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Tasmania urged to add more wind and solar amid energy crisis

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The Tasmanian government is being urged to pave the way for more wind farms and facilitate more rooftop solar as it negotiates its way through its biggest energy crisis with the grid connection to the mainland lost and hydro levels falling to record low levels.

The government has already asked two of the state’s biggest industrial facilities – the Bell Bay smelter and the TEMCO manganese alloy smelter – to reduce output by up to 70MW as it watches its dams dry up, experts struggle to reconnect the Basslink connection across Bass Strait, and bushfires force the closure of some of its generators.

Already the government has had to bring back the Tamar Valley gas fired generator back into service and called for one generator to be flown at great cost from the Middle East. The use of gas has pushed wholesale prices up nearly three-fold too average more than $110/MWh in recent weeks.

Analysts argue that wind and solar would provide better options. Pitt & Sherry analyst Hugh Saddler says wind energy offers a cheaper option to both gas, and imports from Victoria, which were costing $90/MWh when Tasmania was trying to replenish its declining hydro resources by using Victorian coal-fired electricity. Then the drought worsened and the cable broke – and may not be repaired for several months.

“Maintaining electricity flow through Basslink at full capacity during the latter part of 2015 resulted in the wholesale spot price in the Tasmanian NEM region increasing steadily from about $40/MWh in September to about $90/MWh in the first weeks of December,” Saddler notes.

At the end of January 2016 it had reached $120/MWh. That suggests that wind farms would not just be a cleaner option, they would be a cheaper option.

pitt sherry tasmania

The recent contracts obtained between the ACT government and wind farm developers suggests new wind farms could probably be built in Tasmania – even without support from the LRET – if they could receive a price close to $90/MWh.

Tasmania has abundant wind resources – at a high capacity factor of around 45 per cent, but currently, according to AEMO, only three announced new possible projects, with total capacity of 329 MW. It currently has a total capacity of 373MW, well short of Tasmania’s average demand of more than 1,000MW.

“Wind generation is an ideal complement to hydro with storage,” Saddler noted in a recent report. “In windy conditions, hydro can be turned back, allowing storages to replenish, and subsequently generate at higher levels when there is little or no wind.

 

The issue has taken on a political context with energy minister Matthew Groom under pressure – both from his own party and from Labor – to pave the way for a planned 33-turbine wind farm near Queenstown in the state’s north-west, which is struggling to get a power purchase agreement from the state-owned energy utility, Hydro Tasmania.

Parliamentary secretary Adam Brooks has written to a sub-committee of Cabinet, formed in response to the state’s energy security problems, urging them to intervene because the project “adds to our energy security and renewable energy security but also helps diversify the economy on the west coast.”

Labor Leader Bryan Green said the Granville Harbour wind farm – proposed by West Coast Wind – should be first on the Cabinet sub-committee’s agenda.  “You’ve got a renewable project that is ready to go, effectively, just has investors, has planning approval, requires a power purchase agreement and yet they can’t get it up,” he said.

ABC reports that the Tasmanian Greens have proposed community solar farms, micro grids and loans to pay for the upfront costs of solar installation to help address long-term energy security.

The party wants to double the number of homes and businesses with rooftop solar to 50,000 in the next four years, by increasing the solar feed-in tariff.  Greens spokeswoman Rosalie Woodruff said the prolonged outage of Basslink and record dry conditions highlighted the need to invest in solar energy.

However, the solar lobby says the solar industry is being held back by a state pricing regulator that does not understand distributed generation.

Jack Gilding, from the Tasmanian Renewable Energy Alliance, said a draft report from the Tasmania Economic Regulator  acknowledges that solar PV can increase energy security when dams are low.

But because solar PV was only 1 per cent of Tasmanian electricity demand in 2014-15 and there is no current mechanism for rewarding this benefit, the report suggests it can be excluded from the calculation of feed in tariffs.

“This is a self-defeating cycle,” Gilding said.  “Solar PV could meet much more of Tasmania’s energy needs, but until the full benefit is recognised, there will be no incentive for solar owners to invest in feeding energy into the grid.

“Tasmania is currently burning gas and will start importing brown coal fired power as soon as Basslink is fixed. Yet the draft report does not acknowledge any environmental benefit in increasing the use of solar energy in Tasmania.”

