftop solar installations which has all but come to a standstill. Surely this could be done well within the stated cost of $1 billion for a second Basslink cable.

  • MaxG

    TAS shut up: you voted for the clowns in power!

    • suthnsun

      Assume that’s tongue in cheek MaxG? Only a devilishly cleverly informed lay Taswegian would have predicted this state of affairs.

  • Brad Sherman

    The bottom line surely is that dispatchable power is required – something that can come online in 15-60 minutes. Gas is an obvious choice to cover rare occasions, such as the current drought, when hydro isn’t available.
    We can have dispatchable renewable power, but you must include the cost of the industrial-scale batteries required to ensure the hospital, for example, has power in the middle of the night when you’ve arrived for emergency surgery. It’s misleading to quote just the generation cost of wind/solar without adjusting it to cover the cost of making the power dispatchable when you need it.
    Odds are, however, the wind resource is pretty reliable and any gas-fired plant wouldn’t be used often. But I would argue that it makes a lot of sense to have that gas-fired (or renewable plus battery) capacity as backup.
    This is very much like the discussion of water security when some people were arguing that you could do it all with conservation. You can’t and that’s the reason desalination has been built – we will never run out of seawater but we cannot guarantee that it will rain when we need it (just ask Hydro Tasmania).
    There is no place for coal in the future.

    • lin

      the obvious answer in Tassie is to use wind and solar to pump water back up hill during times of surplus, and run it back down the hill when you need extra. Much cheaper to use an existing power storage and generation asset than build a new one.

      • Brian Tehan

        Yes, pumped hydro is an obvious storage solution for Tasmania, particularly with the best wind resources in Australia.

        • Ian

          You may be right, but conserved once through hydro is probably a better solution. Especially when there are already copious amounts of potential hydro storage as is Tasmania’s case. What I mean is, only using hydro when the other renewable resources reach their limit. Ie when there is no sunlight and when there is no wind. The dispatchability and reliability of hydro can be leveraged by these other resources, either by having better long term reliability in the face of droughts or having increase combined continuous output in the short term . Equal nameplate capacities of wind, solar and existing continuous hydro production could extend hydro’s storage 3 times longer or it could allow for the existing length of storage time but three times the continuous output. Wind and solar add to the energy pool when they can, but hydro fills in the gaps. The overall system is bigger and stronger and still has the medium term reliability of hydro.

          • Brad Sherman

            I’m all for pumped storage (I used to work for a hydroelectric utility in the US) but bear in mind that not all hydro systems can be easily converted to pumped storage. Plus there are environmental issues with pumped storage such as upstream transport of invasive species. These may not be issues for Hydro Tasmania. I’d be curious to know what the scope to convert to pumped storage is in Tas.

            Also, the absurd economic restructuring of electricity generation markets no longer rewards logical optimisation of an entire grid. All generators want to skim off peak power prices and hydro is the very best at that because it can ramp up so quickly. I suspect there may be circumstances when hydro is dispatched into a grid to compete with wind/solar as hydro generally beats all comers in cost/MWh.

            In the olden days, an integrated utility (transmission & generation) had the ability to optimise across a suite of generating assets. It also had the ability to abuse its market dominance and there is a need for strong public interest regulation. Unless Hydro Tas owns the additional wind/solar generating capacity, don’t you think the current ‘market’ system will compromise the environmental efficiency of the entire Tasmanian grid?

    • Ian

      Tasmania has the “batteries” already, it’s just that they are flat! They forgot to install enough solar and wind. Pumped hydro is good but not as cheap as existing rain filled hydro. Their cheapest option is installing abundant amounts of solar and wind so that in future when the rain eventually falls, hydro can again take its place as the dispatchable power source. For hydro to act as a battery it does not necessarily need to be electrically recharged such as with PHES, the water just needs to be conserved by allowing other power sources like wind and solar to provide generation capacity when they can and taking up the slack when there is no wind or sunshine. If hydro normally runs 24/7 then it might have 100 days generating capacity( for arguments sake) if similar name plate capacity solar and wind is installed these might reduce the run time of hydro to 8 hours in 24. Now the hydro/solar/wind combo has a reliable generating capacity of 300 days. Of course the dams experience inflows as the rain falls, increasing the long term reliability of the system.

      The idea of not building renewables until the Bass link is strengthened is a typical chicken and egg argument. The politicians are chicken and they have put their eggs in the wrong basket.

      Why does Tasmania need to trade electricity with Victoria? It could trade with Canberra or South Australia through direct contracts and PPA’s all these places are linked.

