KING Island electricity users will not benefit from lower energy prices with the commissioning of Hydro Tasmania’s $4.5m solar farm at Huxley Hill.
Hydro Tasmania says they are launching a new era of clean energy on King Island as the solar farm promises to replace 300,000 litres of diesel per annum, and offset an additional 800 tonnes of CO² every year. However, by reducing the reliance on diesel, the solar farm would reduce the cost of Hydro’s Community Service Obligation that was not linked to the costs of supply.
“Hydro Tasmania provides an ongoing subsidy for customers through the Community Service Obligation, which means Bass Strait island customers do not pay the full cost of their energy,” a Hydro spokeman said. “The intent of the Community Service Obligation is for Tasmanians in remote areas of the state to be provided with similar access to essential services as those living on mainland Tasmania.”
King Islanders say the island is a proud and promoted reference site for renewables but is not being rewarded for this Hydro power. They say there are no night/off peak electricity rate or business rate for King Island customers as offered across Tasmania and in other states.
Last September King Island’s electricity price rose 11.88 per cent and mirrored the increase on mainland Tasmania. King Islanders say the island’s electricity currently has price parity with Tasmania despite being a pioneer in renewables. The island does not have equity with other Tasmanians due to location and do not benefit from business, off peak or other rates. The island only has one tariff rate, and despite statements purporting to be a renewable energy economy, the costs of diesel and its supply undermine the proven lower cost of renewable energy production and maintain higher island electricity prices.
“Hydro Tasmania provides electricity to the Bass Strait islands under the Tasmanian Government’s Community Service Obligation, which heavily subsidises the cost of electricity for island residents,” a Hydro spokeman said.
“Although the Bass Strait islands’ energy tariff is similar to mainland Tasmanian prices, it is not reflective of the cost to produce energy, taking into account diesel prices and other overhead costs,” the spokesman said.
“Retail revenue generated from electricity bills on the Bass Strait islands covers about one third of Hydro Tasmania’s operating costs on the Bass Strait islands. “The Community Service Obligation instructs that only one tariff is offered on the Bass Strait Islands (Tariff 51).
“Island tariff movements are linked to the independent Regulated Tasmanian Price as set by the Office of the Tasmanian Economic Regulator.
“Comparing Bass Strait Island energy prices to mainland Tasmania prices is not comparing apples with apples. “The different pricing structures reflect different operating environments.”
The Regulator will release the new regulated Tasmanian price around mid-June 2023. The hybrid power station, located at Grassy Rd, is a fully automated, high penetration diesel renewable power system, capable of running 100 per cent renewable generation (that is, all diesel prime movers shut down) for multi-day periods, should climatic conditions permit.
The Hydro Tasmania plant is located adjacent to their Huxley Hill wind farm. The generating plant feeds a common 11 kilovolt (kV) transmission system within the station. As part of the expansion of the system, it is proposed that a 1.5 mW solar farm is to be constructed on the site of the Huxley Hill wind farm at Nugara. The output from the solar farm will be integrated into the power station’s 11 kV line for distribution across the island. Meanwhile, Hydro says they have not been approached to assist in building, owning, or operating a power plant for miner Group 6 Metals.
“Hydro Tasmania worked through options with G6M for connection from the King Island grid, with G6M deciding, on balance, that the reliability of supply needs and cost to upgrade the mine was best served by supplying locally,” the spokesman said. “Both parties have committed to maintaining a close working relationship and continue discussions on future needs.
The State Government had provided $2m to upgrade infrastructure between the mine and Grassy Harbour to enable mine commercialisation. “G6M advised Hydro Tasmania in August last year that they would be generating their own electricity for the mine on-site. “Only part of this upgrade was completed, as a majority of the upgrades were no longer required as the decision by G6M to supply their own energy negated the need for these distribution upgrades to go ahead. “The funding to assist with these distribution upgrades was $2m.
“Hydro Tasmania handed back the unused $642,000 of the initial $1m grant funding provided by the government. “Hydro Tasmania is responsible for managing King Island’s electricity grid to provide the Island with reliable power by balancing demand and supply.
“Should G6M wish to engage with Hydro Tasmania relating to embedded generation, we will assess the commercial and technical aspects of their proposal, if or when it occurs,” the spokesman said.