Energy Supply Plan - Hydro Tasmania

Hydro Tasmania Energy supply plan update Current at 22 February 2016

1.

Overview of low energy supply situation and response

The record low rainfall over recent months and the extended fault in the Basslink interconnector are both very rare events, the combination of which has not previously been experienced in Tasmania. The combination of a strong El Nino and a positive Indian Ocean Dipole (IOD) event in Spring 2015 led to extremely low rainfall in Hydro Tasmania’s catchments since September 2015, as shown in Figure 1.

Figure 1: Actual vs budgeted inflows January 2015 - January 2016

The onset of the positive IOD was both extremely strong and very sudden, and this severity was not predicted. The record dry in Spring 2015 saw inflows of less than half the previously worst result in the past 30 years on record for that period. The owners of Basslink initially predicted the repair would take two months but later revised that to three months before advising that the return to service date is to be estimated once the cable fault is found.

Basslink outage timeline    

Basslink outage commenced at 2.10pm (market time) on 20 December 2015. BPL issued a media release on 22 December 2015 that the outage had been caused by a fault on the subsea cable. At this time BPL indicated that a repair would take 60 days. BPL issued a media release on 14 January 2016, with a revised return-to-service date of 19 March 2016 (90-day outage). BPL issued a media release on 27 January 2016 that provided an update on progress.

1|Energy supply plan update

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BPL issued a media release on 12 February 2016 indicating there were problems identifying the cable fault location and that the 19 March return to service date would not be achieved.

Initial response Hydro Tasmania imported additional energy across Basslink from October 2015, which helped manage hydro storage levels. We also reviewed our plant utilisation across the state, including deferring planned maintenance at our power stations. In November 2015 (prior to the failure of Basslink) Hydro Tasmania began the process of returning the Combined Cycle Gas Turbine (CCGT) from dry layup. It was returned to service on 20 January 2016.

Overview of additional response Tasmania had been importing up to 40 per cent of the state’s energy needs across Basslink. The failure of the interconnector has meant we have had to secure alternative generation options. Hydro Tasmania now plans to be able to meet all Tasmanian energy demand even if Basslink repair is significantly further delayed. In addition to continuing to run all available units at the TVPS, we plan to restore the full capacity of the open cycle units (FT8s and the Trent unit). We have negotiated voluntary commercial load reductions in cooperation with major industrial users. We have also worked with TasNetworks and others across government to develop a plan for the implementation of temporary diesel generation. In total, the generation from gas and temporary diesel, along with voluntary load reductions, will be well in excess of the import capacity of Basslink.

Financial impact There is no question that managing the current challenge comes at a cost. We estimate securing and installing 200MW of temporary diesel generation, the site installation costs are approximately $20 million, equipment hire cost of approximately $24 million and the operational cost of operating the first 100MW will be approximately $11 million per month. It’s estimated approximately onethird of that cost will be recouped through energy sales. Actual cost will depend on how much of the diesel generation is operated, and for how long. We will run the diesel generation if we receive low inflows into our storages or Basslink has not returned to service. The final financial impact will be influenced by factors including winter rains and the duration of the Basslink outage. There is likely to be an operating loss this financial year. This final impact will be communicated in our annual report as part of our broader financial reporting. Hydro Tasmania is not paying the facility fee while Basslink is out-of-service. Our focus is on doing all that is required to maintain energy security in a cost-efficient manner.


2.Expected storage position and forecast inflows The storage position at 22 February 2016 is 16.8%. Storages dropped by 0.6% over the past week, compared to 0.9% the week before, reflecting useful inflows into the west/southwest catchments. The Bureau forecasts medium-high (60%-70%) chance of moderate rainfalls in the southwest and central highlands on Wednesday and Thursday this week. Given continued uncertainty about the return to service date of Basslink, Hydro Tasmania has enacted plans to meet all Tasmanian energy demand without Basslink in operation, even in the event of a cool, dry May, and with allowance for an additional adverse event that would have an impact on energy generation, such as loss of a major power station. While planning for three significantly adverse events to occur simultaneously may be considered very conservative, Hydro Tasmania considers this approach to be prudent while uncertainty over future inflows and on the timing of a repair of Basslink remains high. Assuming normal rainfall over the next two months, the low level for storages is expected to be 13.6 per cent at 1 May 2016 if Basslink returns to service on that date. This is lower than the previously stated figure of 14 per cent, which was based on a return to service date for Basslink of 19 March, noting that Hydro Tasmania does not have an update or view on the expected date for Basslink to be returned to service. We will manage our storages such that energy demand will be met with lower than average rainfall in the next two months, a further delay in Basslink being repaired and another possible single substantial event such as loss of a major power station. This is a conservative but prudent approach in the circumstances to ensure we continue to meet energy demand in Tasmania. The plans in place will mean:  

