Labor proposes first renewable energy zone in north west Tasmania

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Federal opposition proposes renewables zone in north-west Tasmania, as Victorian Labor extends coal mining licences for Latrobe Valley’s major brown coal generators.

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Labor is proposing to establish the country’s first official renewable energy zone in the north-west of Tasmania, where more than $2 billion of investment – mostly in wind – are planned.

Federal Labor’s climate change spokesman, and party president, Mark Butler, made the announcement while campaigning in the seat of Braddon, one of the seats to go to the polls in late August.

“We think the first Renewable Energy Zone identified anywhere in Australia should be the North West of Tasmania,” Butler said.

“…. Because we are convinced it has the highest quality resource, great interest in investment and will do great things with the hundreds of jobs that will flow from that.

“What you do need, though, is a government in Canberra that has a policy that will drive renewable energy investment.”

The area is home to several different large-scale wind proposals, including a 1,000MW wind facility on Robbin Island and Jim’s Plains, although this project would only go to that scale if a second “Basslink” was built to add a new connection from Tasmania’s  grid to the mainland.

Renewable energy zones are being proposed by major transmission groups, the Australian Energy Market Operator, and even the NSW and South Australia Liberal governments as a way to harness and co-ordinate the building of large-scale wind and solar.

Butler says Labor’s 50 per cent target contrasts with the Coalition’s attempt to “strangle” new wind and solar investment through the National Energy Guarantee, and its refusal to lift its emissions reduction targets for the electricity sector beyond 26 per cent.

This meant that the federal Coalition’s pet project – Snowy 2.0 – could be built without any significant new investment in wind and solar, making it largely a storage of excess coal generation rather than wind and solar.

“Expanding the pumped hydro arrangements here in Tasmania through the Battery of the Nation project, for example, only makes sense if you have a government in Canberra that will drive renewable energy investment,” Butler says.

As Labor and the Coalition battle over the scope of renewables investment in the future, what is becoming abundantly clear is the impact that renewables are having on current and futures prices in the wholesale market.

Morgan Stanley issued an interesting report on Monday which highlights not just the fall in wholesale prices since their peak last year soon after the closure of Hazelwood, but also the fall in futures prices, despite strong coal and gas prices.

“We therefore attribute falling forward prices primarily to new entrant renewables, and, at the margin, the fall in frequency control prices,” the analysis said.

It pointed to the expected 6.4GW of wind and solar to be added by 2020, and the impact of the Tesla big battery and demand management on the FCAS market.

The price for large-scale generation certificates (LGCs), is also falling heavily on the futures markets, with calendar 2021 prices now down to near all-time lows of $15/MWh, “suggesting that the pace of new entrants has surprised even power market participants.”

Morgan Stanley also noted the emergence of new “firming contracts” that offered customers the ability to source solar power at implied prices of $55-60/MWh during the day, and “firming prices” (i.e., prices when the sun isn’t shining) of $60-65/MWh.

This also meant that customers may be able to procure renewables under contract and hedge the intermittency, without the need for an incumbent gentailer. That has potentially significant implications for incumbents such as AGL, Origin and EnergyAustralia.

(See David Leitch’s analysis on ERM’s recent presentation here).

Meanwhile, the federal Coalition attempted to make something of the Victorian government decision to extend coal mining licences for the major brown coal generators in the Latrobe Valley, saying it stood in contrast to federal Labor’s vow to “kickstart their closure.”

The Victoria government says the mining licences have been extended to marry them with the proposed closure dates for the main generators (2032 for Yallourn, 2048 for Loy Yang), and so that the operators could continue remediation after the generator closures.

Interestingly, however, they have added a clause that will now require operators of brown coal generators in the state to provide five years’ notice of closure, compared to three years proposed by Finkel Review, and the several months provided by Engie for the closure of Hazelwood.

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14 Comments
  1. Joe 5 months ago

    Good onya Mark Butler and Labor….’Jobson Grothe’…with Renewable Energy. What’s not to like with this.

  2. Peter F 5 months ago

    Braddon has fantastic wind, pretty good solar all backed up by nearby hydro. What they need is demand to use it so they need to find high energy using consumers locally, perhaps expanding their existing metal refineries. Exporting power to Victoria through an additional Basslink is not competitive with local wind and solar in Victoria.
    REZs are becoming an outdated concept because the cost of transmission investment and operation no longer offsets the efficiency gains from higher performance renewables a long way from the market.

    • PLDD 5 months ago

      Peter – is there much difference in wind patterns in Tassie vs the Vic coast…..?

      • Peter F 5 months ago

        There are slight timing differences and generally slightly stronger winds in Braddon, but a lack of infrastructure probably makes the farms slightly more expensive to build and even though the losses on Basslink II are small they are not zero which probably eats up a large chunk of the efficiency difference between the sites.
        As for capital cost even if you do build 1,200 MW of generation for say $2.2 bn, adding another Basslink makes that more like $3 bn to compete with a $2 bn investment in Victoria. It has to be hugely more productive to justify the extra capital costs

        • Ren Stimpy 5 months ago

          A business case in other words. And if your confusing spiel means otherwise, lets have it.

        • Eric 5 months ago

          But the second bass link would also provide the opportunity for reverse flow of excess mainland energy into Tassie Hydro storage.
          The wind in Braddon is stronger and more consistent across the year than VIC
          And being located at a distance from VIC the wind may be blowing at one location not the other providing a more consistent energy supply overall.

          Adding it up it makes a lot of economic sense to make Braddon a renewable energy zone. Which is why it has been proposed.
          A full analysis has already been done on wind power on King Island and the community voted in favor of wind power. All we need is a renewable friendly government in Canberra and the biggest wind farms in the country will be built in Tassie.

          • Jonathan Prendergast 5 months ago

            Don’t know how $2 billion of renewables in Tassie that needs $3 billion in transmission can beat $5 billion direct investment in renewables on the mainland, due to these intuitive reasons.

      • Ren Stimpy 5 months ago

        Tassie West sweetheart? No worries.

      • Ren Stimpy 5 months ago

        PLDD is there much wind patterns that blow up your arse hole?

      • Rod 5 months ago
    • GlennTamblyn 5 months ago

      Would Tassie be exporting ‘power’? Or would it be shifting it’s state level generation to wind, for local consumption, and repurposing its current hydro assets to provide ‘storage services’ to Vic/SA.

    • MacNordic 5 months ago

      Peter,

      from what I see on the Basslink charts, the average utilisation is around 110MW towards the mainland – and quite volatile over the year(s). So it should be a business case to max out the existing capacity for a larger part of the time in order to make the most of the existing investment in Basslink I.
      This could be via a larger (maybe not exactly 1GW, but a good share of that) RE generation base, first minimising import, then making sure the flow is maxed out towards the mainland most of the time by using hydro for firming of the variable generation from the wind farms.

      Should turn quite a good profit, if acompanied by a supporting policy…

  3. MG 5 months ago

    Is the referenced Morgan Stanley report public?

    • Giles 5 months ago

      Nope, afraid not.

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