Hydro Tasmania is well positioned to meet the challenges of the next 12 months which will see the business begin full trading in the National Electricity Market (NEM) via the Basslink connector.
Chair Dr David Crean said Hydro Tasmania was progressing on a broad front to be a profitable competitor in the NEM while continuing to develop renewable energy opportunities and exporting its expertise to the rest of the world.
And Roaring 40s – the joint venture between Hydro Tasmania and CLP Power Asia – is expected to significantly grow its investment in the Asia-Pacific renewable energy market with potential wind farm developments in countries such as China and New Zealand. Roaring 40s was set up from scratch in 2001 and is now worth $220 million with a projected value of $1 billion by 2010.
Dr Crean said Hydro Tasmania’s record after tax result for 2004/05 was an indication of its strength despite a challenging year that saw increased costs as a result of low water storages.
“The result of $44.4 million was up almost $9 million on 2003/04,” Dr Crean said. “At the same time, we returned $74 million to the Tasmanian Government, including a $40 million dividend.
“This is an excellent result achieved in extremely difficult circumstances. It was a challenging year but Hydro Tasmania is used to meeting such challenges and will continue to do so through strict governance, careful planning, and strong financial management.”
Dr Crean said very low water storages had put significant pressure on the business with costs rising by seven per cent as a result, including the cost of increased use of the gas-fired Bell Bay Power Station to help it meet demand.
“The low storages issue remains a significant challenge for the business and will continue into 2006 as we await the commissioning of Basslink at the end of April.
“This is why we have purchased three gas turbines to install at Bell Bay to provide 105 megawatts of extra capacity to protect the overall system. The turbines are on their way to Tasmania and are expected to be installed early in the new year.
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“We are well positioned to meet the many challenges of the next 12 months, including consolidating entry into the NEM, but without increased rainfall, Hydro Tasmania may face new challenges in managing production of electricity and protection of lake storages.”
CEO Geoff Willis said the business outlook for Hydro Tasmania was strong but the organisation would be taking a conservative approach to its first couple of years in the National Electricity Market.
Mr Willis said it was expected that with Basslink operating, Tasmania could be importing more power than it exported in order to replenish its water storages but that this should not be taken as the operating pattern over the next 25 years.
He said commissioning of the connection was under way and Hydro Tasmania had been assured as recently as last week by National Grid that the April operational deadline would be met.
Mr Willis said the Consulting business was moving ahead strongly through the development of new opportunities in Asia
“But while there is a significant focus on developing new markets outside Australia, the Consulting business will continue to be a strong player in the Tasmanian market. This is why the business will shortly open a new office in Launceston to look after significant projects such as the Musselroe wind farm which will begin construction in the middle of next year.”
Mr Willis said a highlight of this year’s report was the incorporation of the first Sustainability Report which involved Hydro Tasmania’s performance and activities being assessed and benchmarked and its successes and shortcomings reported.
“For the first time, our performance and activities have been assessed against the principles of sustainability and measured and evaluated to enable us to benchmark our performance against industry best practice,” he said.
“Our successes and shortcomings are reported in the Sustainability Report.
“I am pleased to announce that we have made considerable progress though we still have room to improve and we aspire to do that.”
Mr Willis said sustainability reporting would help the business achieve long-term commercial success while meeting community and stakeholder expectations.
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