Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Economy

Basslink Lemon – Take 2. A Fiscal Encumbrance

Déjà vu in the land of the economic dunderheads

Regardless of the ongoing fiscal burden regarding current Bassslink cable’s liability to the Tasmania public, the irresponsible Hodgman government seems to be convinced another cable is exactly what this state desperately needs, despite the lack of a persuasive feasibility study.

Tasmanians are paying around $90 million annually in rent for the first cable, and given the lack of adequate rain in the last decade, we appear to be importing more power to fill a deficit rather than exporting our renewable energy.

Tasmania should be seeking an incentive to diversify our energy portfolio towards self-reliance through renewables. Instead we have become complacent and import coal-based power.

Currently Tasmania has the ability to be operating on 90% renewable energy given consistent rainfalls into the hydro impoundment catchments. However the island’s hydro storage capacity was calculated on rainfall statistics derived half a century ago, and now with climate change we are only seeing productive rainfalls into storage areas, on average about once in every decade.

The government may gloat that our dam storage has gone from 12% in autumn this year to 40% in spring, but in the event of two consecutive dry summers we could see our storages back to below the sustainable 25% mark before we know it.

We all know how effective the inoperable Basslink cable was during the recent drought earlier this year when Tasmania needed it most, and yet there is still no guarantee that the same scenario may not eventuate again. Hence the kneejerk second cable idea.

It seems Tasmania’s energy generation networks have found themselves in an invidious position where they can no longer rely on either sufficient rainfall, or power imports through a single Basslink cable. This is obviously the State Government’s ongoing paranoia now that the concept of drought-proofing Tasmania with an undersea power link to Victoria has become uncertain.

The establishment and operation of imported diesel generators this year came at an estimated cost of $100 million to Tasmanians. Meanwhile, Hydro bureaucrats defended their decision to export massive amounts of hydro-electricity via Basslink as to capitalise on carbon credits, and by doing so drained our storages below sustainable drought-proof levels.

So the conservative solution is to construct another cable and impose yet another debt on the state coffers rather than look towards sources of independence through renewable energy expansion.

The importation of baseload power should provide Tasmania with a cheaper electricity price if it is managed correctly. However the rental costs of the Basslink cable, and any imports of electricity during peak demand hours undermines that cheaper power rate, so ultimately any higher operational costs float back to the taxpayer.

Yet another apparition, it’s like a re-occurring nightmare

Prior to the last federal election Malcolm Turnbull talked up the potential of a second Basslink power cable to boost investment in renewable energy in Tasmania, and announced a feasibility study into a second undersea cable, which he also said would provide the state with greater energy security.

Mr Turnbull said: “The combination of Hydro power … and [wind-generated power] would enable Tasmania to deliver – on a much larger scale – renewable energy right across the nation. This has the potential to be a very big, significant, economic investment, and a big economic opportunity for Tasmania.”

How can the above statement be possible if Tasmania is unlikely to be in the position of exporting any quantity of power across Bass Strait in the foreseeable future without either massive investment into wind generation, or above-average rainfalls every winter?

Mr Turnbull named the Clean Energy Finance Corporation as an obvious body that could provide the required financial support for the Basslink 2 project. Given his ongoing support for the coal industry in preference to the renewable industry such a statement is highly questionable.

A second Basslink cable is estimated at a cost of at least $1 billion. The same amount of funding could provide a 5 kilowatt photovoltaic system to every residence in the state. Though of course the coal-obsessed Federal Liberal government would never financially support such a renewable energy infrastructure project as the Libs prefer a dependency on coal as an economic base for both national consumption and international exports.

There are numerous unforseen commercial risks in a second Basslink cable.

• Uncertainty in national demand for renewable energy with no carbon price.

• A changing landscape of renewable technology.

• A lack of Federal commitment to renewable energy targets.

• Innovations in power storage.

• Uncertain climatic conditions and dam storage level maintenance.

• Poor financial incentives to private enterprises.

Granville Wind Farm Project

The privately-owned 100-350 megawatt Granville wind farm renewable energy project has been on the drawing board since the early 1990’s.

The project has stalled for years because there has been no price agreement negotiated between the proponents and Aurora/Hydro.

In order to get finance for the project the proponents need to get a power-purchasing agreement with the energy companies, who seem consistently reluctant to provide a reasonable economic return rate to make it viable.

Such a project is indicative as to why renewable energy beyond hydro-electricity is considered a poor investment with little incentives to private enterprise.

Other proposed wind energy projects such as the Robbins Island $1.6 billion 300 turbine wind farm would rely solely on a second Basslink undersea cable from northern Tasmania to Victoria.

