Tasmania bows to fossil fuel lobby as it turns to yet more gas/diesel

It seems that the fossil fuel industry has got what it wanted from the Tasmanian government – a commitment to install yet more gas and diesel plants and put a freeze on any initiatives to encourage more renewable energy.

On the same day that the main coal generation lobby urged the government to take no hasty long-term action in response to its unprecedented energy crisis, the government fell into line, announcing plans for “dual fuel” – gas and diesel – generation plants and commissioning a report on future actions that will take 12 months to complete.

Energy minister Matthew Groom’s statement on energy security included no reference to increased renewables: hopes for an increase to feed-in tariffs to boost the uptake of rooftop solar were dashed, despite solar (6c/kWh) being a fraction of the cost of gas or diesel (30c/kWh). There was no mention of adding more wind farms, despite Groom’s protestations a week earlier that he “liked” renewables.

Instead, Groom announced the government would look to further boost its fossil fuel reserves. The entirety of the government’s “longer-term supply options” revolve around gas and diesel, including installing 25MW dual fuel generating units and more stand alone gas units. But it’s not even sure where it can source the fuel.

This comes on top of the 200MW of diesel generation that has been imported, at huge installation and fuel-burning costs, to supplement the 368MW of gas-fired generation that has been brought back into service following the loss of the main interconnector cable to the mainland, and the slump in hydropower dam levels to record lows.

This, of course, is how the coal lobby would want it. The Australian Energy Council, which represents AGL Energy, Origin Energy and EnergyAustralia, along with most other coal generators, is urging the government to take its time, and is arguing against a second cable to the mainland.

The coal lobby is well placed to benefit from indecision. Should the Basslink be repaired in late May, as is now currently scheduled, the brown coal generators will be called on to supply at least half of Tasmania’s electricity needs while the hydro output is curtailed to allow dam levels to be restored.

Groom says renewables depend on second Basslink

The prospect of a second cable across Bass Strait, both to increase security and to offer an economic driver for more renewables to be built in Tasmania and exported to Victoria – as has been proposed for several years – would provide more competition for the major brown coal generators.

But that idea appears to have been punted down the road, possibly because Groom and his government have so far found no support for the $1 billion proposal in Canberra, where the Coalition is struggling with big deficits and a reluctance to provide funds to renewable energy.

Tasmania has appointed a task force of three to deliver an interim report on the state’s energy options in six months and a final report in 12 months time. It will be led by Geoff Willis, a former chief executive of Hydro Tasmania.

Willis, it should be said, is a big supporter of renewable energy, or at least he was when he was running the state utility. In 2006, he expressed major disappointment when the Howard government pulled the pin on the then mandatory renewable energy target, as the current Coalition has effectively done with the current target.

Willis had hoped to build more than 1,000MW of wind energy, and suggested that the Howard decision on the MRET would cut that down to less than 500MW. As it turns out, Tasmania has only built 310MW of wind energy to date, and would find that extra capacity mighty handy right now.

Groom appeared to indicate that any further renewable energy generation in Tasmania would be dependent on a second cable, and that would be dependent on federal assistance.

“The Tasmanian Government remains committed to pursuing the case for a second Basslink interconnector, but it must be recognised as national infrastructure, and Tasmania must not be left to foot the bill,” he said in his statement.

“The facilitation of substantial further renewable development will depend on it,” he said.

The Greens argued that Tasmania needed to make sure it was self-sufficient in renewable energy before it entertained a new cable.

One idea could be to follow in the footsteps of Brazil, which is also experiencing power supply issues because of their own drought that has reduced dam levels.

Brazil is heavily dependent on hydro, but is now building 10MW of floating solar plants on two hydro electric dams – the first stage array switched on last Friday at the Balbina hydroelectric plant in the Amazon is said to be the first ever use of floating solar on hydro plants.

Meanwhile, wholesale electricity prices trade consistently just below $300/MWh, a seven fold increase from the average before the crisis, and when the state was not relying on gas and diesel.

Some major energy users have offered to reduce demand, with a total of 135MW coming from three major users, and possibly more from a fourth.

Despite this, Groom also made no mention of energy efficiency measures, apart from suggesting that “the government continues to encourage the wider community to take their usual steps in acting responsibly to conserve energy.”