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  • Beat Odermatt

    South Australia and Tasmania are ideal for 100% renewable energy. Wind, solar and wave energy can gradually replace most of the fossil fuels used and dams provide a ready affordable “battery” to store excess energy.

    • Vernham

      What Dams in SA do you suggest? An attempt at testing wind energy in SA sank – literally. Wind and Solar in SA has driven the price of energy into the realm of insanity. Even the State Government is now recognising its excessive cost and inefficiency by going back to gas.

      • I don’t think any wind turbines have sunk in South Australia, although a wave energy prototype did. If you check the AEMO web-site it shows average wholesale electricity prices in South Australia are lower now than they were before wind and solar, because in those days more gas was needed to meet peaks. That’s why fossil fuels and shills like you hate renewables – it lowers wholesale costs.

        • Ronald Brakels

          Retail electricity prices have fallen in South Australia thanks to increased renewable capacity, which now produces electricity equal to about 40% of the state’s consumption. And has eliminated coal power in the state. South Australia’s only coal mine was closed for good before Christmas (that’s one way to avoid paying holiday rates) and the one remaining coal power station will be permanently closed next month.

          • eddierothmanisatool

            spot on giles and ronald. giles you should put up your link from a while back about negative prices in the NEM due to 100% RE. also happens much more regularly in euro markets where more RE across wider range. vernham what on earth are you talking about?

      • Beat Odermatt

        Testing for wind energy was undertaken by environmental scientists of former ETSA as far back as the 1980th and did proof it’s enormous potential to generate electricity for South Australia. You may not realise but a lot of people in South Australia are actually drinking water which happens to be stored in dams. These dams could be used to generate electricity. Do you realise that computers can be very useful to find good information including maps and facts. Computers are not designed exclusively for trolling.

        • John Saint-Smith

          Ouch! But I love it! You could tell he wasn’t real, no data, no links, just BS.

      • Barri Mundee

        Utter tripe!

      • Mark Diesendorf

        South Australia has the potential for sea-water pumped hydro-electric storage in a number of locations. An engineering-economic study is needed to explore this option in more detail.

        • Smurf1976

          ETSA did look at a 400MW plant many years ago. It was never built but they certainly did look at it as an option.

      • JeffJL

        Vernham. Have a gekko at this article re price of power in SA.

        https://medium.com/@ketanj0/wind-power-in-south-australia-makes-people-forget-about-causation-93afb4364f45#.wohq7go6r

        I do agree with you on the lack of dam sites in SA (and in Australia in general). While I believe that batteries are very efficient in their return of power the size required is an issue (although I am hopeful about flow batteries). Storage is a huge issue.

      • solarguy

        That’s BS

  • suthnsun

    As I have remarked previously, a PV fit of 10c would see fully distributed power at a bargain for Tas and would give incentive and scope to dramatically lower the current drawdown. In the long term there are no serious downsides either.(probably far more upsides)

  • Phil
  • Malcolm M

    As recently as 15 August 2015 Hydro Tas issued a press release saying that it no longer needed the gas fired Tamar Valley plant, that it would be sold and its workers redeployed.
    http://www.hydro.com.au/about-us/news/2015-08/changes-operation-tamar-valley-power-station
    Yet it had all the warning signs – an El Nino and low dam levels. For a hydro-dependent State there should be enough in storage to last 2 years of the lowest inflows in the historical record.
    Was there pressure placed by its owners (the Tasmanian government) for Hydro Tasmania to take a high risk approach to extract dividends ?

    According to its website there are now only 2636 GWh in storage, enough for 6 months at the current hydro generation rate of 600 MW. After this the dams would be completely empty.

    • Smurf1976

      “Was there pressure placed by its owners (the Tasmanian government) for
      Hydro Tasmania to take a high risk approach to extract dividends ?”

      That is precisely what occurred and suffice to say that Hydro itself didn’t receive the financial benefit of it all.

