A new normal, as Basslink finally resumes
With little by way of fanfare, Basslink resumed operation this week after almost 6 months.
Basslink is Tasmania’s proverbial umbilical cord - a 500 megawatt submarine HVDC cable that connects to the mainland providing both electrical power and data exchange. Along with unusually dry conditions last Spring, Basslink’s failure back in December last year contributed to an unprecedented energy crisis in the Apple Isle.
To help avert the crisis 200 diesel gensets were installed at a cost of around $44 million. The moth-balled Tamar Valley (gas-fired) Power Station was bought back online, and deals were brokered with large industrials to reduce their energy consumption. Some analysts have estimated the total cost of the crisis at around $400-500 million (see also).
With Basslink’s resumption, the process of repairing the damage begins.
Notwithstanding the immense flood damage, Tasmania’s drenching rains in May followed by torrential rains in early June have at least helped stymie the energy crisis. With HydroTasmania’s smaller catchments now overflowing, many of its run-of-river power stations are operating at more-or-less full capacity. In a matter of a few short weeks Tasmania has gone from acute energy shortage to excess.
Meanwhile, the larger hydro catchments such as Gordon have received much needed replenishment. Over the last six weeks total storage has doubled to 27%, increasing at a near record rate of about 2% per week. Storages are now back to levels comparable to mid June in 2014 and 2015. If good winter rains continue, then it is plausible that storages might top out at around 50% capacity by the end of the traditional filling season in late October to early November. That would be a much healthier position heading into the enxt Summer than in either of the last 2 years.
Because of the excess power production following the recent rains, since resumption Basslink has been flowing almost entirely northwards into Victoria at an average rate of about 140 megawatts and, at times, as much as 350 megawatts. That represents about 10% of total Tasmanian dispatch, none of which is being contributed by the emergency 200 diesel generators that were bought in to deal with the crisis, and only a tiny bit from Tamar Valley and Bell Bay gas units.
Meanwhile, elsewhere on the NEM
With mainland wholesale electricity prices now at extraordinarily high levels of around $100 per megawatt hour, HydroTasmania will be relishing Basslink’s resumption. Such is the crazy brave new world of energy supply, HydroTasmania’s exports are now worth around an additional $2 million a week. Now that the rains have come, HydroTasmania prayers will be for those prices to remain.
However, with mainland prices currently way above what they were even in the Carbon-tax years, questions should be asked.
Memo to our political masters - just why have prices doubled to near record levels despite the removal of the carbon price?
If we factor out the contribution of the carbon tax, prices in New South Wales and Victoria are almost three times what they were in the comparable period two - three years ago.
Some pundits will no doubt point to recent changes in the South Australian market, following the closure of the Northern Power Station in Port Augusta. However the national electricity flows mostly converge on New South Wales. So the drivers for price setting there would appear much more important.
And as indicated in the two maps shown above, there have been no obvious changes to the demand and dispatch settings in New South Wales over the last 2 years. So with no obvious reason for such a price spike, it wouldn’t surprise if the regulators were taking a keen interest, not to mention large energy consumers with market exposure.
I doubt HydroTasmania’s latest prayers will be answered in the short-term, since the current prices seem unsustainable. At least that is, not until we see some major structural transformation in mainland generation, such as the closure of one or more of the Latrobe Valley brown coal generators. With the Victorian Government this week setting ambitious targets to generate 25% of its electricity from renewable energy by 2020, and 40% by 2025, that may not be very far away. When that happens, HydroTasmania will be hoping its dams are full and Basslink is operational. And by then the Apple Isle could be even better off it were to invest more in its exceptional wind resource.