The Cost of Tasmania’s Energy Scandal

In March 2016, The Marcus Review gave a full account of how Tasmania’s energy scandal came about, before concluding the bleeding obvious:

When all is said and done, the cost of the 200 temporary diesel generators alone could come close to (or exceed) what it cost to build the Tamar Valley gas plant. It all depends on when Basslink can be fixed. Using the figures at the very top of this article, the diesel bill will sail over $100 million if Basslink isn’t functioning within three months – which is almost half the Tamar Valley build cost of $230 million. Just stop and think about that for a minute.

On top of this, there’ll also be the cost of building a second Basslink cable (which should have been done in the first place*) and re-commissioning the Tamar Valley gas plant and then doing goodness knows what to it after that. There will also be many more consequential costs on top of this (e.g. millions on government inquiries, ‘re-structuring’ and the like).

One thing is for sure, the short term money that Hydro Tasmania made between 2012 and 2014 will be completely and utterly dwarfed by the cost of this mess.

What’s half a billion dollars between friends?

The cost of this scandal is now coming home to roost. Buried in The Australian (and I do mean buried) was this article showing the current cost sitting at $560 million… and rising:

Tasmania has taken a $560 million-plus economic hit from its energy network being stricken by the failure of the Basslink subsea power link with Victoria, according to analysis
by industry consultant EnergyQuest.

Of course, the real cost is already significantly more than this:

“The estimates do not take into account the economic cost of lost production by the larger industrial gas users in Tasmania. We have also assumed that Tasmanian power prices would have increased anyway to some degree as in other east coast states,” Dr Bethune said.

Dr Bethune said Tasmania’s average power price jumped quarter-on-quarter by more than 350 per cent in the March period to $176.92 a megawatt hour (MWh), peaking at more than $257.36/MWh.

Given that Basslink still hasn’t been fixed (it might be this month) and that all sorts of inquiries are getting underway, we can safely assume that the total cost of this debacle will continue to rise.

To put this in some perspective, the current cost of $560 million is already well over twice the $230 million it cost to build the Tamer Valley gas station.

How smart does Hydro Tasmania’s ‘future thinking’ look now? Even Shakespeare couldn’t script a story of greater incompetence if he tried.

Bailing out the kids yet again

Never forget that it was fossil fuel to the rescue, bailing out yet another delinquent juvenile energy ‘scheme’:

“The Tasmanian situation would have been even worse without the back-up of Victorian gas supplies from Longford via the Tasmanian gas pipeline, the island state’s only remaining energy supply link to the mainland,” Dr Bethune said.

This, of course, was on top of the heavy lifting Victorian coal was doing prior to the Basslink outage (because too much of Hydro Tasmania’s water was already gone), with the small matter of 200 diesel generators taking over following the outage.

Lesson learnt?

If you think that Hydro Tasmania couldn’t possibly stuff things up this badly again, then you might want to sit down for this one:

Tasmania currently completely renewable

For the first time this year, mainland Tasmania is being continuously and completely powered by renewable energy.

Over the past week, Hydro Tasmania has stopped all diesel generation and wound back gas to prevent spill in smaller hydro storages because of high inflows.

Yesterday, the combined cycle gas turbine (CCGT) at the Tamar Valley Power Station was turned off, as continued high inflows push storages close to spilling at a number of locations.

All we can do now is hope that Mother Nature has pity on Hydro Tasmania… and our wallets.


(*) If you believe that Basslink should even have been built in the first place.

4 thoughts on “The Cost of Tasmania’s Energy Scandal”

  1. In a competitive electricity market, the price is set at the equilibrium created by electricity providers offering to generate, and customers bidding to purchase.
    With the Bass Link in service there are several generators and many customers in play. Thus under normal conditions there is no mystery as to how the price varies, sometimes dramatically, as it is set in 5 minute intervals. However, with the HVDC marine cable Kaputsky, there is only one generator in Tasmania and only one wholesale customer; Aurora*. Someone should explain how the wholesale price could escalate under these conditions. When it rained, the price dropped. Is this simply propaganda designed to suggest that electricity from fossil fuel is more expensive? One way is for HT to with draw generation to force Aurora to bid higher. (Aurora is owned by the same State government that owns HT. “Losses” are created when funds are withdrawn from the right pocket and deposited in the left pocket.
    *Actually there are industrial customers in addition to Aurora that for the most part negotiate supply contracts independently of the NEM.


  2. Greens blocked the second Bass link – they tend to block everything down here – like we should have damned the Franklin – Hawke got last choice and went with Greens & Dr Bob Brown said No. Could be a paradise but for lack of get up and go. Always negative.
    Shame really, but quiet place to live low crime etc. Not a lot of night life and beginning to rival Queensland for number of retirees. Too cold for those from hot climes.


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