Exceeding all expectations – strong returns for Tasmania

PRESS RELEASE

Hydro Tasmania has had an extremely productive year, returning a strong financial result for 2017-18.

The business achieved an underlying profit of $167.9 million, which was well above budget.

Chairman Grant Every-Burns said the outstanding result was built partly on excellent trading conditions.

“Hydro Tasmania also produced more large-scale generation certificates than budgeted and sold more electricity contracts relating to small business customers than expected,” he said.

“Having posted a small profit last year, and a manageable loss the year before (fuelled mostly by the energy supply challenge), I’m pleased to report this strong result. It means our returns to government will be greater than projected in the State Budget, including a dividend of $80 million[1].”

During 2017-18, Hydro Tasmania also invested more than $90 million into modernising and maintaining its assets so they can continue to generate clean, reliable and affordable power for decades to come.

Financial results

Hydro Tasmania’s net debt at 30 June 2018 was $703 million, a reduction of $35 million from the previous year.

Hydro Tasmania reports its underlying result year-on-year, allowing comparison of a consistent set of figures (see the table below).

“This outstanding result is built on the commitment and skill of our people, day in, day out,” Mr Every-Burns said.

Energy security

At the end of June 2018, storages were close to 40 per cent, an extremely secure position. Over the course of the entire year, Hydro Tasmania maintained storages well above the High Reliability Level.

Both our captured rainfall and hydropower generation were well up on the year before. In fact, in August, our hydro assets generated the most clean, renewable power we’ve ever generated in a single month.

This week, storages stand at 47.5 per cent as of Monday which is extremely secure.

Battery of the Nation

Hydro Tasmania’s work supporting the State’s vision to become the renewable energy Battery of the Nation took great strides over the past year. In 2017-18 Hydro Tasmania:

• Identified 14 options as the state’s best pumped hydro storage opportunities, from which we will select options that could produce 2500MW of additional, reliable, cost-effective, pumped hydro potential.
• Developed the Future State analysis report confirming that Battery of the Nation is extremely cost-competitive against all other realistic options for meeting Australia’s future energy needs, including when the cost of more interconnection is taken into account.
• Embarked on feasibility work, supported by the Australian Renewable Energy Agency, into upgrading or replacing the Tarraleah Power Station and scheme, which would transform the scheme into a state-of-the-art hydropower asset, perfectly suited for the changing needs of Australia’s energy system.

Hydro Tasmania CEO Steve Davy said there is a considerable opportunity available to Tasmania as we strive to help meet Australia’s future energy needs.

“There’s a significant pipeline of new energy projects in Australia, and the vast majority of them are renewable,” he said.

“This means the country will need to maintain energy reliability, stability and security by investing in dispatchable capacity. Pumped hydro will form a huge part of that. The country will need all the storage capacity we can offer through Tasmania’s Battery of the Nation initiative, and more.

“Of course more interconnection is needed to make all of this viable allowing Tasmania to get its product to market. Even with that interconnection cost, our analysis confirms Battery of the Nation is a front-runner that’s extremely competitive and cost-effective.”

Hydro Tasmania will continue to advocate strongly for Battery of the Nation and work with ARENA, TasNetworks, the Tasmanian Government and the Federal Government to help make it a reality.

Supporting community

Mr Davy said Tasmanians expected more from Hydro Tasmania than a typical business and a commitment to community was demonstrated in many of the projects delivered over the year.

“In the past year, we’ve committed to conducting at least two special water releases down Launceston’s Cataract Gorge each year until 2022, to support kayaking, rafting and tourism,” he said.

“We funded another seven projects to help make Tasmanian communities safer, more connected and more empowered, under our annual Community Grant Program.”

The 2017/18 annual report was tabled in State Parliament today, and is available on our website.

[1]Dividend payments occur in the financial year following the year in which revenue was earned.