Mr BAYLEY – To continue the theme on the offtake agreement with the Northern Midlands Solar Farm, certainly a very welcome development that we support on cleared agricultural land, there’s a question about whether it’s Hydro’s role to enter into this kind of commercial arrangement. Are you prepared to table the offtake agreement for full transparency so that Tasmanians can see exactly what their company is signing up to?
Mr BOLT – No. The short answer is it is commercial-in-confidence, so we won’t be making it public. We can simply give a broad outline of what it contains. Perhaps that’s something that Erin wishes to do but I don’t know what she can add to what I’ve just said.
Ms van MAANEN – As the chair indicated, an agreement of this nature is commercial-in-confidence. The electricity market is competitive and it’s important that with these kinds of agreements the details remain confidential.
I think what we can share is that it’s a long‑term agreement for the full output from the projects, for both the electricity and the green attributes, at the moment represented by large‑scale generation certificates under the RET, but over time that may change. During that time we purchased both the electricity and any green rights associated with that. As I said, it’s a long‑term agreement. From our perspective, we’ve been able to reach a commercial outcome that gives the project confidence to proceed and is value-accretive to Hydro Tasmania from the perspective of operating our portfolio in the state.
Mr BAYLEY – Is it an onerous contract? Will you be reporting on it in the next annual reports on this onerous contract that, for the purposes of those listening, effectively comes at a cost to Hydro?
Ms van MAANEN – We have struck it at a price that’s commercially positive to Hydro Tasmania. That takes into account the value it has within our portfolio in terms of more efficient running of our hydro generation because of the diversity that it buys, so it is positive from a commercial perspective.
In terms of the particular accounting rules around onerous contracts, as we’ve discussed in recent forums, they move over time depending on market movements, so we can never categorically say that a contract wouldn’t become onerous in the future, but we have reached an agreement that is valuable and positive commercially at this point in time.
Mr BAYLEY – Such as the green elements of this contract, for example, may change into the future, and also the price elements?
Ms van MAANEN – Yes, that’s correct. For example, there is a market for LGCs, the green certificate today that ends in 2030. That’s to be replaced by Renewable Electricity Guarantee of Origin, or REGO, which passed in the Commonwealth parliament last week, but we don’t yet have a clear view. We have a forecast for what that might be worth, but obviously over time, we’ll get more understanding of what the market will ultimately pay for those.
Mr BOLT – It could be that at certain times the market will move and the contract will be onerous, but it also then may swing the other way. The whole idea of these sorts of contracts is to hedge against volatility of that kind, which means that sometimes it’ll be positive, sometimes negative. We take the best view at the outset, but it’s valuable at that time with the best information available to us. It obviously also has to work for the proponents so that they can get sufficient funds through that efficient certainty of funds that they can raise the required capital.
Mr BAYLEY – Is that an agreement that Hydro’s voluntarily gone into on your own initiative, or has the minister instructed you to do so?
Ms van MAANEN – Absolutely of our own initiative, and even prior to the changes in the ministerial charter we were already canvassing the market to understand what projects were available that would have portfolio value. Obviously expectations from the shareholder and the public have certainly reinforced the view that there isn’t a level of a role to play for Hydro in supporting new generation for future demand.
Mr BAYLEY – And 288 megawatts is a big project, I think the fourth biggest in the state behind some of your Hydro assets. As a generator, it is effectively a competitor to Hydro. My question is in terms of the modelling and analysis you’ve done that it’s economically positive for Hydro and it’s long-term, for the life of the project I think I heard you just say. Is that correct?
Ms van MAANEN – It’s long-term.
Mr BAYLEY – Not for the life of the project, but long-term. What’s long-term in Hydro’s mind?
Ms van MAANEN – I can’t give the details of that.
Mr BAYLEY – In which case, I assume it’s been modelled and priced and purchased in the context of which Marinus scenario? One cable or two cables or no cables?
Ms van MAANEN – We look at a range of scenarios when we assess the value of any investment or contracting decision. That would include scenarios with different futures for both the level of interconnection as well as the amount of load new demand that progresses in Tasmania and other projects. We look at a number of scenarios.
