Hydro Tasmania cancels King Island wind farm project 

MARK COLVIN: A $2 billion wind farm project for Tasmania’s King Island has been cancelled, after the state-owned power generator said it was not economically viable.

If it had gone ahead, the project would have generated 600 megawatts of electricity with 200 turbines, supplying the national energy market via an under-water high-voltage cable.

Hydro Tasmania says the cancellation wasn’t due to proposed changes to the Renewable Energy Target (RET), but to falling demand for electricity.

Will Ockenden reports.

WILL OCKENDEN: King Island is a little blob of land that hangs around to the north-west of Tasmania’s north-west tip, and it’s safe to say it’s a windy place.

It has about one calm day a month. In fact, this year it’s only had about eight.

The phrase “winds westerly” feature regularly in the weather bureau’s forecasts, thanks to the Roaring Forties.

But while there’s more than enough wind for a wind farm, it seems the island’s remoteness and the national decline in demand for electricity has made the King Island wind farm project unviable.

Hydro Tasmania’s director of strategy and market development is Andrew Catchpole:

ANDREW CATCHPOLE: Hydro Tasmania will not proceed with the TasWind project on King Island.

WILL OCKENDEN: The Tasmanian state-owned power generator Hydro Tasmania wanted to build the TasWind project, with investment of around $2 billion.

Locals were told that up to $310 million of economic benefit may flow to the King Island community and it may boost apprenticeships for young people.

If the power project had gone ahead, it would have produced enough electricity to power around a quarter of a million households.

But with energy demand falling, Andrew Catchpole says the price paid for the wind energy wouldn’t have been enough to sustain it.

ANDREW CATCHPOLE: It’s primarily related to the reduced demand across the national electricity market. With demand down and a surplus in the market which I think is something that’s widely discussed in the public consciousness at the moment, the energy price as a consequence are down and that affects the revenue projections for this project.

This has seen something that’s been happening over a number of years and it’s largely due to the high uptake of solar power across the country. Secondarily it’s due to the general slowdown in the manufacturing sector in Australia which has had an impact on electricity demand.

WILL OCKENDEN: Andrew Catchpole says the uncertainty around the future of the Renewable Energy Target had nothing to do with the project’s cancellation.

The RET mandates that around 20 per cent of the nation’s electricity be sourced from renewables by 2020, but the Federal Government wants to see it reduced.

Mr Catchpole says the numbers on the project didn’t work, even if the RET went untouched.

ANDREW CATCHPOLE: Renewable Energy Target currently exists at 41,000 gigawatt hours. There are reviews and proposals that would consider a smaller target. Certainly under the current RET and the size of the current RET, this project would not be viable.

WILL OCKENDEN: And he says nor was it down to the scrapping of the carbon tax.

ANDREW CATCHPOLE: This project was not dependent wholly on the carbon tax. Certainly the, we understood at the time that we commenced the feasibility study that the fixed price period of the carbon, of carbon was predetermined so we had no expectation of a high carbon price contributing to the economics of the project going forward. It’s very much around more the broader energy environment. On the one hand the energy prices that we can receive and on the other the cost of actually building this particular project.

WILL OCKENDEN: The project has bitterly divided the community of King Island.

The Island’s mayor is Greg Barratt.

GREG BARRATT: There’s been a feeling on the island for some time now that it probably wouldn’t go ahead. Some people would see that as a plus and others a detriment. There’s a lot of nastiness caused by this feasibility study.

WILL OCKENDEN: He says it will give the island’s tourism industry some certainty.

GREG BARRATT: There’ll be jobs there, you know, the fact that we looked like having 200 big windmills in our face, I mean, you know, making some people not all that keen on investing in the place, in other areas I believe.

WILL OCKENDEN: Tasmania’s Energy Minister Matthew Groom says while it’s disappointing the project won’t proceed, Hydro Tasmania did the right thing by making the announcement to provide certainty.

MARK COLVIN: Will Ockenden.

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