By Michael Bailey, CEO Tasmanian Chamber of Commerce and Industry
Tasmania has hit plenty of hurdles since it became a state of Australia in 1901 but I firmly believe our energy system will take our economy and population to levels unthinkable only a few years ago.
The penny dropped during a recent meeting of the Australian Chamber of Commerce and Industry in Brisbane with business leaders and delegates from around the nation.
The challenge is to understand the opportunities and the process needed to make it work with the support of government, the parliament, business and the community.
But, it can’t happen by just flicking a switch.
Undoubtedly the number one issue from all players around the table was the sky rocketing prices of energy including electricity and gas.
Not only have states been challenged by energy increases of 100 to 250 per cent, but they are also working with questionable back-up, as we saw during Adelaide’s black-out earlier this year.
This highlighted the insecurity of South Australia’s delivery system following the replacement of coal power stations with renewable energy such as solar and wind farms.
An example of the challenges in South Australia was shared by the head of the South Australian Chamber , Nigel McBride.
Mr McBride revealed that the much-heralded battery plan now partnered with renewable energy giant, Tesla, would only deliver four minutes of power coverage should they be hit by another major blackout.
It’s a hugely expensive investment for little outcome – there needs to be a balance between investing in new green energy and actually delivering price reductions for customers.
Tasmania has a natural and historical advantage.
Unlike other states that sold off their energy generators, we still own the Hydro and wind farm schemes that generate our power.
While Tasmanian prices are determined by a national authority, it still means that government can intervene to soften the increases through rebates, capping prices to CPI and reducing wholesale prices for contract customers.
The value of Tasmanian Market Intervention through rebates and caps for business and domestics is just over $100million for 2017/18.
But the big decision is to leave the national grid from a purchasing perspective.
This removes the need for us to charge local usage at a national price and enable Hydro and government to continue to offer clean, green power at the lowest price in the nation.
In discussions with Principal Consultant at Goanna Energy, Marc White, I’ve become aware that removing ourselves from the National electricity market would be quite complex.
One challenge is how to manage long-term agreements of selling energy to the rest of Australia through Basslink, which is in the 13th year of a 25-year deal costing $90million a year.
Mr White says there are risks and rewards, which is why the State Treasury is undertaking a major review that includes withdrawing from the National system, or staying and grabbing an opportunity to sell even more energy at the highest prices into the national grid.
I’m not the decision maker in this battle and I’m looking forward to meetings with my TCCI Board members who will inject a creative and innovative approach to what could be a game changer for Tasmania’s future.
By ensuring we have the cheapest and cleanest energy in the nation, it will attract and encourage businesses from other parts of Australia and overseas to relocate to Tasmania.
Similarly this will also appeal to interstate families now struggling to stump up a deposit to buy a home, or to pay soaring power bills.
What an opportunity to relocate to a job creating state with modest house prices and the lowest energy prices in the country.