Tasmania’s diesel detour an “economic and environmental crisis”, say Greens

The economic and environmental fallout of Tasmania’s ongoing electricity crisis has been put under the spotlight in a senate inquiry into the matter, with a particular focus on the cost to the state of its new-found reliance on heavy-polluting diesel fuel generators.

The formerly green-powered island state has lurched back to fossil fuels thanks to an unforeseen combination of record low hydro-power dam levels and an outage of the undersea Basslink cable joining Tasmania’s grid to the mainland.

The inquiry, which commenced on Thursday, aims to examine the state government’s handling of the crisis, as well as that of its network operator, HydroTasmania – although HydroTas has declined to appear at the hearing, as has Basslink.

So far, the response from the state-owned utility has been to deploy more than 100 diesel generators (107MW) to supplement hydro output, with plans to install another 100 units (a total of 200MW) by the end of the month.

And the economic cost has been great – HydroTas says diesel generation will cost $22 million a month for 200MW in capacity.

But the Australian Greens, who established the inquiry along with Tasmania’s opposition Labor Party, argue the cost of the state’s diesel power stop-gap will extend well beyond the fuel bill.

At the inquiry on Thursday, Greens energy spokeswoman Rosalie Woodruff pointed to that day’s spot prices as representative of the true cost of the emergency generation measures.

“Today at 11.30am the spot price for electricity in Tasmania was $594/MWh, compared to between $75 and $82/MWh across the other states in the national electricity market,” she said.

“Businesses who find themselves out of an electricity supply contract, or having to negotiate a new one, are exposed to the market spot price and are increasingly under extreme financial pressure.”

Woodruff said state energy minister Matthew Groom – who was among 11 witnesses slated to appear before the select committee on Thursday – should lift the solar rebate to support investment in the industry.

Ahead of the inquiry, Tasmanian Greens Senator Nick McKim said Parliamentary Library research revealed there would be 256,000 tonnes of carbon dioxide emissions over the four months, from April 1 to July 31 – “which is the same as adding 156,000 cars to Tasmania’s roads,” he said

“That reputational damage is something that will endure long after the energy crisis is over,” he said.

Labor Senator Carol Brown said she hoped the Senate inquiry would give Tasmanians the truth about what was happening at a time when “our dam levels are dangerously low and the cost of diesel for the generators will run into millions of dollars’’.

Committee member Anne Urquhart said she wanted to know why the Government was spending millions on diesel generation while not assisting the Granville Harbour wind farm.

As for Hydro Tasmania, ABC Online reports that economist John Lawrence told the inquiry on Thursday that it would take several years for the utility to return to profitability due to its low dam storages.

Lawrence said Hydro would lose a significant revenue stream from Renewable Energy Certificates, making it impossible it to make an underlying profit.

“It’s unlikely in the next few years, I would say two or three whilst dam levels are being restored, that hydro will generate above that base level amount,” he said.

The inquiry also hopes to learn whether the diesel generators will be needed beyond mid-June, when the Basslink cable is expected to be fixed.

“One question that we have is, for what period has he leased these generators? Does he intend to phase them out, will he stop them all at once?” Senator McKim said.