Mr BAYLEY – Is it positive economically for Hydro across all those scenarios?
Ms van MAANEN – Without going into too much detail, when we look at a range of scenarios we want to be confident that in the bulk of the likely scenarios we see positive value in them. When we talk about the portfolio value of something like solar, there’s an element of that being about diversity, but it’s also about how different futures arise. For example, in a scenario where we had low rainfall, that would be a scenario where the solar would be more valuable as well. There’s different permutations of that future, but we’re confident with the scenarios we’ve looked at that this is a commercially positive transaction for Hydro.
Mr BOLT – You could never say that there’s no scenario under which it will be negative. It’s more a case of if it’s robust across scenarios that are likely, that is a good enough reason to say this is valuable enough to go into.
Mr BAYLEY – One last question on this, if I may, Chair. If governments, if shareholders come to a decision on Marinus that they won’t invest and it’s not a goer, what does that mean for this contract and this project? You’ll find buyers for the power within the state?
Ms van MAANEN – In a scenario where there’s less interconnection, having more megawatt hours and more megawatts in the state to manage the growth in load and to manage risks like low inflows will be more important.
Mr BAYLEY – Coming back to the power‑purchase agreement, I’m interested in the decision-making matrices that you work through in different scenarios. How do you model batteries on the mainland? Obviously, batteries are becoming increasingly inexpensive and bigger and are, arguably, able to provide some significant service to the grid. In making your decisions about offtake agreements and their commerciality, how do you model batteries on the mainland in relation to the changes there, in the context of Marinus and an offtake agreement?
Ms Van MAANEN – In terms of modelling future scenarios, we have sophisticated in‑house models that we look at that look at, essentially, what is the supply and demand forecast in the energy system over the coming years and then what that is expected to result in, in terms of price outcomes. That model will look at future demand and look at projects that can be developed, the cost they can be developed at, and it optimises to that demand by building the least cost combination of energy supply to meet that demand. That is, on a basic level, how it leads to forecasts of power prices.
When we talk about looking at scenarios, we have a model that is solving for that, but we can look at different assumptions about what are the cost of batteries into the future, for example, or what is the availability of projects that the model can have ready to be built, in a theoretical sense. That is kind of in the detail of it. Usually, we start with the base of a well‑established market model scenario, which the Australian energy market operator, AEMO, puts forward in its integrated system plan, and then look at scenarios around that.
What that will see is, based on the demand and the shape of that demand, a combination of batteries and longer duration storage or gas being built, as well as our new wind and solar. If you look at different scenarios for the cost of batteries, for example, that will lead to different outcomes, but when we look at batteries and whether batteries can replace the need for longer duration storage, that is not something we consider in that way. It’s more what combination of the two will be required.
Certainly, batteries may come down in costs, but they’re for much shorter duration of storage, currently two to four hours – that may extend. They are useful at moving solar energy from the middle of the day into the evening peak, but when we look at the role for long‑duration storage and, particularly, the value we can get from the hydro portfolio, it’s about being able to sustain generation through longer periods of low wind and low solar, so that is certainly something that –
Mr BAYLEY – What about the scale of that battery rollout though? I understand in terms of the several‑hour storage, but obviously that depends on the scale and the extent of the battery rollout – how big, how many, how much storage is ultimately rolled out across the landscape attached to different projects.
Ms van MAANEN – Absolutely, and I guess one of the things to recognise is that the scale of new built and new storage required to move from a system that has had a high level of base load from coal, for example, to high levels of wind and solar, the storage task is actually quite vast. Even in scenarios where we look at a high buildout of batteries at lower cost and longer duration, there is still a significant requirement from that long‑duration storage.
Mr BAYLEY – Can we talk about the intersection between an offtake agreement and the hydro regulations, which are being lifted from 30 megawatts up to 300 megawatts – a 750 per cent increase in the level of hydro before it has to come through parliament to get approval. Ms Finlay just alluded to it, but do you have advice that a power purchase agreement – an offtake agreement – is an action that triggers that parliamentary scrutiny?
You are not constructing; you are not participating in constructing. Is there advice to that extent?
