Do we really need a second Basslink cable?

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It’s easy to argue that Tasmania needs a backup cable and that this could also provide benefits. But it’s not so simple.

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As a commentator who argued against the construction of the Basslink cable, recent proposals for a second cable between Tasmania and the mainland have led me to review my position—but not necessarily change it.

It’s easy to argue that Tasmania needs a backup cable and that this could also provide benefits. But it’s not so simple.

The existing cable has brought both benefits and costs. On the one hand, Tasmania could profit from exporting peak power at high prices and from selling renewable electricity when there was a carbon price. It could also import cheap off-peak power from the mainland— increasing its greenhouse gas emissions.

basslink

But it costs 2 to 3 cents per kilowatt-hour (kWh), or $20 to $30 per megawatt-hour (MWh), to cover cable costs and energy losses. That’s a lot when, due to excess generation capacity, wholesale prices have been depressed to around $40/MWh in 2015–16 in Victoria, where Basslink feeds into the mainland grid. Peak prices have fallen due to renewable generation, energy efficiency, demand management and industry restructuring.

Basslink provided an excuse for Tasmanian governments to continue to ignore energy efficiency improvement. This would have cut consumer bills, made better use of existing generation capacity and provided benefits such as more comfortable homes and more productive offices. Development of new renewable energy generation in Tasmania has not exactly boomed. Tasmanians are also paying a high price for the failure of Basslink.

So it’s not clear that Basslink has delivered a benefit relative to other paths. A retrospective study of what could have been done with the Basslink money could be interesting.

The economics of an additional cable are very sensitive to mainland electricity prices and the possible reintroduction of a carbon price. The ability of a second cable to provide useful backup also depends on what happens to Tasmanian electricity demand, investment in new renewable energy generation and rainfall for hydro generation as climate change plays out.

To compete with mainland renewable generation, Tasmanian generators will have to factor in the extra cost and energy losses of using the cable, so they would have to be significantly more productive than mainland generators.

Using the money saved by not building an extra cable (maybe a billion dollars or so) to instead invest in energy efficiency and new renewables, as well as revised dam management practices, could avoid the need for a backup cable and offer other benefits.

Also, instead of exporting to the mainland, it may be more profitable to divert excess electricity to running electric vehicles (or, given Tasmanian conditions, plug-in hybrids), which would offset the much higher cost per unit of energy of petrol and diesel fuel, and use a local resource to avoid import costs. And plug-in hybrids can easily switch to petrol if there is a power shortage.

I don’t have the data to make a call on whether or not another cable is a good idea. But I am inclined to be sceptical. Its cost must be compared with alternative options. And the risks of even greater exposure to mainland electricity market vagaries must be carefully weighed up.

Alan Pears, AM, is one of Australia’s best- regarded sustainability experts. He is a Senior Industry Fellow at RMIT University, advises a number of industry and community organisations and works as a consultant. This article was first published in Renew magazine. Republished with permission of the author.

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9 Comments
  1. Chris Fraser 3 years ago

    As a resident of the ‘big island’ I’m thankful for access to Tas’s hydro energy. Thank you Tas. I’m also looking forward to doing business in any event that wind resource of yours gets around to being used.We do perhaps look through the lens of problems that exist now (like the Latrobe Valley). But we should also consider the advantages of connection when there is lots of new investment in distributed clean energy, sometime in the future.

    • MrCyberdude 3 years ago

      The problem of the Latrobe Valley that you refer to is simply the lack of forsight of both the Labor and Liberal Party’s not stopping the privatisation of the SECV.
      If it was a State owned asset then it would have been replaced with newer and cleaner technology a decade ago, as had been done sucessfully for nearly 100 years.

      • Chris Fraser 3 years ago

        Possibly they all would have been replaced with more efficient Loy Yangs. But still burning brown mud all the same.if we trust that the creation of NEM and states flogging assets held some value, we need to turn our attention to what level of government andc

  2. frostyoz 3 years ago

    There’s no simple answer to the second cable issue.

    A key thing to consider is – who pays?

    Tasmanian taxpayers effectively paid for the first cable, via their ownership of Tas Hydro.

    But Victorian consumers benefitted via the increased competition in supply to Victoria, and consumers Australia-wide benefitted from an increased supply of RECs.

    Should a new cable be a regulated asset, paid for by all grid consumers?

    Is the extra cost of $20/MWh justified?

    Would it just provide an additional market for Victoria’s fossil fuel generators?

    No simple answers.

    • MrCyberdude 3 years ago

      What’s wrong with providing additional market for Victoria’s #BrownCoal generating plant?

      One of the purposes of the National Electricity Market (NEM) was to reduce the price of electricity via competition and to create….. a national market.

      Or are you saying that renewables cannot compete on a level price playing field.
      Actually don’t bother answering that.

      • frostyoz 3 years ago

        I’m very happy to see additional competition between markets, so long as the cost of introducing competition (say, via additional transmission) is less than the economic benefits to be obtained.

        But if I was a Tasmanian taxpayer, I might not want to pay all the cost of something that was going to also give significant benefits to Victorian consumers and producers.

        That was one of the mistakes of Basslink #1.

  3. Ian 3 years ago

    The bass link cable is repaired, what’s the problem, 500 MW can be transmitted either way just as before the cable’s failure.

  4. MrCyberdude 3 years ago

    Well, it is estimated that it cost an EXTRA $426 Million dollars in less than a year to not have a working BassLink. Coal power is what you were missing from the generation equation, but I suppose diesel generators an EPA exemption and a fist full of dollars got the Tassie taxpayer through the dark times.

  5. David K Clarke 3 years ago

    If Tasmania was to plan for a possible failure of the existing Basslink and no backup cable, they could install more wind power and save their hydro for when the wind wasn’t blowing. On the other hand, they have a huge wind resource; if there was to be a new Basslink cable they could export a huge amount of renewable electricity to the north island – perhaps displacing dirty Victorian brown coal power.

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