Epilogue – Disbelief and further insult to public intelligence

Despite the estimated loss of around $90 million in the past financial year, Hydro has just announced that their executives will receive bonus payments when storages are maintained above a 30% level.

What a ridiculous concept to outrageously pay autocratic bureaucrats extra salary if it essentially rains more. Such arrogance beggars belief, in my view.

The same negative equation should also apply if dam levels become unproductively low, and so their salaries should be reduced in times of low rainfall.

This would mean on average they would receive a high salary once every decade or so, and the remaining years they could be living below the poverty line.

That formula sounds fair to me!

*Ted Mead is a committed advocate for renewable energy and has used photovoltaics to power his homes since the 1980’s. He continues to preference solar energy over wind energy in the belief that most mechanical reliant technology is still dinosaur technology. Ted is convinced that through advance innovative developments over the next few decades renewable energy will dominant the world, and micro grids will overtake base-load grid energy sourced from coal as consumer demand for independence prevails.

Matthew Groom: National plan for transition to clean energy

• Chris Harries in Comments: … Tasmania to the rescue? A radical new model has been devised (supported by a number of renewable energy enthusiasts, by the way) whereby Tasmania and the Snowy Mountains dams are converted to become extreme peak power outlets. This would entail those generation systems being virtually shut down most of the time, then run to maximum capacity whenever reserve power is demanded by the national market. …

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12 Comments

12 Comments

  1. Robin Charles Halton

    October 11, 2016 at 12:47 am

    #7 Chris thanks for your interesting appraisal of Basslink.

    Who is going to provide $1B for a second cable to an island State with reasonable Hydro power generation assuming that the State Government take reasonable steps to sustain lake levels for local generation requirements and not treat the network as a false cash cow.

    With the Federal Government who are meant to be crying budget repair, Basslink II makes no sense either.

    You mention in your closing statement “There is a fundamental fault line within the environmental movement across this physophical divide (Renewables) that needs threashing out!

    Have a look at the Labor Environmental Action Network site (LEAN) site, too right there is a major problem with Labors expectations for ongoing electricity generation.
    . 50% Renewables by 2030. Labor Policy.
    . Labor committed to zero net pollution by 2050.

    Those objectives by Labor are as recent as Mid 2016.

  2. Clive Stott

    October 11, 2016 at 12:09 am

    Thanks for the article Ted.

    “…Hydro has just announced that their executives will receive bonus payments when storages are maintained above a 30% level.”

    Do we know how many executives and what the bonus payments would amount to in dollars?

    If a directive was issued to keep the storages above 30% level then there would be no need to pay a bonus. Or don’t these people respond to directives? Haven’t they ever heard of standard operating procedures (SOP). Why the need for a carrot?

    Excuse me, a cloud just moved in front of the moon. Looks like I will get paid my state bonus!

  3. Simon Warriner

    October 9, 2016 at 1:47 pm

    Chris, what needs to take place in parallel with the discussion you propose is a detailed investigation of whether we would be better off economically by promoting ourselves as the clean energy state and attracting investment and jobs to that manufacturing environment. If the current bulk users want to leverage off that label then perhaps they should be starting to think about paying for that advantage, if it is in fact an advantage, or becoming so.

    An observation, If the mainland wants/needs our spinning reserve to provide peaking capacity, then the cost of the infrastructure would be most fairly be shared on a “connected population” basis.

  4. mike seabrook

    October 9, 2016 at 11:35 am

    step 1 recommence construction of the gordon-below-franklin hydro scheme

    step 2 stop selling electricity to the cronies at est. 4c per kwh delivered whilst buying wind power at est. 8c per kwh from the mainly chinese owned business and from the filthy vic brown coal electricity generators at est.4 c per kwh and pay the bass strait cable operator/owner a full absorption cost of est. 5c per kwh for transmission and transformation(*2) on top of this

    is anyone in tassie mathematicaly literate.

    nothing else should matter – apply user pays and no-one will pay for a second bass strait cable at a rate which will show a profit.

    why even waste time and funds considering this.

  5. Estelle Ross

    October 9, 2016 at 11:12 am

    If Tasmania were to build a solar/thermal power station this would add to the base power supply and with a couple more wind farms we would be truly 100% powered by renewable energy.A 2nd bass link cable is an absurd idea and a waste of money which could be better spent on renewable energy projects.

  6. Chris Harries

    October 9, 2016 at 10:38 am

    The notion of a second Basslink is being sold on a premise that Tasmania will help the nation by exporting ‘clean’ energy. Let’s stop right there. We can’t.

    Firstly, we are nowhere near to being a net exporter. Tasmania produces about 90 percent of its power in an average year and much less during low rainfall periods. We are a net importer, end of story.

