There is no question that hydroelectric power is a wonderful thing. It’s green, it’s renewable, it’s emissions-free, and it’s relatively inexpensive.  There is also no question that water can be stored behind a dam for days, weeks, months, or even years before it is used to spin turbines that generate electricity.

Tasmania has an abundance of hydroelectric power — quite a bit more than it needs, actually. It would very much like to sell some of its excess electricity to the rest of Australia. The plan put forward by Hydro Tasmania and TasNetworks is known as the Marinus Link — a 500-kilometer-long undersea transmission line linking Tasmania to Melbourne. From there it would connect to the utility grid on the mainland, making Tasmania Australia’s national battery, so to speak.

But there’s a flaw in the Hydro Tasmania plan. According to a report written by the highly regarded Dr. Bruce Mountain for the Victoria Energy Policy Center, the Marinus Link is a money-losing proposition that will only make less economic sense in coming years as the cost of grid scale battery storage continues to decline. Here’s a quote from the Executive Summary that pretty much says it all.

“The main conclusions of that report are that 1,500 MW of four-hour battery can be provided for less than half the cost of Marinus Link; that the same capacity of six-hour battery can be provided for 79% of the cost of Marinus Link and that 1,500 MW of eight-hour battery storage is still cheaper than Marinus Link.

“In other words, even if Hydro Tasmania is able to provide, for no additional cost, 1,500 MW that it could export to Victoria day-in day-out for eight hours at a stretch for the foreseeable future, it will still be cheaper to build 1,500 MW of batteries in Victoria rather than to build Marinus Link. Of course the Tasmanian electrical system has no-where near the power or energy capability needed to provide 1,500 MW of supply to Victoria for 8 hours every day and so many billions will be needed to expand its storages and energy production in Tasmania in order to be able to provide the capacity that Marinus Link claims to offer.”

The ending of the report is just as brutal. “We now feel able to conclude that not only does Marinus Link have no chance of competing with battery alternatives but that if Hydro Tasmania develops pumped hydro capacity in Tasmania it is very likely that, like Snowy 2.0, it will be stranded from the outset.”

Cuanto Cuesta?

So how much would the Marinus Link cost? The proposal calls for building two new 750-megawatt undersea power cables between Tasmania and Victoria at a cost of about $3.5 billion. Hydro Tasmania, which is owned by the state of Tasmania, plans to store power in Tasmanian dams by releasing water to generate electricity for export to Victoria when prices are high, and pumping the water back into dams when power prices are low.

According to MSN, Mountain claims that if the Marinus Link is funded by the Tasmanian or Commonwealth governments, taxpayers will be left paying for an asset that would cost more to build than it can earn. “It would be placing a dead weight on the shoulders of the people of Tasmania, if indeed the people of Tasmania bear most of the cost. If it’s borne by the Commonwealth in some way, it’ll be placing a burden on all taxpayers and energy consumers depending on how the bid ends up, when you build an asset that can’t compete.”

Mountain also expressed skepticism about the the long term benefits of construction jobs associated with the projects. “It would be much better for the community if the government simply gave that money out — frankly, it would be less of a loss for the community. Building a white elephant, a dead weight loss, entrenches disadvantage.” No namby-pamby, wishy-washy words from the esteemed Dr. Mountain. Better to take that money and just throw it in the street.

The Case For Marinus Link

Hydro Tasmania and TasNetworks aren’t giving up the fight. TasNetworks general manager for Marinus Link Bess Clark says both batteries and pumped hydro storage will be needed as Australia’s energy market transitions away from fossil fuels. “Marinus Link presents a once in a generation opportunity to double Tasmania’s clean energy, helps combat climate change, puts downward pressure on power prices and creates thousands of local jobs,” she says, before adding that modeling by the Australian Energy Market Operator shows the Marinus Link will be a key part of Australia’s energy grid in the future.

A spokesman for Hydro Tasmania said batteries wouldn’t be able to meet all of Australia’s energy storage requirements and that deep storage like pumped hydro will be needed. “It’s not a question of having one or the other. We will need all the relevant, cost competitive technologies to play their part to ensure all Australians have a power system that is reliable, secure and affordable,” he said.

Last week the Tasmanian Chamber of Commerce and Industry threw its “wholehearted support” behind the Marinus Link project. “We know that this project will be fantastic not just for employment across the state over the next 50 years but also for the growth of business within Tasmania,” TCCI CEO Michael Bailey said.

All Of The Above

There are two sides to this debate and they both have points in their favor. Pumped hydro can supply power far longer than any grid storage battery in existence. A battery can react in milliseconds; pumped hydro cannot. One of the benefits of battery storage is its frequency and voltage regulation capability. Both save grid operators money but are services pumped hydro cannot provide.

Then there is the question of timing. Bruce Mountain tells the Sydney Morning Herald the Victorian Big Battery, composed of dozens of Tesla Megapacks, will be commissioned shortly, while a similar installation at Jeeralan should be ready by 2026. There are four more storage battery projects in the pipeline as well. A further four major batteries are likely to proceed. Those will all be in place and operational before the Marinus Link becomes operational.

“Battery storage capacity will be built and operational in Victoria long before Marinus Link and the Battery of the Nation developments in Tasmania are close to operational,” the VEPC report says. “Marinus Link continues to have no prospect of competing against battery alternatives in Victoria.” Mountain adds, “Considering the much higher efficiency and responsiveness of chemical batteries than pumped hydro, if pumped hydro is developed in Tasmania it is surely likely that it, not batteries, will sit idle.”

“It’s not a question of having one or the other,” Hydro Tasmania counters. “We will need all the relevant, cost-competitive technologies to play their part to ensure all Australians have a power system that is reliable, secure and affordable.” Tasmania also is investing heavily in the power of wind, something it also has in abundance.

The Trouble With Transmission

Solar power advocates like to say that a gigantic solar farm in a small corner of the Sahara desert could power all of Europe and the UK — if there were transmission lines connecting the two areas. In the US, some people dream of New Yorkers getting solar power from California after the sun sets on the Big Apple. That could happen if there were transcontinental high voltage transmission lines.

That being said, transmission lines can be hugely expensive to construct and maintain. They are also subject to disruption from any number of causes — wind, earthquakes, wild fires, even malicious damage. The world is learning a hard lesson about making stuff in one place for consumption in another place using a flotilla of cargo ships to connect the two. Anything that can go wrong often does go wrong and at the worst possible time. Just ask Puerto Rico about relying on distant generating stations to power its major cities.

Pumped hydro is an important piece of the energy storage puzzle but it can’t just be plunked down close to the places where demand for electrical energy is high. In theory, battery storage facilities can be sited almost anywhere. Ideally, they can go where retired thermal generating stations are located, places with the advantage of already having the connections needed to feed the stored power into the electrical grid.

Planning For The Future Is Hard

The objection is not to Tasmania’s abundant hydro power. The objection is the cost of getting it to distant markets at competitive cost. Then there a time considerations. What may seem like a good idea today may not look quite so appealing a few years down the road when the economics tilt more in favor of one solution than another. When there is not an unlimited supply of money, it is best to invest what you have in solutions that will be fiscally viable for the longest period of time, not one that will be come economically noncompetitive before the end of its useful life.

Perhaps Tasmania would be wise to invest its dollars in technologies that turn its excess electricity into green hydrogen or ammonia, which could then be exported at reasonable cost to anywhere in the world. The issue is not energy storage. The issue is energy transmission. It will be interesting to see how this plays out in Australia, where wise energy planning at the federal level appears to be an alien concept.

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Paul McGarry

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