Mr BOLT – Yes; it’s not caught by that requirement.
Mr BAYLEY – It’s not?
Mr BOLT – It’s a power purchase agreement; it is not an equity position that we are taking. We’re not –
Mr BAYLEY – Coming to those regulations, we had this conversation at this table a few weeks ago, including with the minister, but is there anything on the cards that Hydro is looking at that requires a 750 per cent increase in the regulations?
Ms van MAANEN – Not in terms of a project that we have today that we would be looking to seek approval for immediately. We are looking at a range of actions we can take to support that future energy supply. Power purchase agreements are our current focus because there are a number of projects in the state that are already developed to a point and so, entering into an agreement is a faster pathway to see a project realised than us starting to develop one today. Projects that we are particularly looking at, such as Tarraleah and Cethana, will require parliamentary approval in any case.
We are not progressing advanced development of any projects that would seek approval, but we are looking at a range of options that would, in a scenario where there is still more progress required than what we can achieve through agreements and we decide that that’s a commercially valid decision for us – we do explore options in terms of what projects we might be able to develop in the future. That could be prospective in nature from that perspective.
The other thing I would say about the quantum of the increase in the limit, I think at the time the limit was set, probably the threshold in terms of the 40 megawatts may have been representative of the size of a project that you would develop.
The reality is today, anyone building a new project, it will be in the order of 200‑300 megawatts to be of commercial scale. I can’t talk for the government in terms of the exact logic, but I would say that that is a reasonable size for a new project being developed today.
Mr BAYLEY – On the power purchase agreement, you mentioned there were three that went through to a final decision and you chose Northern Midlands. Is that because of the economics of that project or is that because you sort of capped out at how much power you wanted to actually purchase and commit to into the system? What is it that helps you whittle that down to just one and are those other two still on the table?
Ms van MAANEN – It was less about – do you want to?
Mr BOLT – You answer the specifics, I’ll come back to the general point about whether the others are still on the table.
Ms van MAANEN – Each of the projects was of a significant size, so that was less of a consideration in terms of differentiation. Probably the three primary aspects we looked at was absolutely the commerciality, so it needed to be value-accretive to us from a portfolio perspective. The two other factors we looked at, which kind of go hand in hand and which I mentioned earlier, was how soon the project could be up and generating. That does feed back to the commerciality as well because the sooner it can be generating, the sooner there is that benefit from the project, but it was also about wanting to see more supply in the system to meet growing demand and also to continue to ensure reliability in the state.
The key metrics were around the timing as well as the commerciality, but one of the things that really ties into the timing aspect is our confidence that the project will be delivered. We look at deliverability risks for the project, so how progressed are they with their planning approvals, what’s their pathway to a connection agreement? Those are some of the important factors, as well as stakeholder and social perceptions around the projects as well.
In a broader sense, it’s probably less about differentiating between the three, but certainly things we looked at throughout the process were in terms of the relativities between the projects and what that looked like in terms of benefits to the state, in terms of things like local spend, returns flowing back into the state, those sorts of things, as well as obviously environmental and social aspects in relation to the projects.
Mr BAYLEY – Did the chair have something he wanted to add?
Mr BOLT – I just wanted to say on your question about where to for projects that didn’t make the cut, we are developing a framework for considering further agreements or other forms of partnership that would expand the renewable base of the state. There are a number of considerations on our part that are relevant to that and fit with our portfolio, some of the other criteria there, and she’s gone through them for the TasRex agreement, but the fundamental point is that we’re not stopping consideration with one project.
Mr BAYLEY – Are you looking at things other than power purchase agreements?
Mr BOLT – To the point made earlier, when you’ve got a number of projects that are relatively advanced, a power purchase agreement is the quickest way to in a sense underwrite them to be able to raise the capital and proceed to deployment. When speed and volume is of the essence and good projects are on offer, that is the most prospective option, but we’re not ruling anything out. The charter changes also envisage the potential for other forms of partnership and that could obviously involve some level of equity. We already have potentially major commitments of equity to make in the big projects we have just been discussing, Tarraleah and Cethana. They are really our major focus at the moment when the markets are already throwing up other forms of project, but all of those options are on the table and will be considered as circumstances unfold.
