PLEA Network

15 February 2016, Renew Economy, Tasmania energy prices to soar as supply crisis forces switch to diesel gen-sets. Energy consumers in Tasmania – already facing a trebling in wholesale electricity prices since the state lost its grid connection to the mainland, now face yet another trebling in prices as the government turns to highly expensive diesel gen-sets to protect its rapidly depleting hydro resources. The Tasmania government late Friday announced it would turn to diesel gen-sets to ensure the lights would not go out and was ordering at least 200MW of containerised diesel generators to be installed as hydro levels continue to fall and the repair to the Basslink cable to the mainland is further delayed. Tasmania enjoys among the cheapest costs of wholesale energy in the country when it relies only on hydro and wind energy. But prices doubled to around $90/MWh when it decided to import 40 per cent of its needs from Victoria in the face of the driest spring on record which forced hydro levels to fall to near record levels. That cost rose further to more than $110/MWh when the Basslink cable failed in December, and the government had to accelerate its plan to bring back its Tamar Gas power station into production. That has brought back 280MW of gas capacity into production, and Hydro Tasmania is now planning to add another 75MW of gas and up to 200MW of diesel power in “containerised diesel generation.” The cost of diesel generation is expected to be at least $300/MWh and may be more. As some diesel was switched on at the weekend, the average price of electricity jumped to more than $160/MWh on Friday and Saturday. This compares to prices of around $40/MWh last summer. The situation is highlighting the fact that wind energy and solar energy would have provided much cheaper power, and obviously much cleaner power, except the state authorities have passed up opportunities to accelerate the deployment of those technologies, despite having a large hydro resource to act as a battery. Read more here