The crisis in the national electricity market has confirmed one thing: Despite the recently announced power price rises, we in Tasmania are better off than other eastern states.
We are now self-sufficient with renewable energy. Wind produces 20 per cent of our needs with hydro power comfortably providing the remainder. Basslink can also import electricity and Hydro has gas peaking units that can be used if needed.
Half our wind power is produced by the largely foreign-owned Woolnorth Wind Farm Holding P/L, which recently released financial statements for the 2021 year revealing its entire output was sold to Hydro via a power purchase agreement for $95 a MWh, $35 a MWh more than spot prices. Hydro subsidies to WWF totalled $34 million.
The other two major wind farms also have PPAs with government businesses, Granville Harbour with Hydro and Cattle Hill with Aurora Energy. Commercial in confidence prevents Tasmanians from learning the extent of these subsidies.
The $3.5 billion Project Marinus to build a second interconnector into the NEM will require a doubling of locally generated electricity. Up to 10 more wind farms the size of WWF will be needed, although some may come from Hydro's pumped hydro/Battery of the Nation project.
Financiers and investors require certainty. Wind farms won't be built without PPAs. Will these be with government businesses or will someone else sign up? We can't be sure as the government has just announced an expressions of interest process years after first talking about Marinus.
Additions and upgrades to the transmission network will also be needed. It's a regulated network meaning higher charges will be spread among all users.
New wind farms will be competing with mainland wind and solar power generators and increasingly with electricity in batteries stored at zero cost awaiting a better price.
Once built with largely imported components using FIFO workers, wind farms are relatively cheap to run with few trickle-down effects. Spare cash will be used to repay financiers and reward investors. WWF provides the template.
Little tax will be paid because of capital write-offs. Beneficiaries are unlikely to include many people in Tasmania.
Major infrastructure projects need to do more than create a few private benefits funded by the public purse. They are supposed to have positive flow effects to Tasmanians.
The Advocate, Monday 20 June 2022Go Back