Push for second Tasmania Basslink wins new ARENA funding

The push for a second undersea cable linking Tasmania’s electricity network with mainland Australia has gained new momentum, with another $20 million in federal government funding put towards developing a business case for the billion-dollar project.

The Australian Renewable Energy Agency and TasNetworks announced on Friday that they would work together to explore a more detailed feasibility and business case assessment for a second interconnector across the Bass Strait, to complement the existing Basslink cable.

The new funding from ARENA comes as state energy ministers meet with the federal government to discuss the future path of the national energy market, and in particular, how to manage the transition from centralised baseload energy generation to distributed renewables.

It also follows a push for Australia’s island state to become the “battery of the nation,” by expanding its hydro power capacity and developing “significant” pumped hydro resources to store and dispatch renewable energy – feasibility studies into which have also been backed by ARENA.

ARENA has previously committed up to $2.5 million for Hydro Tasmania to undertake early stage feasibility studies as part of the Battery of the Nation project.

The third of these studies currently underway considers how Tasmania can play an expanded role in the NEM through increased wind power and reconfiguring or expanding its hydro capacity, which would rely on the installation of a second interconnector.

Preliminary findings from that study indicate that the benefits of a second interconnector could outweigh the costs by $500 million.

But a 2016 report into the feasibility of adding a second undersea link suggested it would not be worth the $1 billion investment unless at least 1,000MW of new renewable energy capacity was built in Tasmania.

And not everyone is convinced that a second cable is the way to go, when the installation of grid-scale battery storage alongside renewable energy generators – and harnessing the collective resource of behind the meter battery storage in homes and businesses – could offer a cheaper and easier fix to problems of balancing variable wind and solar recources.

In one scenario, drawn up by the Australian Energy Market Operator, AEMO found that the benefits of installing a second Bass Strait interconnector might outweigh costs over a 20 year period by just $20 million, and that those benefits might be eroded if battery storage costs continued to fall.

The same report found that under a 45 per cent emissions reduction scenario, the second interconnection would provide minimal capital deferral benefits.

“Increased uptake of large-scale battery storage in all cases dampens the benefit of the additional capacity access provided via the inter-connector,” it said.

In a statement on Friday, ARENA said a second interconnector after Basslink would allow Tasmania to expand the amount of electricity it could provide to the grid, allowing Tasmania to play a greater role in the National Electricity Market.

It would also provide a backup line to the mainland to ensure supply to Tasmania – a key consideration, ever since the existing Basslink cable suffered a “force majeure” outage in December 2015, and tipped the state into a months-long electricity crisis.

TasNetworks and ARENA say they are now defining the scope of the more detailed feasibility and business case assessment to be formally assessed by ARENA.

They said the business case would consider: the optimum capacity of the cable; the preferred route; technical specifications and grid interconnections; timing; detailed cost estimates; and financial and development models.

“Tasmania has some of Australia’s best wind resources, a large established hydro electric system and the potential to develop pumped hydro sites,” said ARENA CEO Ivor Frischknecht.

“To harness this potential, a second interconnector would need to be constructed to enable further generation and storage capacity to be delivered to the rest of the NEM.”