Unlocking Tasmania's energy capacity through interconnection

12 December 2018

Analysis released today by Hydro Tasmania demonstrates that additional Bass Strait interconnection would immediately unlock many hundreds of megawatts of latent dispatchable capacity in the Tasmanian hydropower system, and make it available to a transforming National Electricity Market (NEM).

This immediate boost to the NEM would be the first of many benefits of more interconnection. Looking further ahead Tasmania’s ambitious plan to become the renewable Battery of the Nation is also dependent on increasing our interconnection. ARENA has supported the Battery of the Nation initiative with up to $5.0 million funding for project studies, being matched by Hydro Tasmania.

As the NEM transitions away from baseload fossil fuel generation and the penetration of wind and solar increases, new energy storage options are needed to ‘firm’ variable generation sources.  But there are limited cost-effective options available in the NEM for long-duration storage.

“It’s well understood that additional interconnection would stimulate investment in new renewable energy development in Tasmania, including cost-effective pumped hydro energy storage and high-quality and diverse wind generation,” said Steve Davy, Hydro Tasmania CEO.  

“While those projects require feasibility assessments and construction lead time, additional interconnection would realise benefits almost immediately through accessing Tasmania’s latent dispatchable capacity, made available by relatively minor changes to the way we operate existing hydropower assets. And this could happen without the need for new generation investment.

“Our analysis shows that 400 MW of reliable capacity can be unlocked with no new investment. It would be available over the summer months, when demand is at its peak in Victoria and the system under greatest pressure. This coincides with the period of lower demand in Tasmania, which means supporting the NEM can coexist with meeting domestic energy needs.”

The capacity of existing interconnection constrains how much support the Tasmanian system can currently offer to the NEM.

“Until there’s additional interconnection, the latent capacity that exists in our hydropower system is being under-utilised. It’s not needed in Tasmania, and while it would provide value in Victoria, there’s not sufficient interconnection capacity to deliver it to that market.”

Mr Davy said with the right market signals, there could be even more dispatchable capacity unlocked with limited investment through asset upgrades, altered operations and demand-side opportunities.

The White Paper The potential of Tasmania’s renewable generation assets with more interconnection is available on Hydro Tasmania’s website. The report has been developed as part of Hydro Tasmania’s work to support Tasmania’s ambition to become the renewable energy Battery of the Nation.

We also welcome today’s announcement by Federal Energy Minister Angus Taylor that the Federal Government has opened the Underwriting New Generation Investments program.

“The future market remains uncertain, and the industry requires a safeguard regulatory mechanism to unlock the dispatchable flexible capacity that Australia badly needs,” Mr Davy said.

“The Underwriting New Generation Investment program could reduce that uncertainty and make dispatchable capacity projects like pumped hydro a far more secure investment.

“A strong framework will support an orderly transition for the market which is in the best interests of consumers.”

Ends.

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