This Report is required under Section 13 of the Energy Co-ordination and Planning Act 1995

Under the Energy Co-ordination and Planning Act 1995, the Director of Energy Planning has functions relating to Tasmania’s energy supply, which include:

Assisting the Minister in planning and coordination of the provision of energy in the State;
Examining and monitoring factors affecting the supply and demand for energy in Tasmania;
Promoting the development of commercial applications of renewable energy;
Producing and publishing information and reports on energy related matters; and
Providing support in the resolution of disputes about energy-related matters.
Throughout 2003/04 the adequacy of electricity supply in Tasmania has been monitored with the assistance of the Electricity Supply Ministerial Advisory Committee and the cooperation of Tasmania’s major electricity entities. Support from the Bell Bay Power station and from the new Woolnorth wind farm, and good rainfalls in June 2004, have resulted in an improvement in the State’s hydrological reserves and they are now stronger than they have been for several years.

Stage 2 of Hydro Tasmania’s Woolnorth development was commissioned in May 2004, bringing its installed capacity to 65 Megawatts (about 2.5% of the State’s total). The second turbine at the Bell Bay power station was converted from oil to natural gas in October 2003. The contributions from these units have not only strengthened the reserves position, but they have also diversified Tasmania’s energy supply options and positioned Tasmania well for the future.

Arguably the most significant electricity infrastructure development under way is the Basslink Project. This will connect the Tasmanian and mainland electricity grids in late 2005 and will represent a fundamental step forward for electricity in both Tasmania and mainland Australia. Tasmania will be able to export electricity based on renewable sources to mainland Australia during peak load periods and, if necessary, import electricity (mainly based on thermal power plants) from Victoria during off-peak periods, taking advantage of the characteristics of both types of generation system and the resultant market opportunities. Capacity and security of supply will also be enhanced.

Associated with Basslink is Tasmania’s entry to the National Electricity Market (NEM). This represents a considerable evolution in the way electricity will be sold in Tasmania and requires changes to current wholesale trading arrangements. Preparations for Tasmania joining the NEM are well advanced.

Demand for electricity continues to rise, in line with strong economic growth, demographic factors and improvements in standards of living. These trends are expected to continue and are reflected in the Annual Planning Statement produced by the System Controller.

The reliability of the Tasmanian electricity supply as experienced by end use customers is monitored by the Tasmanian Energy Regulator. As reported in The 2003 Reliability Review Report, published in January 2004 by the Regulator, reliability in the Tasmanian electricity system has improved over the past three years.

The Reliability Network Planning Panel assists both the Regulator and the Director of Energy Planning by advising on any current or potential constraints or inadequacies in the Tasmanian power system and on whether the options for addressing these are effective, technically feasible and meet the requirements of the regulatory test required by the Australian Competition and Consumer Commission.

Part of the good management of energy in Tasmania involves the assessment, monitoring and mitigation of risks at all parts and levels of the electricity supply chain, and the preparation of emergency response protocols and procedures in the unlikely event of a supply emergency.

The supply entities, the National Electricity Market Management Company and the Tasmanian Government, all cooperate in this task. The emergency response plans are being updated and tested in anticipation of connection to mainland grids and the National Electricity Market, and because of an increased emphasis on security. Oversight of this process is being done by the Director of Energy Planning.

The development of Australia’s electricity and gas markets is continuing at a national level, with leadership and policy direction provided by the Ministerial Council on Energy, assisted by the Standing Committee of Officials from all States, Territories and the Commonwealth. The Ministerial Council announced a program of reforms in December 2003. Important reforms include the establishment of the Australia Energy Regulator and the Australian Energy Markets Commission.

Numerous working groups are progressing this reform agenda, including the development of a single National Electricity Code, streamlining the code change process, greater energy security, promoting energy efficiency, improving the framework for the integration of wind energy, and developing an integrated approach to national transmission issues. Tasmania is represented in this work at all levels.

Tasmanians are now benefiting not only from additional options for generating electricity, but also from additional choices between different types of energy. Powerco continues to roll out the distribution and retail part of the Tasmanian Natural Gas Project and connected its first commercial customers in the first half of 2004. This is another important milestone for Tasmania.

Tasmania is currently at the forefront of renewable energy generation in Australia. One of the functions of the Director is to promote the use of renewable energy. This has been done through support for Tasmania’s wind energy developments and through managing the Remote Renewable Power Generation Program (RRPGP) in Tasmania.

The latter involves a number of renewable energy projects of varying scale and also administering Federal funding for eligible off-grid energy developments which displace diesel generation. Tasmania contributes to national energy efficiency schemes, including efficiency standards and buyer information for new buildings, and for electricity and gas appliances.

As a long-term option, Hydro Tasmania, the University of Tasmania and others are investigating the uses and potential of hydrogen as a store of energy and as a fuel. The Director is assisting this work through the Office of Energy Planning and Conservation.

ROB NICHOLL
Director of Energy Planning
Office of Energy Planning and Conservation