When there is a misalignment of technology with politics, money and ideology, environmental and financial havoc can follow.
At home, on a small rural property in the mainland State of Victoria, my family relies on tank water, but there is also a small rural pipe that connects the tank to a town water supply about a kilometre away.
This pipe runs beside a road and across paddocks so we can’t be certain of its reliability. It’s a handy ‘insurance’ but we don’t use the tank water to excess just because the pipe is there. We are especially careful to limit water consumption in a dry year and wouldn’t consider selling water out of the tank.
Use water wisely, a familiar advertisement constantly reminded us during the long drought which still grips parts of our nation. So how could the State of Tasmania, being very dependent on hydro electricity, in effect, find itself in what amounts to a self-imposed drought?
Unholy alliances between technology, politics, green ideology and the financial imperative appear to have created economic disarray and, ultimately, ‘powerful disconnections’. For good reasons, renewable energy is widely believed to be highly desirable. Its popularity seems to defy the law of supply and demand.
To get the gist of how economic reality can be obscured by ideology, suppose I’m doing a survey to test the popularity of green energy:
Q1. Is the environment important to you?
Q2. Do you want a clean world for your children and grandchildren?
Q3. Do you think burning coal is bad for our climate?
Q4. Do you think it’s important to prevent global warming?
Q5. Would you rather use clean hydro or dirty, coal-fired electricity?
A survey respondent answering ‘yes’ to questions 1-4 is bound by logic to answer question 5 in the affirmative. The possibility that there may not be sufficient green energy to meet the burgeoning demand for it does not seem to have crossed the minds of those who wish to ‘save the world’ or those who would profit from it.
The ABC reported in April 2016 that Hydro Tasmania’s dam storage levels have dropped to 13.6 per cent of capacity. One of the state’s major storages, Lake Gordon, was sitting at just 5.9 per cent. Tasmania’s energy situation has been worsening since dam catchments only received record low rainfall in spring, and the Basslink undersea cable, that brings power to and from the state, broke in December 2015.
Hydro Tasmania had earlier projected the dams would not fall below 13.6 per cent by the start of May. Energy Minister Matthew Groom said Hydro Tasmania was now advising storages would reach as low as 12 per cent by early May, assuming April rainfall in the catchment areas is only 50% of average.
The Basslink cable connects Tasmania to the national electricity grid. It is owned and operated by the foreign-owned Keppel Infrastructure Trust. The cable runs beneath Bass Strait from George Town in Tasmania to Loy Yang in Victoria.
The cable had been exporting power when wholesale electricity was up to 30 times normal its normal price and Hydro Tasmania was reporting record profits. The owners of the cable expressed concern that Hydro Tasmania had been transmitting electricity at rates above agreed limits. The normal electricity export capacity of the Basslink cable is 500 MW but it is rated up to 630 MW for short periods. The electricity import capacity of Basslink is 480 MW.
The cable was reportedly importing electricity into Tasmania at capacity when it failed. Owners of the cable say that they were ‘lucky’ to have located the fault within about a kilometre of where they cut it for testing purposes. The government of Tasmania has ordered a review of dam storage modelling which will rely on assumptions about future rainfall and the condition of catchments.
Good ‘luck’ with all that Mr Groom.
Australia has been the ‘lucky country’ and we are fortunate to have been born here. But anyone who pays attention knows that sooner or later, luck tends to become less reliable. It is ironic that over 80% of Tasmania’s electricity generation capacity is hydro-electric yet hundreds of expensive and polluting diesel generators have been imported to meet the State’s domestic power requirements until the Basslink cable is repaired.
The total capacity of Tasmania’s hydro-electric scheme is 2276 MW; demand for that state is approximately 1200 MW. The average annual volume of water flowing through the hydro power stations is about 15,364 Gigalitres (GL). Therefore, a crude estimate of the volume of water released from the dams to generate ‘green’ power for export is around 120 GL per week (500/1200*15364/52). For comparison, Sydney Harbour holds 500 GL and the volume of the MCG is 1.6 GL.
In other words, if the water released to generate electricity for export had remained in storage, it could have generated over 40% of Tasmania’s electricity demand.
In the meantime, and not forgetting other ‘alternative’ power sources, more than a million solar panels have been installed in Australia, about 70% of these imported from China. Ideologically and in theory this must surely be a good thing. However, the manufacture of solar panels in China is notoriously energy-inefficient. Water, soil and air pollution are also serious problems. The point is that we must be willing to pay the true cost of goods, INCLUDING SOLAR PANELS and the like.
Cheap goods are cheap because Chinese workers (in this case) are exploited and because pollution control is absent or ineffective. In other words, the difference between the price we pay and the true cost of goods is externalised onto workers and the environment. The harsh financial reality is that if I choose to pay the right price, I will be disadvantaged.
‘The Tragedy of the Commons ‘ describes the dilemma of many individuals acting rationally and separately in their own self-interest, knowing that a shared and limited resource, such as the atmosphere, will ultimately be depleted or altered against the best interests of all.
A major issue in the 1983 federal election was opposition to the construction of dams in Tasmania and that this greatly assisted the election of the Hawke Labor government. How can this be reconciled with an apparently insatiable demand for hydro electricity, regardless of the environmental and economic impacts?
A somewhat unkind definition of an economist is someone who sees something working well in practice and wonders how it might work in theory. In view of what has happened in Tasmania, it is beyond credulity to believe that climate change is purely an economic problem.
Moreover, an emissions trading scheme that risks creating distortions in the electricity market cannot be expected to limit the impacts of climate change. Inadvertently, the Tasmania Hydro ‘experiment’ demonstrates that the alignment of green ideology with market economics will not necessarily render the desired or predictable outcomes.