Mr BAYLEY – How much does the Commonwealth’s Capacity Investment Scheme factor into your considerations and calculations, and to what extent?
Mr BOLT – The CIS, Capacity Investment Scheme, in terms of our projects or in terms of –
Mr BAYLEY – In terms of power purchase agreements and offtake agreements.
Mr BOLT – I was about to answer a question you hadn’t asked. Erin would be best to answer this.
Ms van MAANEN – Under the capacity investment scheme there’s already been a tender round involved looking for 300 megawatts for Tasmania, but since then the state has signed its transformation agreement with the Commonwealth, which sees a quota of 1.2 gigawatts for the state, so there’s the potential that up to that volume of projects is supported through revenue underwriting through that scheme.
From our perspective, what we’re looking to do is play a role in supporting new supply, certainly to the extent that projects can proceed absent of our involvement. That’s obviously also beneficial to the state, so there could be a scenario where a project proceeds with underwriting through the Capacity Investment Scheme and there’s not an involvement from Hydro, or they may have other commercial models for their projects as well.
Mr BAYLEY – Or they could have both?
Ms van MAANEN – They could have both. The Capacity Investment Scheme is meant to underwrite or give projects more certainty in terms of a floor price so that they can proceed, but it’s not meant to take away from the role of projects looking to commercial arrangements for their projects. You could have a scenario where a project had that downside underwriting but still looked for a level of contracting to get to the revenue outcomes they were looking for to make a final investment decision, so they could be separate or they could be utilised by the same project.
Mr BAYLEY – In that context it doesn’t necessarily factor into your considerations as to whether the contract is onerous or commercial from Hydro’s perspective, or worth signing up to or not? It’s more a consideration for the proponent?
Ms van MAANEN – Yes, it may mean that their threshold of contracting required to proceed is less, for example.
Mr BAYLEY – Does it factor into your kind of risk analysis as to the viability of the project going forward?
Ms van MAANEN – Yes. When I spoke about deliverability before, being confident that they’ll not only sign up to an offtake but they’ll ultimately proceed to build the project, it would add to confidence around that, yes.
Mr BAYLEY – Minister, I want to come back to the hydro regulations. The debate in the upper House in terms of disallowance of those is currently suspended. I think you have pointed to wanting to pull levers along the way, but we have heard very clearly from Hydro that they have no projects on the table; they have nothing on the horizon that doesn’t relate to power purchase agreements or to wind. On whose advice are you proposing to expand those regulations by 750 per cent, and why?
Mr DUIGAN – As part of the election campaign and the rethink of the Hydro Tasmania Charter, which had front and centre as part of it this expectation for Hydro to play a more active role in bringing on new generation than it had done under the auspices of its previous charter. We then wanted to look at what other barriers exist to potentially Hydro Tasmania participating in that. Whether Hydro was going to go out and build something, which is still potentially on the cards, and if that was something likely to happen, what was the most prospective thing that Hydro might do. I think, that was probably go out and build a solar farm, as we have seen in recent days as the most prospective way to bring energy to market quickly.
In the context of that, removing that barrier, or – Hydro needing to bring a project like that through the parliament, we saw as a potential barrier that was relatively simple, in the realms of government, by way of regulation, to remove that. I think that is the central tenet of what we are seeking to achieve with that regulation.
Mr BAYLEY – Given that the market’s complicated and there are plenty of private players with projects up in this space, why do you see it as a positive thing to lift the level of parliamentary scrutiny over the actions and investments of a government business? We’ve seen your government completely bungle the Spirits and the port facilities. In the context of that, in the context of a GBE review that’s underway, that’s completely not resolved, why is it a positive thing to lift the level of parliamentary scrutiny and leave it entirely up to you or whichever minister is in charge and Hydro Tasmania?
