Guest essay by Phil Hutchings
Two days ago, charles the moderator showed us some dumb thinking from the UK‘s efforts to pursue clean power.
Down here in Australia, we’re pretty good at it too…..
Hydro Tasmania has just collected a windfall profit of $48 million from Australia’s soon-to-be-short-lived foray with a $23/t Carbon tax.
You see, Hydro Tasmania is Australia’s largest renewable energy generator. Three years ago, Hydro Tas saw the Carbon Tax coming. So it started a policy of holding back water in its dams to increase its future electricity production. It wasn’t hard to figure out that stored water would be worth a lot more with a tax than without.
But with Australia’s political opposition pledging to scrap the tax if elected, Hydro Tas knew it had a narrow window of opportunity to game the system. So it saved up enough water for almost five months of full production before the tax started on 1 July 20012. That’s 3000 GWh worth of electricity.
Figure – Hydro Tasmania Source saved up water for three years before the Carbon Tax
Source – Frontier Economics (reference below)
Come July last year, Hydro Tas let that stored water flow, maximising its power output in the new world.
Once the Carbon Tax hit Australia’s coal fired generators, wholesale electricity prices jumped immediately. In Tasmania, they averaged $16/MWh higher in 2012-13 than in the prior year.
· A cool $48 million of extra profit for Hydro Tas, thank you very much
· More coal burnt before the tax, and less afterwards – so at least it looks like the Carbon Tax is working …. and
· No additional long term renewable generation from Hydro Tas to show for it.
Frontier Economics has put this together, questioning whether the Carbon Tax has played any role at all in reducing greenhouse emissions in our electricity sector. Read on….
Photo Credit – Australian Government (see below if needed)