Comments
Credit where credit is due, please. Where is the mention of Tasmania’s greatest Treasurer and party to the Bacon-Lennon-Crean triumvirate, Dr David Crean?
Posted by .(JavaScript must be enabled to view this email address) on 04/03/07 at 09:39 AMI have an elderly pensioner living next door who is dreading the arrival of winter.
For her it means going to bed early with the electric blanket on.
But I’m sure Minister David Llewellyn’s anonouncement of increases in energy costs will fill her with a warm inner glow.
The bit I find scary is that these bunch of incompetents are going to build us a new hospital.
Posted by .(JavaScript must be enabled to view this email address) on 04/03/07 at 04:52 PMI hear a lot of whinging about the Basslink cable which might be fair enough. But if we didn’t have the Basslink cable how would we have prevented power blackouts due to the low levels of water in the dams?
Build More dams? More gas plants?
Nobody has explained this to me. I just think it’s easy to whinge. Us Tasmanians are great at it. We never seem to think about alternatives though.
Posted by .(JavaScript must be enabled to view this email address) on 04/03/07 at 08:39 PMThe most important question is what happens if the pulp mill gets built. Will it receive water as a priority over power generation? If so and we have to import more power through basslink as a direct consequence will Gunns pay enough for their water to stop electricity price rises for the rest of us. Some how I don’t think so. I’ll bet some nice mates deal will mean they get their water at a flat rate however scarce it is. Even more than I hate the idea of the mill being built at all I loathe the idea of subsidising its operation through my higher electricity bills.
Posted by .(JavaScript must be enabled to view this email address) on 04/03/07 at 09:11 PMLarge electricity consumers can purchase software that enables them to view the national electricity market live, minute by minute. The prices in all states pretty much track each other, except for in Tasmania. Here the price tracks the ups but flattens out the dips. We are paying the higher prices driven by shortage of supply, but not getting the full benefit from the price drops when supply is in surplus. I had the “joy” of watching this screen for some 45 minutes the other day, and left feeling more than a tad ripped off.
I suspect some large industrial consumers may be getting a touch upset in the near term. The issue of price fluctuations is such that the company in question will probably appoint someone to “manage” their electricity usage. This means dropping production when price spikes exceed profitable operating levels. This whole thing smacks of a rort, but the smoke and mirrors spun out of Hobart makes it really hard to sort out who is really winning.
The losers are obvious, Tasmania every time.
Posted by .(JavaScript must be enabled to view this email address) on 04/03/07 at 10:15 PMGood try “David”. I was wondering how long it would be before a Govt/Hydro flunky rolled out the official-line on this thread. If you bothered to read the attached articles and had a memory capacity greater than 12 months, you would know that tasmania always managed to cope with electricity issues prior to Basslink (for the past 60 years). The Hydro would simply use its contracts with the 16 Major Industries and enforce a minor cuttback to them for a few months (shave off a few MW) and if needed they would also ark-up the emergency back-up (Now gas fired Bell Bay station with a capacity of 375 MW) for a month. It has worked for years in the past and was cheaper than the current diasater. But of course that is all buggered now with Basslink and the sale of Bell Bay to Alinta.
Basslink has essentially been a means by which the 16 MI can continue to access public energy (oe expand use) whilst being subsidised by the Tasmanian taxpayer.
Anyone else notice the add in the Saturday paper for an Energy specialist to join the Comalco “Energy Team”. What does this mean? Is Comalco (the largest electricity customer) trading power across Basslink (for which the taxpayer is paying the rent)? What happened to their guaranteed supply contract from the Hydro to 2011? I thoughnt Hydro would be the only ones buying power across Basslink and then onselling it - that’s how is was explained in Parliament. Why cant the rest of us choose a cheaper supplier on the mainland and dump Aurora?
Posted by .(JavaScript must be enabled to view this email address) on 05/03/07 at 08:08 AMAll of this disaster could have been avoided if there had been the political will to do so in Tasmania. Attached is a letter I wrote to the RPDC following their approval of Basslink in 2002:
“”
15 April 2002
Mr Julian Green
Tasmanian Chairperson
Basslink Joint Advisory Panel
c/- Resource Planning and Development Commission
Level 3, TGIO Building
144 Macquarie Street
Hobart TAS 7000Dear Mr Green,
Comment On
“Draft Panel Report, March 2002, Basslink, proposed interconnector linking the Tasmanian and Victorian electricity grids”Thank you for the opportunity to comment on the Draft Panel Report.