That’s not saying the decisions are necessarily going to be bad ones, but why is it a bad idea to have parliament scrutinise those decisions? I think by anyone’s expectation, a 750 per cent increase in the threshold by which parliament gets to have a look at the details of a major power facility is a massive increase. Nothing goes up by 750 per cent these days. How did you come to that figure and why is it a good thing to remove parliamentary scrutiny at the moment?
Mr DUIGAN – I think, essentially, we wanted to be unambiguous in our support for enabling Hydro Tasmania to play whatever role it felt that it could play in terms of bringing new generation to market and that’s a position that I would fully stand behind today. In terms of the number, I think we took advice from the department and it settled on that number as being representative of typical large‑scale solar developments, so that 288-megawatt development would fit into the scheme and the scope of that.
In terms of parliamentary scrutiny, look, we have seen people and the parliament take varying views on renewable energy projects here and elsewhere and my position is that this is a way for the government of Tasmania to signal to the market and to Hydro Tasmania that we see these kind of projects as critically important for our state and we would seek to remove the barriers where we’re able to do and the change in that regulation would make that signal loud and clear.
Mr BAYLEY – It’s optics? Basically, it’s optics only?
Mr DUIGAN – No.
Mr BAYLEY – To the chair, did you see the 40 megawatt threshold for which parliament gets to scrutinise investments as a significant barrier? You have no solar projects on the table at the moment. It doesn’t seem like there’s any in the very near horizon, other than partnering with power‑purchase agreements. Is it such a massive threshold and problem and barrier that warrants lifting it by 750 per cent?
Mr BOLT – I think that we saw the change as having – a very long‑term change. I can’t predict exactly what kind of partnerships and scale of projects might come up in future. The fewer barriers to that – and we could certainly get ourselves into a position where relaxing that constraint would be beneficial to getting projects moving. That is certainly quite contemplatable. Right here and now, there is no such project, but in the future there may well be, and I think the change was made with the future in mind.
Mr BAYLEY – But relaxing that constraint to the tune of 750 per cent. Do you agree that, by any stretch of the imagination, that’s a huge increase in capacity and-
Mr BOLT – That’s a policy matter, that’s a judgement, and a debate between the minister and his cabinet colleagues in the parliament. It is not really for Hydro to comment on.
Mr BAYLEY – Optics.
Mr BAYLEY – We talked a bit about the $1.6 billion capital investment program that you’re running through. I want to talk about some of the Pedder dams, Scotts Peak and Edgar in particular. Obviously, there’s a building momentum around draining Lake Pedder in the United Nations Decade of Ecosystem Restoration. There’s a huge opportunity and given it’s effectively a top-up for the Gordon Scheme – it can be done.
The Edgar Dam works were supposed to begin in October 2024. You spoke in relation to Cethana about cost estimates being a point in time and needing to add inflation, et cetera. A couple of questions there – why the delay? Why hasn’t any work on the ground started? Is there a new start date and what’s the new cost estimate?
Ms van MAANEN – With all projects, there are certain steps that we need to go through to be in a position to start. With Edgar, we’ve been working through the planning but we’re also needing to work through approval steps to be able to progress with the works, particularly around it being assessed with respect to the Commonwealth Environment Protection and Biodiversity Conservation Act (EPBC), given the location of the project and potential aspects around the environment and the Tasmanian Wilderness World Heritage Area.
One of the things we’ve spent more time on is working out how we are approaching the project, how we are managing that within respect to the location it’s in and any potential environmental impact. That took some time in terms of working through. To be in a position to start we needed a dam works permit, which was granted in May 2023, and also an EPBC decision. That decision was given in May of this year and determined that it was not a controlled action, particularly because of the way we were intending to approach the project to minimise social and environmental impacts.
Parallel to that, we’ve been running a tender process for the delivery of the works in terms of contractors. That has been run in parallel this year. The preliminary works were anticipated to commence in October 2024. However, now the timing has been a little delayed and is expected to start in January after the Australia Day long weekend, so quite close to the start time in terms of the implementation of this project with respect to Edgar Dam.
In terms of the cost, the budget has been updated taking into account the outcome we’ve reached with contractors in terms of ability to deliver the project and the price at which we can contract the works for. The approved project budget, taking that into account and including contingency, is now $35 million.
