Hydro will benefit as water value rises

Hobart Mercury
Friday 18/7/2008 Page: 4

INCREASED electricity prices due to carbon trading policies is likely to help Hydro Tasmania in coming years, chief executive Vince Hawksworth said yesterday. Speaking to the Tasmanian Farmers and Graziers Association biennial conference, Mr Hawksworth said that renewable energy would be worth more and the value of water would increase.

"Electricity prices are likely to go up because coal-fired power stations are having to pay for the carbon they use," he said. "Those power stations will need to recover that through higher prices, but if you are a hydro producer the electricity prices will be higher but the costs are lower because there is no carbon used." "Our renewable energy will be produced at a lower cost so it could benefit Hydro Tasmania and our shareholders." "Tasmania's future in a carbon constrained world can be a good one." He said about 80 per cent of Australia's electricity was not from renewable sources.

But there was still a lot of uncertainty about how steep any increases in electricity would be. "That will not be known until the white paper is produced," Mr Hawksworth said. He said that the amount of rainfall would be critical to how much improved margin electricity could be produced. He said that in 2007-08 Hydro had been forced to import 2500 gigawatt hours of electricity via Basslink because of lower inflows into Hydro storages. "We are receiving 10 per cent less water than we were four to five years ago and generating 9000 gigawatt hours rather than 10,000 GWh," lie said.

The project to find a further 1000 gigawatt hours of electricity was important because of the likelihood of increased prices. "If long-term yield has dropped what can we do to maximise what is falling," he said. "There we are upgrading canals, improving ways we gather water, small hydro plants and when we refurbish existing plant we can do it to get more energy," he said. He said that it would cost about 1000GWh for $400 million investment over 10-15 years. Treasurer Michael Aird said the government has made no decision regarding future electricity pricing for the Bass Strait Islands.