Mismanagement of Tasmania’s once-abundant hydroelectric resources combined with the driest year on record see the state on the brink of wintertime power cuts. By John Martinkus.

Tasmania’s power crisis

The dire state of Tasmania’s hydro dam levels is apparent at Lake Gordon.
The dire state of Tasmania’s hydro dam levels is apparent at Lake Gordon.

You don’t have to go far in Hobart to get an opinion on the unusually dry weather or the proposed power cuts. Nor to hear about the low level of the dams that provide most of the state’s power and, of course, the cable.

A taxi driver complains about his night driver hitting a wallaby and goes on to tell the story of a friend who filmed his kids’ wading pool overnight in the suburb of Glenorchy. “Thirty-six wallabies, possums, pademelons all came in to drink from it between midnight and five.” The problem, he continued, was the fact there is no water in the bush that surrounds the Tasmanian capital, and the animals are on the move at night in the suburbs to find something to drink.

There are urban myths flying about, too: the wallaby in the shopping centre car park looking for water; the employees of Hydro Tasmania, which runs the dams and the power supply for the state, stocking up on firewood and buying generators in expectation of power cuts. It is an atmosphere of panic and apprehension some say is fuelled by the Greens and Labor as the water that runs the state’s power falls to record lows and the cable that connects Tasmania to the mainland has been cut. No one, not Liberal Premier Will Hodgman, Hydro Tasmania, or the company that maintains the cable, can say when the connection will be fixed. Earliest guess is June, or maybe July.

To summarise, the story is this: as a result of the carbon tax, Tasmania benefited greatly from having a surfeit of exportable carbon-free power from its network of hydroelectric dams, which it could send to the mainland and sell at a profit via the Basslink cable. It did this with revenues from the sale of power going back into the state’s coffers and being pumped back into the state’s budget. In the three years the carbon tax was in force, the export revenue from hydroelectric power went from $40 million to $250 million. Labor and the Greens say this ultimately drained the dams to unprecedentedly low levels, requiring the importation of power through the Basslink cable to the tune of 40 per cent of the state’s needs by the time the cable “fried” on December 20 last year. This left the state with no way to import power, and with dams so low – 13.6 per cent of capacity as of this week – Tasmania has been forced to import 200 emergency diesel generators and restart a disused gas-fired power station. The prospect of power cuts during winter in the coldest state in Australia is now very real.

The importation of diesel generators to fill the gap, of the type normally seen in Third World hot spots, will add anywhere from $100 million to $200 million to the power generation budget and, as Tasmanian senator Nick McKim told the ABC last week, “It is the same as adding 156,000 cars to Tasmanian roads.” In a state with just over 500,000 people, that is a lot of cars. It is unlikely in the next two or three years that Hydro Tasmania will make a profit unless dam levels are restored, a senate hearing was told last week.

State opposition leader Bryan Green has been very vocal on the issue. “Through that carbon-price period, that was obviously the time Hydro Tasmania – run as a commercial entity – was acting in a prudent manner to generate wealth for the state,” he says. “And interestingly, of course, most of that wealth was generated for the incoming government, who took over in 2014. There has been a lot said about water levels and whether or not too much water was used, but obviously if you talk to Hydro Tasmania they will tell you we actually built water levels up to get full value from our renewable energy.”

Green says that in 2013, when Labor left office, water levels were at 30 per cent. But with a new government came new policy. “The incoming Liberal government indicated in 2014 the Tamar Valley Power Station would be decommissioned,” Green says. “And they indicated at that time also they would take a much higher dividend from Hydro Tasmania. They whacked it up from 75 per cent to 90 per cent, and obviously they were starting to set Tasmanians up, effectively bad-mouthing the Tamar Valley Power Station as a millstone around our neck.”

Green says the decommissioning of the Tamar Valley Power Station was crazy.