    So what does the state government really mean by this sales pitch? What’s the story behind this story? This is important because this agenda has serious ramifications, for nature and many other things.

    This is how it goes: Tasmania has a significant reserve of peaking capacity. That is we have enough generators installed to produce at any one time about twice what the hydro system can put out continuously.

    Now, if we look at the national electricity market, it is able to absorb only so much wind and solar before generation systems become very hard to manage. The accepted wisdom is that the thermal power states can go to an upper limit of about 40 percent renewables input, then they hit a brick wall and must have some other instant stand-by power available.

    Tasmania to the rescue? A radical new model has been devised (supported by a number of renewable energy enthusiasts, by the way) whereby Tasmania and the Snowy Mountains dams are converted to become extreme peak power outlets. This would entail those generation systems being virtually shut down most of the time, then run to maximum capacity whenever reserve power is demanded by the national market.

    Not many commentators have got their heads around what this would really mean in practice, but it has a number of serious ramifications, even if viable. The best I can liken it to is the way Davey Street has been converted into a virtual raceway, whereas it was once a two-way thoroughfare. Everything hinges on attaining maximum throughput during during peak times. Hang everything else.

    Long before this radical energy model becomes a fait accompli in policy makers’ minds we Tasmanians need to understand implications for energy security and – importantly for environmentalists – we need to accept the gross impact of radically surging river flows on river ecologies. We would also need to accept a growing dependence on the national grid, and the consequent further loss of autonomy as an island state that this transition would bring about.

    I’m inserting this briefly here because it’s an issue that has yet to be understood by many, let alone debated much at all. Importantly, this energy policy move is not an issue of the government versus the people. Numbers of technology enthusiasts love this model, seeing it as a means to progress a renewable energy future for the nation.

    There are others (self included) who don’t see it this way. ‘Renewable’ may be the catchword, but it is a pragmatic means to try to fit renewables into a large, centralised, corporately managed national grid context. It is the antithesis of self sufficiency, resilience building and localisation.

    There is a fundamental fault line within the environmental movement across this philosophical divide. It needs to be thrashed out.

  7. Russell

    October 8, 2016 at 10:18 am

    Nice to be able to set your own future bonus conditions, eh?

    First you set them according to profitability when the dams are full and the market is connected.

    Then personal greed takes hold and your dam storages get down to a critical level and the State almost goes into darkness (hence 200 massive portable generators are shipped in at enormous cost).

    Now (after unprecedented rains and flooding) you decide to your bonuses according to how much water is held in the dams. How convenient.

    You should be glad you’ve got a job and just do it for the unjustifiably enormous wage you already get (without self-gifted bonuses)!

  8. mike seabrook

    October 7, 2016 at 8:37 pm

    this is why people vote for harradines, wilkies and lambies and antiestablishment and all their cronies and insiders and why brexit and possibly trump will hapen

  9. Pete Godfrey

    October 7, 2016 at 1:34 pm

    #2 Richard, the problem with a second Basslink cable and the trickle down economic argument is this.
    The cable will be manufactured overseas.
    It will be laid by an overseas cable laying ship with overseas crews.
    The converter stations will be made overseas and installed possibly by a couple of locals with the help of overseas contractors.
    Hardly any trickle down effect will happen.
    Except for the possibility that Tasmanias lights will stay on in the event of a major infrastructure failure at one of out dams.

  10. Mathew Munro

    October 7, 2016 at 12:42 pm

    Coal is cheaper than ever. We should either build a coal plant or raise the price to the big industrials until one of them goes bust.

  11. Richard Barton

    October 7, 2016 at 11:24 am

    Looking at the behaviours of government it seems that they believe in ‘trickle down economics’ so their main priority is to find reasons to spend more money. The best ‘reasons’ are those that might deliver some public benefit, since it’s our money that they’ll use. So ‘big ideas’ like interest free loans to Councils, Council running business affairs like the Taste, and now another Basslink all are designed to spend money. To understand this it helps to know that government positions are paid more the more money they spend (it’s supposed to reward ‘responsibility’ but perversely rewards the opposite) and promotions are also offered to those who spend the most.

    So now we can really appreciate the ‘good for Tasmania’ mantra as meaning ‘we’re going to be spending more money here and that’s got to be good’.

  12. Andrew

    October 7, 2016 at 9:39 am

    It will be interesting to see what Tasmania looks like in 20 years time. I suspect that some of the large energy users will have shut down, so, despite the drier climate, the state may well have enough capacity to supply the population without a second cable. The trick is effective risk management and a conservative approach to dam levels, given the uncertain climate these days!

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