If it rains less then we will generate more from gas and temporary diesel generation to maintain storage level and energy demand; and If it rains more we will generate less from gas and temporary diesel generation as storages will remain at higher levels.

The start of winter means that the storages are likely to stay level or even rebuilding through May and June as expected winter rains arrive. Figure 2 shows expected inflows by month for the remainder of the calendar year.


Figure 2: Long-term average inflows (GWh) for the remainder of 2016

Rainfall forecast The current 3-month outlook from the Bureau of Meteorology covers February-April and forecasts a 65-70 per cent chance of better than median rainfall in our catchments. The next outlook will be issued on Thursday 25 February and will cover March-May. Longer term rainfall outlooks (greater than 3 months) do not provide information that is useful for our modelling. Forecasts of key drivers that affect inflows to our storages, such as El Nino and the Indian Ocean Dipole, are for neutral conditions through winter and spring, which indicates that rainfall during this period is likely to be close to average. Note that the forecasts can change significantly through autumn and early winter and will need to be monitored closely.

Environmental impacts and mitigation The ongoing dry conditions and extended Basslink outage are having an environmental impact on our storages. Hydro Tasmania’s approach to environmental monitoring and risk management enables the business to assess impacts and respond appropriately. The key points are: 

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Low lake levels, particularly in Great Lake and Woods Lake, are putting pressure on some aquatic species. We are monitoring those impacts carefully, adjusting management approaches where reasonable (within climate constraints and generation needs). In Great Lake we are monitoring impacts on native fish populations, invertebrates and aquatic vegetation. We will continue to monitor how these species are impacted and how they respond and recover when the lakes refill after expected autumn/winter rains. We are monitoring water quality impacts in Great Lake and Woods Lake and will extend this work to include Lake Echo and Lake King William.


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We are working with our key stakeholders, including the Inland Fisheries Service (IFS) and DPIPWE, to keep them informed. We are accessing the best available expertise and information from previous research and current monitoring programs to inform our environmental risk assessment and mitigation measures.

Impact on other water users We recognise that low lake levels are having an impact across all of our larger storages and on a range of stakeholders who use or depend on these storages. Due to low lake levels, a number of boat ramps have been closed at popular angling spots. These sites include Great Lake, Lake Burbury, and Lake Echo. These ramps were closed on advice of Marine and Safety Tasmania (MaST) and will remain closed until water levels increase to a level that permits safe launching. Up to date information on access to water bodies managed by Hydro Tasmania is available on Hydro Tasmania's website at http://www.hydro.com.au/community/recreational-sites While not all of our storages will be affected by record low rains, there will be an impact on the use of, and access to, some popular angling spots as we manage our declining storages for the benefit of all Tasmanians. We understand anglers’ concerns and frustration and we continue to work with them through what is a very challenging dry period. We are also in close contact with the Department of Primary Industries, Parks, Water and Environment and Tasmanian Irrigation stakeholders regarding access to water for irrigation. There is sufficient water available in the hydro storages to meet the existing obligations to provide irrigation water for the balance of the 2015/16 irrigation season.


3.Planned response Hydro Tasmania and the State Government have a plan to manage energy security and that plan is being implemented. A range of actions are being initiated as required, in response to the unprecedented situation.

Gas generation All of Hydro Tasmania’s gas generation is located at the Tamar Valley Power Station. The combined cycle gas turbine, with a capacity of 208 megawatts, was returned to service on 20 January. It has operated reliably on a round-the-clock basis since that time. In addition, three FT8 units (open cycle gas turbines) are in operation. Their full output is 120 megawatts. They are currently operating at 90 megawatts and expected to progressively reach full output by late June. The Rolls Royce ‘Trent’ unit (open cycle gas turbine), with a capacity of 58 megawatts, has been undergoing warranty repair and its return to Tasmania has been expedited. Hydro Tasmania personnel are currently in Abu Dhabi inspecting the unit, prior to it being returned to the state during March and it’s expected to be ready for service in early April. The anticipated departure date from Abu Dhabi is 7 March. With all plant running at TVPS the station can provide up to 386 MW. Figure 3 illustrates the timeline for increasing capacity at TVPS.