Clearly I have wasted my time in making a submission to the Panel. The Panel’s sole economic justification for the M$500 Basslink project is, simply, that “the benefits of Basslink are real and substantial, but predicted economic outcomes are indicative only” (p44). This absurdly weak statement—coined by counsel for the Proponent—is made notwithstanding the fact that my submissions to the Panel (T57, TE159), amongst others, show conclusively that the input to the CREA econometric model (from which the economic outcomes are derived) is wrong and based upon erroneous assumptions. Neither the Proponent nor Hydro Tasmania have demonstrated any flaws of analysis in my presentation of October 2001 to the JAP, yet the draft Report ignores this by the inclusion of Table 4.2 “Macroeconomic impacts and employment” with data taken directly from the discredited CREA report. The unqualified inclusion of this table is deceptive as the table shows significant economic benefits to Tasmania which have not been substantiated. This is grossly misleading to the intended readers of the Report: that is, the Commonwealth, the Victorian and Tasmanian Governments and the public. I had hoped that the Panel genuinely welcomed open, honest and frank debate of the issues and had sufficient independence to report truthfully on the outcome—sadly, this is not the case.
Using current Victorian NEM electricity prices, and including the extra cost of corrosion mitigation, my updated analysis shows that the direct economic benefit of Basslink to Tasmania is negative under any scenario based upon selling electricity generated by wind-power, gas, hydro or wood and receiving income from sale of Renewable Energy Certificates. This outcome is consistent with the submission by the CEO of Hydro Tasmania, Geoff Willis who, in his presentation to the Panel in October, said that the project had a 50% chance of failing to break-even if costs were to increase by 10%. Permanent measures to mitigate corrosion, including the laying of a metallic return, will add more than this to the cost of the project. Thus Basslink is non-commercial.
Sir, we all wish benefits from Basslink to be “real and substantial”, but wishful thinking does not turn an economically bad project into a good one. Direct positive benefits of Basslink are non-existent or imaginary—nevertheless, the project is real enough to be deleterious to the environment and our economic well being should it go ahead.
I am singularly disappointed that the Panel recommends approval of the proposed interconnector and does not have the will to tell the truth in this matter. That is, Basslink has no economic justification and should not proceed.
Yours sincerely,
Dr Andrew Wadsley
“”Posted by .(JavaScript must be enabled to view this email address) on 05/03/07 at 08:34 AMStick a fork their ass, turn em over they’re done!
It genuinley sounds as like that ‘if’ the millions had been better spent on on increasing renewable energy aternatives the supply issues could have been
solve in a more permanent manner.Posted by john reeves on 06/03/07 at 12:05 AMA “Gordon River Hydrology Assessment”, contained as Appendix 2 in this document, “Basslink Environmental Studies” and with a summary by Helen Locher; was presented to the Joint Advisory Panel at the time.
http://www.hydro.com.au/home/our environment/water/basslink environmental studies/
Click on Appendix 2 and go to page 11. There you’ll find that Basslink will allow Lake Gordon water levels to be maintained about 3 metres lower than without Basslink.
Such uncommon prescience is hard to find nowadays.
Posted by .(JavaScript must be enabled to view this email address) on 07/03/07 at 11:52 AMA few facts and figures. I’m only going to draw technical conclusions here. I’ll leave it to you to draw your own economic conclusions.
Gross yield to the hydro system = 10200 GWh per annum long term average. This is equivalent to a constant load of 1164 MW and includes 50 GWh from the presently closed Lake Margaret station.
Firm supply from the hydro system with no thermal support available. That is, the level of output where it is highly unlikely the dams will ever run dry (noting that this assumes output is held at this level even in wet years to allow the dams to fill) = 9330 GWh per annum or 1065 MW constant load.
Firm supply level with Bell Bay (original 2 machines) available and used only as backup = 9680 GWh per annum or 1105 MW constant load.
Maximum supply with Bell Bay run baseload (constant 24/7) except when dams are near full and during maintenance shutdowns = 11080 GWh or 1265 MW constant load.
The 3 new machines (actually they are second hand) at Bell Bay have a total rating of 108 MW. Allowing for maintenance, they could realistically generate 850 GWh per annum on average or jsut under 100 MW average output. However, they are about 50% more expensive to run than the 2 larger Bell Bay units due to lower thermal efficiency.
Total electricity supplied for use in Tasmania (including transmission losses) in 2004-05 was 10770 GWh or 1229 MW average.
The obvious conclusion from the above, and the only one that I am going to draw here, is that continuing to rely solely on hydro-electric generation with Bell Bay as backup was not a viable long term proposition since electricity demand has effectively reached the limit of supply and will likely continue to rise in the future.
More gas fired generation was one option, new wind farms or hydro dams were another. So was a local coal-fired station. So was Basslink. So was anything else which either added generation or reduced load at an economic price. And economics is the key given that around 80% of Tasmania’s electricity consumption is, ultimatey, price sensitive (indluding residential heating and hot water).