      • Malcolm M

        Over the last few years it seems (with the benefit of hindsight) that Hydro Tas have played nearly all their cards wrongly. Tamar Valley gas-fired power station produced an average of about 160 MW from its opening in September 2009 until its effective mothballing in July 2013. At the time of its mothballing, the carbon tax had been operating for 12 months, and storages were at 35%. I expect one of the reasons that hydro levels were good is because of the contribution on the Tamar Valley plant offsetting water that would otherwise need to be release from storage. The hydro stations were then run hard, sending a consistent 400 MW of green power across Basslink until the end of the carbon tax in July 2014. This was a good move at the time, which resulted in about $200 m of additional revenue for Hydro Tasmania, but this left the dams depleted, with energy in storage of only 29%. To restore dam levels they should have imported more power from the mainland via Basslink, and restored gas-fired production from Tamar Valley. However, to do this requires cash for mainland power purchases, and cash for gas, resulting in lower dividends to the Tasmanian government. At the time, gas prices were unusually low because of the Gladstone LNG plant gas use lagging gas production, and large-scale renewable energy certificate (LGC) prices (paid for generating green hydro power) unusually low at $22.50/MWh.

        What has happened since then ?
        1. Gas prices have increased
        2. LGC’s have increased to $92/MWh
        3. Dam levels have run down resulting in less power generated per unit of water. For example, the Gordon Dam is now 43 m below its full height of 183 m, resulting in 23% less power generated per unit of water than at full supply.

        So Hydro Tasmania now has the quadruple whammy of
        – no access to cheaper Victorian power due to the outage of Basslink
        – higher gas prices to run the Tamar Valley power station than if it had been used earlier
        – less hydro power to sell at the higher LGC price
        – a poorer return on their water flow assets because of lower heads

  • ??

    Well done to those behind the granville harbour project for getting everyone to believe they are the one and only wind project out there. If they manage to get a PPA in these circumstances they are going to do very nicely out of it. There are other projects around, such as the Cattle Hill project. All for Tas building more wind farms but they should be chosen through an open competitive tender process rather than backroom negotiations and politicial grand-standing. Also not sure why Hydro Tas would be the one entering a PPA – they’re the generator in this market, Aurora would make more sense as the retailer.

    • Charles

      Agreed, Cattle Hill is about 220MW and there is also one proposed for Robbins Island which is proposed to be up to 400MW. The Granville Harbour one is going to be under 100MW.

  • onesecond

    Should be a no-brainer really. They should overbuild it and supply excess electricity to Victoria once the interconnector comes back on.

    • eddierothmanisatool

      into a market with falling demand? that will accelerate under PV and storage. it makes zero sense actually.

      • onesecond

        Well my point is that lifetime of PV and wind are actually heavily underrated and therefore their economics heavily undervalued. Because their generation cost once installed is zero, they can push brown coal out of the market and make a profit in the long run. This would by my take a path to long term prosperity for Tasmania, but I guess long term thinking and short term markets don’t always agree. I just can’t see how Tazmania can loose by having an already paid for renewable energy park delivering energy to the mainland in the future, amassing knowledge of handling them and reducing the cost of installation further on top of any ongoing lifespan. Another point is that densely populated cities with high rise buildings don’t have enough rooftops to deliver all the demand for the city and its industries, so electricity deliveries into population centres will still be necessary.

        • eddierothmanisatool

          1. the link will cost 1 billion dollars! thats a lot of rooftop solar. in fact enough for every household in tasmania (4000/house)
          2. interconnector silly idea in distributed paradigm and illustrates how disconnected the old guard in hydro tasmania and the government are.
          3. utility scale solar and storage on mainland is cheaper and more efficient way to deliver power to NEM. hydropower is $60-90/mWh. solar + storage is now <30c/kWh. so why would you do it?
          4. its a completely ridiculous idea that has now been politicised.
          5. the "park" is not paid for it has 850 million in debt and something like $350 million in defined benefits liabilities, it is one giant aging stranded asset.

          • onesecond

            Well, I disagree, but I can see your point.

          • eddierothmanisatool

            how can you disagree its not an opinion, this is simple energy economics. the link makes zero sense? if the idea is to push brown coal out of market that will occur in the next 5 years anyway??

          • onesecond

            I stated my reasoning before and I don’t want to repeat myself.

          • eddierothmanisatool

            no worries. the reasoning is totally flawed, but, as you wish.

          • david_fta

            Did someone mention energy “economics”?

            You can make energy economics whatever you like, by adjusting taxes. For example, a fossil carbon consumption tax coud be imposed (with revenue going to Company and Income Tax cuts, and even pension adjustments); that measure alone would make Victorian power distributors impatient for Basslink repair – and Hazelwood’s owner fearful of the same .