Figure 3: Expected available capacity from gas and diesel generation, and voluntary load reduction


Load reduction In January 2016, TEMCO made a business decision to reduce its power consumption by approximately 30 MW. This has been achieved by the company bringing forward maintenance activities planned for later in the year, providing for reduced energy consumption. Bell Bay Aluminium has commenced voluntary load reduction with a goal of reducing power consumption by around 10% (between 30-40 megawatts) for up to four to five months, from 4 February. Figure 3 illustrates the contribution made by load reduction. Our approach favours additional supply options over further voluntary load reductions in order to minimise any impacts on economic activity. However, given the very challenging circumstances we face they cannot be ruled out. Hydro Tasmania remains in close contact with all our major energy users. Figure 4 illustrates the changing generation supply to Tasmania since August 2015, showing that the inflow shortfall that we being met by Basslink prior to its failure is now increasingly being met by gas generation and voluntary load reduction.

Figure 4: Changing generation supply

Temporary diesel generation Hydro Tasmania, TasNetworks and others across government are delivering a plan that will have up to 100 megawatts of temporary diesel generation available for operation by the end of March. This involves ongoing and rapid investigations to identify and prepare proposed sites, including the management of technical, logistical and regulatory issues.


Work is also progressing on a number of options to enable a further 100MW to be available for generation from the end of April. Six generators and some ancillary equipment have been received in Devonport. 18 generators and ancillary equipment are available in Melbourne. This first 24 megawatts is ready to be deployed as soon as site preparation is complete. The remaining generators are en route to Tasmania and are expected to arrive throughout March. A number of sites are being investigated to meet the government’s commitment on diesel generation. Some key sites are being prioritised for site works and installation, and a number of additional sites are being investigated in parallel. Sites are chosen for the ability to connect additional generation to the grid, ability to supply diesel to the generators and to minimise impact on nearby residents. These include sites in the north and south of the state at Hydro Tasmania power stations, TasNetworks substations and industrial sites. Prioritised sites are Catagunya Power Station, Meadowbank Power Station, and several potential sites within the Bell Bay industrial precinct including the George Town Substation and the Bell Bay Power Station. Appendix 1 lists further details of some priority sites. Engagement with stakeholders is underway and Hydro Tasmania has been working closely with a number of councils on the necessary approvals, and with the EPA on environmental approvals. Figure 5 shows the locations currently being prioritised for additional diesel generation, while Figure 3 shows the expected timing for commissioning and availability of that generation.

Figure 5: Northern and southern locations

What is TasNetworks’ role in the energy situation? TasNetworks’ role is to connect the generators to the network. A significant amount of work is being undertaken by TasNetworks’ technical teams to ensure security of supply.


The business is working with Hydro Tasmania and the Australian Energy Market Operator (AEMO) to safely connect the temporary diesel generation, and to ensure the network operates safely and reliably.

Will there be an effect on voltages? Will customers experience outages? TasNetworks’ expert team is working on technical studies to ensure it meets the technical requirements to provide a safe and reliable network which meets the National Electricity Rule. Voltages and frequency will be addressed in these technical studies.


4.Appendix 1 – Additional diesel generation planning details Site: Catagunya Power Station Capacity: 24 MW Status: work started on 19 February on key civil works; work on running cables to enable connection to the grid will begin 23 February. Commissioning date: 8 March (5/3) Land tenure: Hydro Tasmania land

Site: Meadowbank Power Station Capacity: 24 MW Status: civil works have started; site works will begin 23 February. Commissioning date: 20 March Land tenure: Hydro Tasmania land


Site: George Town sub-station Capacity: 24 MW Status: initial site works will begin week starting 22/2. Commissioning date: 31 March Land tenure: TasNetworks land

In addition to these priority sites, a number of other sites are being investigated to meet the government’s commitment on diesel generation. These include sites in the north and south of the state at Hydro Tasmania power stations, TasNetworks substations and industrial sites.