“Before Basslink went down we saw a potential problem. And I was running an argument at the time that it wasn’t necessarily for this year we would struggle with water levels, because we would just get through with Basslink … It was the year after when we would not get rain, but when it went down it was … just completely the perfect storm. It compounded it and magnified it to a massive extent.

“When Basslink went down, the light went on that we were in a major crisis. I think the time frames have been compressed – 10-year periods have become five-year periods – [so] 2008-9 dry here we are again. Basslink failing always should have been factored in. The predictability of our hydro system has gone. When the link went down, everything was lost.”

Given the link went down on December 20, when the public service was beginning Christmas holiday shutdowns, most politicians, journalists and administrators in the state didn’t find out until December 22, on social media.

Despite four of the major industrial power users in the state, which account for 60 per cent of power usage in Tasmania, already cutting usage, Green says the situation is dire. As for the way the Hodgman government has handled the issue, Green is scathing. He is especially critical of the minister for state growth, energy and the environment, Matthew Groom. “They had it in their head they could take an approach that they were bulletproof,” says Green. “Matthew Groom thought he was bulletproof and he dropped the ball.”

When discussing the energy issue with the interested parties – namely the state leaders of the opposition, of the Greens, the energy minister and federal Tasmanian senators – the phrase “the perfect storm” keeps coming up. Take this exchange from last week’s senate committee hearings in Hobart, starting with ALP Tasmanian senator Lisa Singh: “Is Tasmania currently experiencing an energy crisis?”

Groom: “You could call it that.”

Singh: “What do you call it?”

Groom: “You can have an argument, if you want, about words. Let’s call it an energy crisis if you would like to call it an energy crisis. It is an extreme situation; there is no question of that. We have been very upfront. From my perspective, what is important is the response to this circumstance. As I have indicated, any suggestion that there be blame because it has not rained or because the Basslink cable has gone down is a nonsense.”

Repairs are under way on Basslink’s damaged undersea cable and the company expects the service to return in mid-June.

Luke Crowley, spokesman for the union representing high-level hydro workers in Tasmania, Professionals Australia, said the problem, energy crisis, perfect storm, whatever you want to call it, has been coming for a long time and is not just due to lack of rain or the cable break. Quoting figures of how much Hydro Tasmania has made from on-selling hydro power to the mainland via the Basslink cable, he says there has been a steady increase: between 2000 and 2012 it was, on average, $40 million; from 2012 to 2013 it was $238 million; and from 2013 to 2014 $250 million.

He says switching from such high levels of export back to import put more stress on the cable and, he says, may have contributed to the breakage. He says such profligacy with the hydroelectric resource not only has “fried” the cable but led to levels in the dams that are so low – and have been compounded by the lowest recorded annual rainfall in the past year – that the actual physical infrastructure of the dams themselves is being threatened.

He talks about a whirlpool effect where air gets into the turbines due to the low water levels and then gets compressed and expands and explodes. He says engineers are telling him that, with no rain, many of the turbines would be unsafe to operate within two months.

The Tasmanian Greens leader, Cassy O’Connor, also talks about the “perfect storm” hitting the state’s power supply. “We all want Basslink to be fixed,” she said. “[But] there is an ideological antagonism to rooftop solar and wind.” She said the Tasmanian Liberal government should use this crisis, “this unfortunate series of events”, to overcome a deep resistance to attracting large-scale investment in renewable sources of energy to Tasmania.

“There are solutions out there,” she says. “It requires the Liberal government to overcome their reluctance.”

In the short term, if it doesn’t rain enough and the cable is not fixed, she fears a worst-case scenario. “It is pretty obvious lights will go out and there will be closures and job losses,” O’Connor says.

She is not alone in her prediction. It is being reinforced everywhere – by taxi drivers and thirsty wallabies and dads with video cameras set up in their backyards.

This article was first published in the print edition of The Saturday Paper on Apr 30, 2016 as "The price of power".

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John Martinkus is a foreign correspondent and author.

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