          • eddierothmanisatool

            not actually true when applied to distributed gen and storage. this is declining around 20-25%/annum due to uptake. carbon price is actually not relevant. it is how hydro tasmania got themselves in this mess however pumping the storages dry before the carbon tax expired.but i understand what you are saying

          • david_fta

            “not actually true when applied to distributed gen and storage”

            Thanks for that correction, power distributors would rather there was no behind meter generation, they’d rather meter the lot. With high enough carbon tax, it’d be worth their while to install the panels on your roof, meter you for what you use and collect the rest for storage/distribution to their other customers – even back to you when the sun goes down.

            Power Tasmania were selling lots of power through Basslink when there was a carbon price operating – and Victorian networks were buying from Tasmania rather than brown coal burners.

          • eddierothmanisatool

            thats the point isnt it. when storage + solar is cheaper than the retail tariff in even the mid priced states like Tasmania (its already cheaper than tariffs in QLD in 2-3 years it will be cheaper in all states i suspect) the networks and gentailers will begin to experience the death spiral more acutely. and yes i know HT was selling flat out during the carbon price impediment and generating record profits while traders were paying themselves 100k bonuses. now the storages are at critical levels the tasmanian price is 110/mWh and they have shipped in diesel gensets and curtailing MI power use. there needs to be a serious enquiry as to what the long term cost to the taxpayer is due to the GBE nature of HT. regardles the entire global vertical integrated utility model will fail over the next few years. their scale is their biggest problem. can you say kodak?

  • Ian

    Can someone explain wholesale price, spot price, price of contract, and FiT. When there was mostly hydro the wholesale price was $40/MWH, bass link cost was $90/MWH, when they relied on 200MW of gas out of a total of 1100MW the wholesale price was $110, roof top solar tariffs range from 5c/KWH upward converting to comparable units that is $50/KWH, New wind would be in the order of $90/MWH.

    Obviously wholesale price would reflect scarcity of supply ranging from $40 to $110/MWH . When disaster struck and ” the drought worsened and the cable broke” wholesale was $110 gas provided about 20 % of generation, wind about 10% and hydro the rest. Does that mean hydro received $110/MWH at that time when they could have received $40 at other more abundant times? If that’s the case then they would definitely not want other competitors driving down wholesale prices. Especially wind which would have a price of contract (presumably meaning a guaranteed price) of $90/MWH. When there is lots of water and lots of wind, wind would trump hydro and receive the higher price as per contract. Hydro would have to throttle back production and receive the lower wholesale price of $40/ MWH. Add rooftop solar to the mix and demand drops: customers make their own power at certain times of the day. What happens to the wholesale price now?

    On the face of it hydro is better off dealing with expensive gas and much better off in times of adversity. They can sell half their product at the better wholesale price and get the same revenue. Is this a correct conclusion?

    • eddierothmanisatool

      i think what you are asking is why are prices high now the link is broken?
      in short when link was functional hydro was importing overnight at low wholesale prices, and exporting during the peak. also they are not operating at 1100MW as they have to serve the MIs within the state and many generators are not functional due to low storage? does that answer your question?

  • Geoff

    there is no way that the state Tasmanian government will ramp up the deployment of solar and wind especially seeing that they have wanted to burn native forests for power generation. Tasmania need to get their morale’s sorted out before making logical moves like this. this and also a turn over of the current government.
    hydro power is immediately under threat due to climate change. water scarcity will be on the rise hence less hydro power generation so going solar / battery wind is a good option.

  • Kevin O’Dea

    Hydro Tasmania, until a few years ago, was dominated by engineering specialists who were primarily interested in building dams and generating delivery systems for HYDRO electricity. I remember their absolute disdain for solar and wind energy, and I suspect some of this disdain lingers on in this age of renewables. Very similar to the coal mine brigade who are fighting tooth and nail for their survival at the moment. In case you have not noticed, the Earth’s climate system is changing rapidly whether we like it or not, and Tasmania is running very low on water stocks. Hydro projections have been shown to be a fantasy. There is no guarantee about future rainfall. We really do need to explore all options, especially wind in these latitudes. Tasmania’s Liberal Party Government seems very focussed on biomass as a power source, the “harvesting” of native forests for wood to BURN. Very predictable political fixation here.