Another big industrial trims demand as Tasmania energy crisis deepens

Another major industrial user has agreed to “voluntarily” reduce their electricity demand as Tasmania continues to grapple with its biggest ever energy crisis.

Hydro Tasmania on Tuesday announced that paper milling giant Norske Skog has agreed to close one mill and reduce demand by 43MW as the energy authorities work out how to deal with the loss of the Basslink connection to the mainland and the fall in dam levels to their lowest levels ever.

The decision by Norske Skog takes total demand cuts from big industrial users to more than 110MW, following similar offers of 32-40MW by the Bell Bay aluminium smelter and 30MW from TEMPCO, the local manganese alloy factory.

Hydro Tasmania is currently rushing in 200MW of diesel generation as a stop gap measure to ensure there is enough supply. It has already switched back on the Tamar Valley gas plant, sending average prices more than four-fold higher to around $180/MWh.

The situation has led many to wonder why the government did not invest more in locally sourced wind energy, or encourage more rooftop solar – both options that would have been substantially cheaper than gas. The diesel generation will cause wholesale electricity prices to double again.

Hydro Tasmania says it is facing operating losses this year as it brings in more expensive generation to allow it to conserve its depleting hydro resources as long as possible. Dam levels are now down to just 16.1 per cent.

It said Norske Skog will voluntarily reduce load at its Boyer Mill for one week, starting from the middle of next week. The reduction will involve the closure of one of the mill’s two paper machines and associated pulp mill. These actions will have no effect on the Boyer workforce.

Andrew Catchpole, the acting CEO of Hydro Tasmania, said in a statement that the generation from gas and “temporary” diesel, along with voluntary load reductions by large consumers, will be “well in excess of the import capacity” of Basslink.

“This will ensure Tasmanian demand can be met, even with a prolonged Basslink outage.”