Mr BAYLEY – That’s captured within that $1.6 billion, that’s part of that?
Ms van MAANEN – Yes, correct.
Mr BAYLEY – What about Scotts Peak?
Ms van MAANEN – We’re really focused on Edgar Dam in terms of the delivery of that. Scotts Peak Dam also has a level of risk and we would like to be completing further works there in the coming years, but we would look to progress that project once we’ve completed the works at Edgar.
Mr BAYLEY – Coming back to Edgar, it has gone up from $25 million I think was the last cost estimate, to now $35 million. Is that fully funded? Has Hydro had to engage additional borrowings to fund that or anything?
Ms van MAANEN – We look to prioritise investment within our Strategic Asset Management Plan. In the current inflationary environment, costs will be sometimes greater than expected and sometimes costs can be less than anticipated, but we look to continually reprioritise our investments we’re making on the assets within the budget envelope we have. We obviously need to assess that over time as well, but we’re looking to progress this work within the current boundaries of the SAMP.
Mr BAYLEY – One last one on this, if I may, Chair. It requires that the permit condition includes a biosecurity washdown station at the intersection of Scotts Peak Road. What’s the timeline and expected cost on that in terms of beginning construction and the construction cost of that washdown station?
Ms van MAANEN – As to the washdown station specifically, I don’t have that particular breakdown here so we can look at that, but it’s within that project budget of $35 million.
Mr BAYLEY – Could you take that on notice? Would you be happy to provide those figures of the specific costs for the washdown station?
Ms van MAANEN – I think we can have a look at what breakdown we can provide of the cost estimate.
Mr BAYLEY – Thank you.
Mr PETERS – For the project commencing in January, one of the first parts to get underway is the washdown station.
Mr BAYLEY – I would imagine so. Okay, minister, you’re happy for that to be taken on notice? The cost estimate of the biosecurity washdown station.
Mr DUIGAN – Okay, if that’s information you think you can provide.
Mr BOLT – We’ll do our best and provide what breakdown we can on that and we’ll look at whether or not that can be separated out.
Mr BAYLEY – If it makes it easier, the full cost breakdown on the Edgar dam project full stop would be useful. I’d imagine it would include that in it. Thank you.
Mr BAYLEY – To continue the thread on the Pedder dams upgrades, you’ve taken on notice the full cost breakdown for the two dams, the Edgar and the Scotts Peak dam, including the washdown station, but I’m interested in Scotts Peak specifically in terms of the timing. It was originally scheduled for 2025-26 and is now pushed out till 2029, although the works on that dam are acknowledged as being urgent as well. The Edgar Fault can’t be determined to be inactive, so there is a real risk there, and the flood modelling maps have been released in relation to the Huon River downstream at Huonville. Why was Scotts Peak pushed out from 2025-26 until 2029? What’s the reason, given that works are urgent and I guess it would make sense to bundle them, both from an EPBC assessment perspective and a contracting and works perspective? What’s changed?
Ms van MAANEN – There’s always considerations in terms of efficiencies of doing things at the same time, but there’s also things to be considered in terms of the staging of our capital program, availability of resources to complete works and balancing timeframes in which we’d like to address risk with what’s practical to complete the works. With respect to the different risks, Edgar Dam is seen as having more urgency to complete the works because of the evacuation warning time being less in terms of populated areas downstream, hence why Edgar is preferenced. We will be looking at completing Scotts Peak after Edgar, as I mentioned.
To come back to your question in terms of the washdown stations, two washdown stations are being put in place for the Edgar project at a total cost of around $440 000, one being placed at Scotts Peak turn-off and one at Edgar Dam. Together with the sealing of the Scotts Peak Road, these will make a difference and really substantially manage the biodiversity risks in terms of predicting the wilderness area.
Mr BAYLEY – Are you still then able to take on notice the cost breakdown of the full projects for Edgar and Scotts Peak?
Ms van MAANEN – Because Scotts Peak has not progressed to the stage where we’re not ready to deliver on that, we only have early estimates for that, whereas for Edgar, we’re at a point that we’re proceeding to delivery, so I think we’d be looking to provide a level of breakdown on Edgar, with Scotts Peak closer to the time that we were making it.