  • Rasa

    It has come back to bite Tasmania. In the late 1970s and 1980s Bob Brown and his crew in Tasmania focused on curtailing the ultimate in green renewable electricity Tasmanian Hydro. Cynically Bob Hawke massaged the electorate by embracing Bobs ideas on electricity generation. Classic coulda, shoulda, woulda. Tasmania could be self sufficient now and exporting Hydro electricity to the Mainland.
    The brown coal industry in Victoria now looks rosy with South Australia grid based on the Brown Coal driven connector. Looks lik Tasmania is going the same way. SA doesn’t have the natural resources like Tasmania so doesn’t have a choice. But Tasmania….. A classic lost opportunity. Bob and his band of Merry Greens at the bottom of the garden.

    • Brian Tehan

      Except that Tasmania has run out of water. You need to read the article.
      Tasmania will never run out of wind and wind doesn’t require flooded world heritage areas. If Tasmania had built the planned wind complement to hydro, they wouldn’t be in the position that they’re in.

      • Charles

        Exactly, the current issue is lack of diversification. Another dam may have meant fewer wind farm developments. Then we’d be in even bigger trouble than we are now.

    • Barri Mundee

      So if the Franklin was dammed all would be fine? Well I doubt it.

      Hydro is a good source of low emissions electricity but recent events demonstrate that water resources which in the past could be relied on are no longer as reliable.
      A “portfolio” approach with less reliance on hydro and more on true renewables such as wind and solar could have avoided the current fiasco.

  • Cooma Doug

    We need to look close and answer a few key questions.
    1……What are the fundamental wholesale electricity market forces that enabled this fiasco to mature into such a mess?
    2….Does the 2016 market accommodate or deny technology enhancements that solve this problem?

    The answer to these questions are indeed an eye opener. Might I suggest the facts are a little stunning if one expects all has been done for the benifit of the consumer

  • Alen T

    “Sometimes things have to go worse before they get better.” It was the case for QLD, now let’s see/hope this plays out in Tasmania too.

  • Mark Duffett

    On the face of it there is a major inconsistency here. Why does the ‘coal lobby’ think it’s great to have a single link across Bass Strait ‘for brown coal generators to supply at least half of Tasmania’s electricity needs’, yet having two would ‘offer an economic driver for more renewables to be built in Tasmania and exported to Victoria (and) provide more competition for the major brown coal generators’? Why should increasing transmission capacity across Bass Strait cause the net flow direction to reverse?

    • because the tasmanians have made it clear, and it is repeated in Groom’s statement, that agreement to build a second interconnector would be a trigger for significant amounts of investment in wind energy etc. The second interconnector has always only ever been partly about energy security, mostly about export opportunities. Brown coal generators don’t want more wind coming into victoria, which is why they fought for a long time against upgrading connection to south australia.

      • Mark Duffett

        But that’s what they said about the first interconnector as well: “The decision to build Basslink and join the National Electricity Market was based, in part, on Tasmania’s capacity to export our renewable energy”. If the first interconnector hasn’t triggered sufficient investment in wind, why should a second change the situation? Is the transmission capacity (>500 MW) a significant limiting factor? Would upping it to 1 GW (say) make all the difference to wind investment attractiveness? My question still stands.

        Thanks for the prompt response, BTW.

        • As you suggest, based in part by capacity to export. So the main reason was security, but they knew they could export too. In fact, it was seen more as an arbitrage play – import at off peak, export at peak, although it didn’t necessarily always turn out that way. Now, the thinking seems to be they need the second to justify more renewable energy based on export potential. many argue they should be building more renewables anyway cos it cheaper than gas and diesel, and cheaper than imports. Either way, a second link would obviously create more opportunities for export rather than import, so that why the coal lobby not so happy.

  • Phil

    If i were a Tasmanian i would be more concerned about reliability of supply and becoming 100% off the mainland grid than selling surplus energy for 2 reasons.

    Reason 1 is if they are reliant on the interconnector for either contribution or consumption it leaves them wide open exposed to industrial and terrorist actions.

    Reason 2 If the climate change predictions are correct Tasmania is in the box seat for industries that are relocating chasing a more suitable climate such as grape growing.

    If the Tasmania energy grid was renewable friendly working with business , consumers and the grid together then these businesses can promote that clean , green fact as a marketing tool to appeal to the renewable mindset of consumers.

    Tasmania has a clean , green renewable branding opportunity that is now totally wasted as it’s powered by brown coal Co2 and diesel fumes.

    Its much like a mini Fukushima event unfolding , albeit over a shorter term , but the waste lingers on forever with higher Co2 , Diesel fumes and no doubt massive cost to the hapless consumer and businesses.

  • Suburbable

    On the positive side, drowned ecosystems may have a chance to regenerate as the dams will probably never be full again.

  • neroden

    So what can private industry do to bypass this useless government? Is there any requirement that additions to grid production be put out to bid, as we have in most of the US? When it’s put out to bid, wind and solar are winning every time.