Basslink Outage Isolates Tasmania from the National Electricity Market

by Energy Action | Feb 19, 2016
The Victoria to Tasmania transmission interconnector went down on 20th December and has been off line since.
Basslink, at 300 km is one of the world’s longest undersea transmission cables, connecting Tasmania to the National Electricity Market. It has been in operation for ten years. Whilst capable of bi-directional energy transfers, Basslink has most recently been used to import electricity from the mainland and has supplied 30-40% of the state’s electrical demand.

Power generation in Tasmania is predominantly from hydro-electric schemes. With lake levels at 24% in late December and forecast to decline to 14% by April, the outage comes at an unfortunate time. In response, and to shore up supply reliability, Hydro Tasmania has restarted the Tamar Valley gas fired station and brought in small diesel fired back up generators. In addition, the Bell Bay aluminium smelter and the Temco manganese plant have agreed to reduce consumption, the former by 32-40 MW for up to five months and the latter by 30 MW for up to three months.

Initially it was expected that Basslink would be back in operation by 19 March, although recent comments from its operator indicate that the outage will be longer than expected.  Difficulty in determining the exact location of the fault and rough seas have hampered the repair efforts.  

On the electricity market, spot prices have increased progressively and are currently settling at $175 to $220 per MWh.  In normal circumstances the spot price would be circa $40 per MWh.  The forward baseload price for April to June 2016 has increased from $58.49 per MWh to $136.01 per MWh.  To date forward prices for July 2016 and beyond have increased only marginally.  

So far only customers with exposure to the spot market or those asked to reduce consumption such as Temco have been directly affected.  Looking further ahead it is highly likely the Tasmanian Government will instruct Hydro Tasmania to maintain minimum lake levels which could lead to higher prices for retail contracts if this is sustained. Beyond that there is speculation regarding the construction of a second interconnector although that would be many years away if at all.

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