Mr BAYLEY – Scotts Peak was originally budgeted at $50 million for commencement in 2025-26 but is now pushed out to 2029. What are your working estimates now in terms of the cost of that upgrade in 2029?
Ms van MAANEN – I’d have to come back on the detail of that, but we wouldn’t be looking to provide a high confidence estimate until closer to the time that we’d implement.
Mr BAYLEY – But you must have –
Ms van MAANEN – We’ll have an allowance within the strategic asset management plan, which we’ve referenced, I just don’t have the figure to hand.
Mr BAYLEY – Thank you. Coming back to the delay, apart from the risk and the evacuation timelines around Edgar and Scotts Peak and staging, are there any other significant reasons as to why you would do that? When are you going to put in a referral for Scotts Peak to the federal EPBC if that was a barrier or a complication when it came to Edgar?
Ms van MAANEN – We would be looking to do that as we’re approaching the implementation of that.
Mr BOLT – On the total cost breakdown of the Edgar Dam project, if we release that we’re effectively signalling to all those who made a bid for the work the total cost that they can actually bid to. We don’t regard that as a prudent thing to do. It’s commercial-in-confidence, therefore, so we really can’t provide that.
Mr BAYLEY – The breakdown?
Mr BOLT – The breakdown of the entire project.
Mr BAYLEY – Just the total cost?
Mr BOLT – Giving one item is not going to give the entire game away to the market, but the whole project would.
Mr BAYLEY – Just on these, the projects are getting pushed out and the costs are going up, as they do and will. Have you done any modelling on the opportunity cost, the option of decommissioning the dams and redirecting that investment elsewhere in other generation capacities or stimulating investment elsewhere? Have you done that sort of alternative scenario?
Ms van MAANEN – The Gordon Power Station and the Gordon‑Pedder storage are really important parts of our asset portfolio. We’re talking about around 13 per cent of annual generation in megawatt hours, but more importantly than that, the deepest storage in Tasmania and in fact the deepest storage in the country in terms of the National Electricity Market. What they form in terms of part of our overall portfolio is significant.
Mr BAYLEY – Pedder’s contribution is relatively modest, though, with respect – 57 megawatts. That’s relative ‑
Mr BOLT – I think the figure is 42 per cent of the catchment of the Gordon‑Pedder combination.
Mr BAYLEY – What, physical catchment, area?
Mr BOLT – It harvests a lot of water. It then goes through the canal and into local water.
Mr BAYLEY – I guess that’s part of the problem in terms of lost values.
Mr DUIGAN – It is certainly not government policy to be looking at those options.
Mr BAYLEY – I understand that. I’m just interested in Hydro’s contingency planning and whether you’ve modelled an alternative scenario that decommissions those dams and looks at investing the $200 million it might cost perhaps by 2029 to upgrade those dams into something else.
Ms van MAANEN – As I said, they’re important assets. Our role is to operate them safely, reliably and efficiently.
Mr BAYLEY – Look, we’re obliged to ask questions about Entura every year because there have been concerns raised about some of Entura’s activities internationally, Sarawak and a dam project there being case in point and the displacement of indigenous people because of that dam that Entura was working on. Last year, we spoke of the, I think it was a framework, and you reference it in the annual work –
Ms van MAANEN – Sustainability screening.
Mr BAYLEY – the sustainability screening, and there’s also an integrity framework. I was wondering if you could talk us through that process. In particular, are you willing and able to table the integrity framework and the sort of sustainability screening process for the committee, so that we can see exactly what concerns you take into account there?
Mr BOLT – I think they’re in a – we won’t go into the detail, but just to reinforce something that I think we made clear last year, we take very seriously that Entura’s operations overseas are done with a very strong focus on it being beneficial to communities and meeting ethical and sustainability considerations. I’m pretty confident that they are going about that task with great application, but you asked some detailed questions and I won’t continue to –
Mr BAYLEY – Just on that, maybe I’ll come back to that, if I may, but just on that, and I hear that and that’s really welcome to hear. But, of course, the Sarawak project was condemned by a lot of people in terms of its impact on Indigenous people and their rights and displacement. I note the annual report now says that the only project Entura’s internationally involved with in Indonesia is closed. Can you tell us about that? Has the project just finished or your involvement has finished or?
