Tasmania’s hydro-generation system is unable to sustainably meet the annual demand for electricity.162 The supply of hydroelectricity is constrained by the availability of water which is subject to significant variability and unpredictability. This limitation has seen the diversification of Tasmania’s electricity supply beginning in the 1970’s. As a result of hydroelectric shortage events during 1967-68 the Bell Bay Power Station was commissioned in 1971163 providing oil fired electricity generation to the State. Further diversification strategies have seen the establishment of the Tasmanian Natural Gas Pipeline and gas distribution network, Basslink, conversion of Bell Bay Power Station to Natural Gas, new gas fired generation at the Tamar Valley Power Station and the emergence of wind generation in Tasmania. To date, 140 megawatts of wind power has been installed and other substantially sized projects are under evaluation.
Tasmania currently has a total electrical power generation capacity of 2,787.25 megawatts.
The generation capacity refers to the sum of the name-plate ratings of all the available generators and determines the ability of the system to meet peak demand. The majority, approximately 82 per cent, of the total capacity is contributed by hydro power.
Approximately 13 per cent is contributed by natural gas electricity generation and approximately five per cent from wind.
Table 9.5 Existing Generation Capacity
Generator Type Number of Sites Total name-plate capacity (MW)
Hydro 27 2,275.6
Thermal (natural gas) 1 371.9
Wind 2 139.75
Total 30 2,787.25
Source: Transend Networks, 2011
162 Electricity Industry Panel, 2011a
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Although Tasmania’s total electricity power generation capacity is in excess of maximum demand, Tasmania also imports electricity from the mainland. Due to the composition of Tasmania’s electricity supply profile, which is dominated heavily by hydro, the ability to generate electricity to full capacity is influenced significantly by natural elements that can be highly variable, namely rain and to a lesser extent wind. Only during optimal conditions can full generation capacity be reached. Under drought or suboptimal wind conditions the ability to reach maximum capacity is reduced and in this situation importing electricity provides the advantage of continual supply reducing the dependence on stored resources (for example water) that may be diminishing. Alternatively, price of electricity also provides an incentive for Tasmania to import electricity. In the case where the cost of electricity imported via Basslink into Tasmania is less expensive than generating the electricity within the state at that particular time, there is a cost advantage in importing supply.
Transend Networks164 provides estimates of forecast total Tasmanian Winter Demand under three scenarios. These are displayed in Figure 9.2. The scenarios reflect both different underlying economic growth and different load assumptions for the Tasmanian industrial customers. The average annual growth rate for the low scenario is 0.61 per cent per annum, 1.84 for the medium scenario and 2.76 per cent for the high scenario. The dip visible in actual demand around 2010 is stated to be due to a combination of mild winter conditions together with a significant reduction in industry load. Under the low scenario, maximum demand is predicted to reach 1,938 megawatts by 2025, 2,326 megawatts under the medium scenario and 2,662 megawatts under the high scenario.
Figure 9.2 Total Tasmanian Winter Demand Forecast
Based on data from: Transend Networks, 2011 – 10 per cent POE at low, medium and high from Figure A1.2:
Tasmanian forecast data – winter maximum demand (MW)
The high, medium and low scenarios represent rates of economic growth in Tasmania. The winter maximum demand represents the demand on generating equipment in meeting the maximum Tasmanian demand in winter.
164 Transend Networks, 2011
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Figure 9.3 displays Transend’s projections of remaining generation capacity after subtracting electricity use under the medium demand forecast. Three scenarios have been modelled applying various levels of generator contribution. Under scenario one and two there is sufficient capacity beyond the year 2030. Under scenario three there is adequate capacity up until 2027 but further generation sources are required beyond this timeframe.
Figure 9.3 Projected capacity excess
Wind generation is assumed to be out of service unless otherwise specified.
Scenario 1 – all current Tasmanian generators available.
Scenario 2 – Basslink contribution of 480 MW, two of the largest machines out of service and an assumed wind contribution of zero per cent. The addition of a potential 480MW from Basslink increases the long-term available capacity by approximately 200MW.
Scenario 3 – Basslink constrained to 300 MW, a major failure of a hydro scheme (Gordon Power Station) and one generator out of service and very low wind contribution.
Source: Transend Networks, 2011
The entry or exit of a major industrial customer into the Tasmanian economy has the potential to substantially influence the maximum demand and consequently the period of years remaining with excess electricity capacity. Transend performed a sensitivity analysis on the potential entry in 2016 of a major new industry requiring 200 megawatts.165 Under scenarios with similar assumptions to scenario one and three described above, there is sufficient capacity up until 2029 and 2021 respectively, beyond which further generation capacity would be required. Under a similar scenario to scenario two there is adequate capacity beyond 2029. Alternatively, if a major industrial customer exits Tasmania, total demand will be reduced and the period of adequate capacity extended.
165 Transend Networks, 2011
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These results indicate that under a medium growth scenario for maximum forecast demand, the existing generation capacity of Tasmania is adequate to meet demand for another 15 years as long as there is no entry of a significant industrial consumer. If a major industry was to enter the market, the period of time remaining with adequate power capacity is reduced to around nine years.