Tasmania could become a “battery for Australia” under a proposal to double the capacity of the country’s largest hydro power scheme, Prime Minister Malcolm Turnbull has declared.
Speaking alongside Tasmanian Premier Will Hodgman in Launceston, Mr Turnbull announced an investigation into an expansion of the state’s hydro scheme that, if built in full, would cost more than $3 billion and add 2500 megawatts of storage capacity to the national grid.
The future of energy in Australia
Coal has dominated the National Energy Market, but the closure of Hazelwood power station heralds a potential transition to renewables.
It follows the Prime Minister’s announcement last month of a feasibility study into an expansion of the Snowy Hydro Scheme. The full Hydro Tasmania expansion would be larger.
Mr Turnbull said it could provide enough electricity to run 500,000 homes.
“It is a huge opportunity. Potentially, Tasmania could become a battery for Australia,” he said.
A significant expansion of the state-owned Hydro Tasmania system would be likely to require a second electricity connection across Bass Strait.
But a report into that possibility released on Thursday – having been commissioned after the existing cable, Basslink, broke down for months – found it was unclear whether a second interconnector would be a sound investment.
Headed by John Tamblyn, a former Australian Energy Market Commission chairman, the study estimated the interconnector would cost up to $1.1 billion.
Tasmanian Premier Will Hodgman, Prime Minister Malcolm Turnbull and Energy Minister Josh Frydenberg in Launceston on Thursday.
It found it was likely to improve the reliability of supply in Victoria and Tasmania, and increase the viability of new wind power in the island state. But an assessment of whether the economic benefits would outweigh the costs depended on what assumptions were made about other changes in the rapidly transforming electricity system.
Mr Turnbull stressed there was an opportunity for Tasmania, which gets more than 80 per cent of its locally generated electricity from hydro plants and has the country’s best wind resource, to provide more renewable energy.
Hydro Tasmania’s Gordon Dam. Photo: Peter Mathew
“The energy market is progressing, the evolution of it is very rapid, so I think the sooner we can see the opportunities here in Tasmania, the better,” he said.
Pumped hydro involves using excess electricity at times of low demand to pump water up hills. It is stored until times of high demand, when it is released to flow back down through turbines, generating electricity.
Hydro power in Tasmania. Photo: Bruce Miller
Environment and Energy Minister Josh Frydenberg said Tasmania could become an important power source for Victoria after the closure of Hazelwood coal plant last month.
Opposition energy and climate spokesman Mark Butler said Labor welcomed the announcement in principle, but a feasibility study was not a solution to the “immediate energy crisis”.
He said without a plan to build a new interconnector the Tasmanian study would amount to nothing. “This won’t solve the policy vacuum that is undermining new generation as old coal plants retire,” Mr Butler said.
The Australian Renewable Energy Agency will spend $2.5 million investigating with Hydro Tasmania the feasibility of expanding the existing Tarraleah and Gordon power stations and building 13 pumped hydro projects.
Hydro Tasmania chief Stephen Davy said the proposed expansion would mostly involve connecting existing reservoirs, rather than making new dams.