Mr BOLT – I’ll ask Erin to deal with that.
Ms van MAANEN – In terms of the status of the projects on the table, where they’re closed, it’s simply that that package of work that is indicated in there has been completed as at the end of the financial year, so it’s not an ongoing piece of work, and the others are flagged as such. With respect to the screening process itself, so the framework is informed by the UN’s guiding principles on business and human rights. The integrity management system also forms part of our quality system, which is independently certified to ISO 9001. The documents or the process itself includes kind of flow charts, decision matrices, and reporting forms that allow us to assess the client and the work, with respect, against key criteria to ensure that we’re comfortable with that, from the perspective of sustainability, safety and governance.
From our perspective, it’s a very robust process that we’re putting projects and clients through. There are always, in any business, learnings to take away from previous engagements and that’s something that we are, I guess, live to as a business and would continue to do so, but that is methodically applied to Entura’s work. With respect to the 2023‑24 year, all new companies and projects were subject to this screening, of 124 screens conducted, 115 of those projects were found to be low risk.
Mr BAYLEY – That’s different to the integrity framework, though?
Ms van MAANEN – The screening forms part of that framework.
Mr PETERS – In regard to the integrity framework, there is an Entura web link that we can provide you that provides that information.
Mr BAYLEY – Does it actually provide the framework in its entirety or just some pointers as to what’s considered?
Mr PETERS – It’s got reference to the relative code of conduct sustainability principles, modern slavery considerations, competition law protocol and environmental policies.
Ms van MAANEN – I think what’s important is it outlines the key aspects that we’re assessing through that process as opposed to – I don’t think a process document necessarily adds to that. It really provides that information on what we’re looking at when we’re screening.
Mr BAYLEY – The Sarawak project is in Malaysia and it’s actually still current. Have you run that through the integrity framework again since it’s been developed, or has the integrity framework been changed since Entura made a decision to engage on that project?
Ms van MAANEN – We’d have to check the specific detail. We continue with all of our kind of policies, guidelines and processes internally. They have regular review cycles that they go through, so we don’t set and forget these policies. They continue to be updated when needed.
Mr BAYLEY – A quick one to finish up on the Paradise Dam in Queensland, described as a spectacular infrastructure fail – maybe outdone by the Spirits, I’m not sure – but it was announced by the Queensland government earlier this year that it would need to do significant work to effectively rebuild a whole new wall. Hydro had an involvement in that dam in design and other elements. Do you have or anticipate any liability in relation to the work that needs to be done in regard to the dam?
Ms van MAANEN – With respect to our role in Paradise Dam, Hydro Tasmania consulting, or Entura, was part of a four-member alliance of firms that designed and built the dam. Our specific role within that group was to assist with the initial site investigations and provide design work. Our design involvement was from October 2003 to December 2005. With respect to the design work that we completed, our work complied with then accepted industry standards and practice, we had a world-leading expert involved engaged to support the work and the design was also peer reviewed.
We note that there have been a number of findings regarding the construction of the dam and corrective work which have been accepted by the Queensland government and are to be applied to future dam projects. We have no involvement in the current activity on or off site.
Mr BAYLEY – And you don’t anticipate any liability issues or any indications from the Queensland government about them wanting to pursue parties involved in it?
Mr BOLT – The government has given no indication of that. We’re keeping our eye on developments. That is all we can do in that situation, but there’s no public indication or any kind of indication from the new government that they wish to pursue us over this issue.
Mr BAYLEY – Have you internally discussed contingencies and how to deal with it, should they wish to do so?
Mr BOLT – We’ve had a good look at the risks arising from the Paradise Dam situation. As Erin’s indicated, there’s quite a lot of factors involved in that and we’re only one player of many, but yes, we’ve discussed it and we will now simply have to keep our eye on developments but at this stage the risk radar is not hotting up, so to speak.