Oil is relatively expensive, over $100 / MWh, so can’t really be considered a serious option for permanent baseload supply. Likewise the cost of solar water heating is also well above the market value of electricity under most circumstances. Heat pump water heaters are somewhat more attractive however for large users.
For reference, the cost of energy from wind is in the order of $65 - 70 / MWh before the MRET subsidy is taken into account. The marginal cost of running the original Bell Bay station on gas is around $30 / MWh not including whatever is paid for gas transmission (presumably a fixed fee whether used or not).
Posted by .(JavaScript must be enabled to view this email address) on 07/03/07 at 08:28 PMAll this debating over powerloads, supply, demand and the potential for rolling black/brown-outs seems to ignore the obvious issue that the bulk power users present.
While no Tasmanian Government would have the guts to do so, Basslink allows Tasmania (for the first time) to tell the bulk power users to pay the same as the rest of us, or bugger off.
In one fell swoop Hydro Tasmania’s balance sheets would be rolling in the black stuff while at the very same time these (recent) threats of power shortages would be averted for the forseeable future.
One of the two biggest bulk power users is currently negotiating (or about to start negotiating) a new bulk power contract. While the Tasmanian Government has said approximately nothing about this, the company in question is spending oodles of dollars on adverts across all media, on letterboxing nearby residents and on holding an un-precedented on-site open day. In short, a PR campaign is upon us and the end result will of course be another bulk power contract for this company, at prices Tasmanian residents and businesses (who actually own Hydro) can only dream about.
Obviously, it’s cheaper to spend millions on spin and PR than it is to pay a fair price for electricity - the same fair price that the rest of us pay.
Why can’t Tasmania put its own economic balance sheet ahead of corporate profit and allow Hydro Tasmania to sell the bulk power users’ electricity at a premium across Basslink, instead of selling it at a loss to big business?
Regards,
Jason LovellPosted by .(JavaScript must be enabled to view this email address) on 08/03/07 at 09:03 AMShaun,
Even based on your figures it can be seen that Tasmania is (and always has been) roughly in energy balance (as has been pointed out by other TT writers). This assumes that Bell Bay runs on both machines. As you point out the critical issue is - what is the most cost effecive means for generation as demand pushes above the supply envelope.
However firstly we need to debunk another myth - that Tasmania has some unquenchable demand for more electricity! Over the 10 years since 1996,Hydro Tas output (demand driven) has only increased by about 200MW or an average growth of 1.8% pa. However most of this demand has been driven by industry (specifically the 16 major Industries (16 MI). Aurora supplys about 43-45% of the state’s power to residential and commercial customers and this demand has increased by an average of 1&#xpa;. In summary most of the demand growth over the last 10 years (around 140MW) has been from the 16MI alone.
Tasmania’s population growth over the next 50 years is projected to be largely stagnant - even the more optomistic series A growth is fairly dismall). Hence nearly all present and future growth in electricity demand will be driven by the 16MI.
This highlights the point that Hydro Tas clearly caved-in to increasing demands [at cheap contract prices] for power from the 16MI when they knew all along the limitations of a closed system. The answer from the 16MI - make it an open system. Hence Basslink became a means by which the public could subsidise more power to the 16MI. This is why the 16 MI were the only group in the community lobbying for Basslink (I dont recall seeing the Tasmanian Pensioners Association pushing for it).
If the 16 MI were pulled into line with regards to their greedy demands for power, and if Bell Bay remained in public control as a gas-fired backup generator, the the need for Basslink would be nil. Even with mild increases in residential demand over the next 20 years, this could have been catered for through gas-fired generation in the short term until alternative sources were brought on-line. Even if Bell Bay ran continuously on 2 machines, the relative power cost would be $63 million (excluding gas purchase). This is markedly cheaper that the Basslink rental alone (not including all the other bungled costs).
Clearly Alinta (the gas pipeline operators) believe [their] gas is cheap enough to produce electricity - otherwise the Tas Govt wouldnt have given them the OK to build a new $230 million gas-fired generator at Bell Bay. But why is it not economical for the Tas Govt to run Bell Bay on gas? Perhaps the answer to this is the bungled gas contract. Essentailly the Govt had a choice of either being hostage to Alinta gas prices, or being hostage to NGI Basslink and the National Grid. Oh what a mess! We could all see it coming - but not the Govt. And the underlying cause (apart from Govt ineptitude and corruption) - the greed and power of the 16 MI.
Posted by .(JavaScript must be enabled to view this email address) on 09/03/07 at 06:01 AMIt’s true that Tasmanians have managed okay without Basslink for the past 60 years like electric mouse states. But we haven’t had a drought like this for well over 60 years either.
Posted by .(JavaScript must be enabled to view this email address) on 11/03/07 at 03:28 PMI would like Shaun Caris to explain how solar water heating, when combined withthe energy saved in the hydro system for sale to another user is uneconomic.
