Price is right with Hydro

11 September 2018

Tasmania’s hydropower assets can support the national grid and lower energy prices, says Hydro Tasmania CEO Steve Davy in The Australian.

New Energy Minister Angus Taylor has been given the substantial job of reducing energy prices, and he has Tasmania on side through the Battery of the Nation initiative, which aims to do just that.

Business and domestic consumers are crying out for lower power prices, but that becomes a bridge too far if the fundamental issue of reliability is not addressed also.

Australia had the foresight to invest in two nation-building hydropower schemes during the past century. Those investments will reap huge rewards for decades to come and, through strategic reinvestment, the Tasmanian and Snowy Mountains hydropower schemes can remain the cornerstones of Australia’s low emission energy supply and ensure the smooth and efficient transition of the sector.

These schemes are the jewels in the crown of Australia’s electricity generation landscape and are poised to play a crucial role in solving the country’s energy challenge.

While the federal government works on the policy side, Taylor is right when he throws out the challenge to industry to step up and provide practical solutions. Tasmania’s Battery of the Nation solution is exactly that, and Hydro Tasmania and others are working hard to realise it.

It is an ambitious plan to double Tasmania’s energy generation capacity and to make a major contribution to the National Electricity Market. It will involve repurposing existing hydropower infrastructure, including addition of pumped hydro, taking full advantage of Tasmania’s unmatched wind resource, and developing additional interconnection to get energy into the markets where it is most needed.

The Future State NEM analysis report, released by the Australian Renewable Energy Agency in June, strongly supports repurposing Tasmania’s existing hydropower assets to help support a future energy market. It found the use of flexible hydropower could translate to a 20 per cent reduction in energy resource costs, putting downward pressure on prices to customers. That’s on top of a reduction of up to nine million tonnes of greenhouse gas emissions a year.

Hydro Tasmania already has identified 14 options for pumped hydro, which together could provide up to 4800 megawatts of reliable, cost-effective power generation. From these options, Hydro Tasmania will select the most attractive projects. That could lead to the development of up to 2500MW of pumped hydro storage. Modelling shows these and other Tasmanian renewable development opportunities would create up to $5 billion in investment and 3000 jobs in regional Tasmania for up to 15 years.

Pumped hydro in Tasmania is extremely cost competitive. There’s ample opportunity, and most sites have an estimated cost of between $1.05 million and $1.5m a megawatt to build.

An essential part of the plan is further interconnection across Bass Strait. It’s how the energy will be fed into the national grid and to the markets where it will be most needed.

As a whole, Battery of the Nation is cost competitive against all other realistic options for meeting Australia’s future energy needs, including when the cost of more interconnection is taken into account.

The pumped hydro developments would run in conjunction with wind power, which would see water pumped uphill while the wind turbines are turning. The water is then stored in the uphill dam ready to produce more electricity when the wind isn’t blowing. Our dams effectively become huge batteries as well as power generators at the same time.

Once Battery of the Nation is under way, the private sector stands ready to invest in significant wind power developments in Tasmania. These plans are well developed and ready to go. Developers are just waiting on the right signals.

Following a decade of instability around energy policy, now is the time for the federal government to give Tasmania the confidence and support to invest in Australia’s energy future.

We look forward to the opportunity to work with the Australian government towards a stable and reliable national network that delivers price benefits for the consumers it was established to serve.

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