How Tasmania’s hydro could have prevented Victoria’s summer black-outs

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Hydro Tasmania says a new transmission link to the mainland would have the most benefits for Victoria, including improved energy security and lower power prices for consumers.

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The Victoria load-shedding events of the January 2019 heat-wave could have been avoided by tapping hundreds of megawatts of “spare” existing hydro generation capacity in Tasmania – but only with an extra interconnector between the island state and the mainland.

Speaking at the Power + Utilities conference in Melbourne on Wednesday, Hydro Tasmania’s Christopher Gwynne pitched the various benefits a new transmission link from Tassie could deliver to both the NEM, broadly, and Victoria in particular.

Chief among those was flexible capacity – something that would have come in very handy to Victoria when record heat, combined with a series of failures and capacity reductions at all three of the state’s big brown coal generators, resulted in load-shedding on January 24 and 25.

“Tasmania is very, very rich in flexible capacity,” said Gwynne, who heads up Hydro Tasmania’s Battery of the Nation initiative. “But we don’t really use it, because we don’t sort of need it. It’s there due to the nature of how we built the hydro system.”

At the time of the load-shedding events in Victoria, Gwynne recounts, Basslink was on maximum export, but the state still had 400MW-500MW of extra capacity the whole time.

“We didn’t do anything for that to be available, it was just sitting there.

“There was … on average, 400MW of excess capacity just sitting in Tasmania that could have been switched on, but there was no point because there was not enough interconnection.”

Hydro Tasmania, of course, wants to change this, starting with its federal government-backed plan to install a new sub-sea cable across the bass Strait, called the Marinus Link.

For Tasmania, the link is important because there’s a lot of high quality wind and pumped hydro resources in the state that can’t be developed without greater transmission access to the mainland market.

But Victoria with its ambitious – and legislated – renewable energy target, its high power prices, and its ageing coal plants, finds itself a key part of the business case – not just for Hydro Tasmania’s Battery of the Nation plans, but likewise for Snowy Hydro 2.0, to its north.

“Victoria’s got strong renewable energy development ambitions, we all know that. And one of the limiting factors for that long-term trajectory for Victoria will be access to flexible capacity,” Gwynne said.

“If you can’t access enough of that flexible capacity, then you almost put a cap on the ability of the market to respond with the new variable renewable energy that you want to see coming on line.”

“And storage is in many respects the best way to actually incentivise that growth, because storage isn’t just about providing the flexible capacity to fill a hole, it actually provides a load.

“From a Tasmanian perspective,” Gwynne adds, “there’s two pieces to that; there’s the pumped hydro proposition, which is sort of easy to understand, but there’s also the ability to …displace the current hydro power system from providing that 24-hour, seven days a week energy production for Tasmania.

“If you do put more interconnection between Tasmania and the rest of the market, Tasmania will all of a sudden have access to new sources of low-cost supply, whether that be wind and solar generation from Tasmania itself that gets developed off the back of the interconnector… or it’s new development from Victoria or anywhere else in the NEM.

“Essentially, then, you could start to free up this flexible (hydro) capacity to be doing something else in the market.”

On top of that, Gwynne notes, the introduction of new flexible demand to Victoria’s market would put downward pressure on the state’s notoriously high energy prices, which reports on Wednesday show are forecast to surge by almost 50 per cent in the March quarter of 2020.

“One of the main things that drives high prices in Victoria is lack of competition in terms of flexible capacity,” he said.

“Flexible generation only sets the price about 20 per cent of the time in Victoria, but it accounts for about 60 per cent of the market cost.

“If you can introduce new competition into Victoria, in flexible capacity, you will have a dramatic impact on outcomes for customers, and we think that’s really, really important.”

As for gas – Hydro Tasmania also has a combined cycle gas generator and a “couple of peakers” in its generation portfolio – Gwynne, reckons its big moment in Australia’s clean energy transition might have already passed.

“If you roll it back five or eight years, we thought gas was going to be that transition technology… and that didn’t come into play, for lots of different reasons.

“I think, globally, the general view is that we’ll sort of use … gas to transition to a low-carbon future, built around renewables.

“We’re sort of bunny-hopping that.

“I don’t think …the idea we have of gas being the transition technology … is going to play out. I think that moment has passed in some respects for Australia.

“We’re now focussed on how we actually make that bunny-hop into that next stage, and I think we’ll lead the world, and there are a lot of countries that are watching what we are doing.”

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