Further will any of the correspondents address th value of Bass link when Carbon Emissions trading commences.
Finally do any of the contract prevent a major user reselling the power
Posted by .(JavaScript must be enabled to view this email address) on 12/03/07 at 06:23 AM“I would like Shaun Caris to explain how solar water heating, when combined withthe energy saved in the hydro system for sale to another user is uneconomic.”
OK, I’ll explain.
Assumptions.
Life of hot water system (HWS) is 20 years for both solar and electric systems. This assumes maintenance (replacing the anode) as required rather than letting the system simply rust away (in which case the life will be considerably less).
Cost of capital, that is interest rates, are taken as 8% which is the current mortgage rate (many would argue, correctly, that this is somewhat lower than the long term average but I’ll stick with current circumstances).
I’ll assume we’re comparing solar with electric boost versus electric only. In both cases that may be either a continuous or off-peak system since both are practical options in Tasmania. I’ll take the annual hot water supplied (that put into the pipes) as being 4000 KWh which is broadly typical in Tasmania.
For the electric HWS, cost of installation (including the tank) is roughly $800 or $1000 for an off-peak system. Acutal electricity used, including tank losses, would be typically 4800 KW/h for the continuous system or 5300 KWh for off-peak (night only).
For the solar HWS the cost of the system is roughly $3000 excluding subsidies (REC’s). The saving on electricity is taken as 55% of that otherwise used (typical value from manufacturers’ data). So a saving of 2640 - 2915 KWh per annum.
Depreciation comes to $100 per annum on a cash cost basis (2000 / 20). The cost of capital comes to roughly $160 per annum (8% of $2000). So a total additional cost of $260 per annum.
2800 KWh (2.8 MWh) saved at a cost of $260. That’s 9.3 cents per KWh saved (including GST) or 8.4 cents excluding GST.
The trouble is, quite simply, that the average NEM spot price is around 4 cents per KWh. Bell Bay costs about 3 cents (marginal cost - excluding the cost of having built it in the first place). New wind energy costs 6.5 - 7 cents per KWh and new gas-fired generation should be no more than 4.5 cents / KWh.
So solar HWS looks rather expensive. Sure, Renewable Energy Certificates would reduce that cost but then these also apply to wind, new hydro etc too. And they don’t reduce it down to 4 cents or so per KWh that is the market price.
But what about distribution costs I hear you say? Since Tasmanian peak demand is in Winter when solar is less effective, it doesn’t actually save much on the system peak. It’s the extreme cold days we need to consider, not the average, and solar doesn’t save much on those days.
Some will have noted that solar is about the same as the current continuous hot water electricity rate. However, this rate (as with other retail tariffs) is based on an average load factor which in this case is about 25%. Since a solar HWS would have a very much lower load factor by its very nature, the tariff charged would be higher if full costs were to be recovered.
However, the hot water tariff is based upon (1) energy rate and (2) a peak demand charge which is in practice apportioned to each unit of energy consumed regardless of the actual time of use (since the time of use is not measured).
So if the peak demand remained constant whilst the units consumed halved (as they would if everyone went solar) then the peak demand charge per KWh would necessarily double.
The present rates for continuous all-electric hot water thus do not justify (financially) a shift to solar since those rates themselves are inversely correlated with energy sales volume in a situation where peak demand is unchanged.
Of course, a solar with off-peak boost would make zero contribution to peak demand and thus saves quite a bit on distribution costs. But then an electric off-peak HWS would be equally effective at this.
With Basslink now operational there is a compelling case for Tasmanians to shift away from continuous electric water heating without delay. It just doesn’t make sense to be heating water during the morning and evening during Winter when that water could be heated overnight at a 60 - 80% discount on the wholesale energy cost. Likewise it makes no sense for water to be heated during Summer afternoons when national demand peaks and prices soar.
From a purely economic perspective, off-peak is the cheapest option, at least where natural gas is not available. In that context it is interesting to note that over 92% of Tasmanian households have unnecessarily expensive water heating systems, mostly continuous electric.
I do acknowledge there are non-financial benefits to solar HWS, although a heat pump HWS is a better (more efficient) option in Tasmania’s climate.
If everyone shifted to solar HWS then it would save roughly 50 MW on average, or 4% of Tasmania’s electricity use. Shifting to heat pump water heaters would be somewhat better, around 70 MW saving, but eexcept for large users they still have the economic issues associated with solar.
Posted by .(JavaScript must be enabled to view this email address) on 12/03/07 at 04:56 PMJust a thought, how much does the tariff structure determine outcomes.
Does solar HW incur a price penalty when electric boosting is used? Hydroheat does seem to have a priviliged position in regard to pricing.What of the pesky crest factor?
Posted by .(JavaScript must be enabled to view this email address) on 14/03/07 at 12:39 PM
