The Future of Energy in Tasmania summary report

The Future of Energy in Tasmania The Pathway to a Carbon Zero Economy 2024 Carbon Zero Initiative acknowledges the traditional owners of the country on which we live, the Palawa, and recognises Aboriginal people’s continuing connection to land, sea, waterways, sky and culture.

Acknowledgements Authors Jack Redpath

Principal, Carbon Zero Initiative

Philip Harrington

Principal, Strategy Policy Research

Lachlan Rule

Senior Consultant, Strategy Policy Research

Reviewers Sheree Vertigan

Cradle Coast Authority

Michael Pullinger

Energy Revolution

Todd Houstein

Sustainable Living Tasmania

For more detail view the full technical report at www.cradlecoast.com/energy-hub/

Carbon Zero Initiative Ltd Level 5 24 Davey Street HOBART TAS 7000 Please acknowledge Carbon Zero Initiative when referencing this report.

For commercial re-use, and licensing please contact Carbon Zero Initiative.

The Future of Energy in Tasmania The Pathway to a Carbon Zero Economy This document is a summary of the key findings of The Future of Energy in Tasmania report.

The Future of Energy in Tasmania The Future of Energy in Tasmania report charts the pathway to a Tasmanian economy running entirely without fossil fuels - a carbon zero economy, the first of its kind in the world. The report sets out the opportunities this will unlock from investment in new energy infrastructure, reduction in carbon emissions, and the amount of new renewable energy required.

In order to model these opportunities, the authors used the Australian Energy Market Operator’s (AEMO) forecasts for Tasmania, and added significant fuel switching away from industrial coal and gas to renewable energy. 1 Tasmania has an existing claim to be a centre of low carbon innovation. Despite being far away from economic hubs, the state leads in low carbon innovation because of the strong work ethic and determination of Tasmanian businesses and workers, supportive policy and affordable clean energy.

Through hard work Tasmanian businesses are at the leading edge of innovation in an increasingly post carbon world. To name a few prominent examples, Incat is building a world-first 130m fully battery electric catamaran at its Derwent Park plant. In Burnie, Elphinstone, a leading manufacturer of construction and mining equipment, is

developing fully battery electric vehicles for underground hard rock mining.

In agriculture, Sea Forest based in Triabunna grows red Asparagopsis algae before manufacturing it into a feed additive for livestock. The additive is being used at a commercial scale to reduce methane emissions and has a huge potential global market. Tasmania’s emerging tech sector is producing companies that are taking on peers in Sydney and Silicon Valley.

Examples include Orkestra, a software company for solar installers, Sumday a carbon accounting firm based in the north west; and graphic design software company Procreate based in Hobart.

In heavy industry, Grange Resources, Rio Tinto, GFG Alliance and Norske Skog all have public carbon reduction commitments achieving net zero emissions between 2030 and 2040. Quantifying the amount of new renewable energy to meet these commitments is another key output of The Future of Energy in Tasmania report.

In our modern world energy is the building block on which everything else is created. In order to work and grow, all businesses across industries in Tasmania will need more clean affordable energy.

Tasmania leads in low carbon:

Manufacturing 1

Agriculture

AEMO, Integrated System Plan, 2024

Tech

Industry

Services 1

The Pathway to a Carbon Zero Economy As the world continues to phase out fossil fuels and build out clean energy supply chains it will create huge economic opportunities to sell Tasmanian low carbon innovation, products and services to the world.

A key output of this report is quantifying the scale of this opportunity for a changing energy system on the island.

Carbon Zero Initiative estimates that infrastructure investment will total $17.1 billion over 25 years, creating just under 10,000 jobs, with most of this investment concentrated in the next decade. 66 percent of the $17.1 billion is expected to come from private sources, offering a significant boost to regional Tasmania, especially in the north, northwest and west coast, where much of the new infrastructure is planned.

For many years Tasmania was the sole renewable energy power house in Australia.

Today Tasmania is one among many rising stars and risks being left behind unless it continues to innovate. Whilst Tasmania’s electricity supply is largely from hydropower, wind and solar; electricity is only about 40 percent of the total energy used on the island.

The remaining 60 percent is used in cars and trucks as gasoline and diesel, and coal and gas in heavy industry and commercial businesses. When forest carbon is excluded from Tasmania’s carbon inventory, emissions are about 15 tonnes per person per year.1 This is the same as the rest of Australia.2 In November 2020 the Tasmania government committed to a 200% renewable energy target of 21,000 MWh by 2040, with an interim target of 15,750 MWh by 2030.3 This research found the 200% target should be taken as the status quo, or a baseline requirement to meet the needs of existing commitments from heavy industry to phase out fossil fuels by 2040, and no later than 2050.

The report finds the primary source of new electricity use - and difference from the plans published in 2024 by AEMO - is from fuel switching from coal and gas at Tasmania’s heavy industry and commercial facilities.

The technical report models six very large facilities, and 20 large facilities changing to electric boilers, industrial scale heat pumps and green hydrogen. Green hydrogen use is modelled where appropriate to provide heat and as a reducing agent in refining metals in the case of Tasmanian heavy industry.

The report uses publicly available company commitments to model the timing of facilities’ switching to green hydrogen and other technologies such as industrial boilers or electric heat pumps.

2 3 4

2 University of Tasmania, Tasmanian Greenhouse Gas Emissions University of Tasmania, Tasmanian Greenhouse Gas Emissions Update, Update, 2022 2022 3 Department of Climategreenhouse Change, Energy, Department of Climate Change, Energy, the Environment and Water, Australia’s gas the Environment and Water, Australia’s greenhouse gas emissions, 2022 2 emissions, 20222020 Department of State Growth, Tasmanian Renewable Energy Action Plan, 4 Department of State Growth, Tasmanian Renewable Energy Action Plan, 2020

The model suggests that the government’s 200% target does not account for the addition of large new industrial facilities opening, large datacentres, or the ability for Tasmania to become a significant net exporter of electricity via new undersea cables.

two new interconnectors, assuming the cables export electricity three quarters of the time on average.

In the main report, the new interconnectors have their own graphs and electricity projections which can be read separately or combined with other totals.

This is demonstrated by separately modeling the amount of electricity needed to service

Tasmania Needs more Renewable Energy A key output of the report is to determine if Tasmania needs more renewable energy in order to phase out fossil fuels, and if so how much for each new source of electricity use.

The answer to this question is an emphatic

yes. The trend towards phasing out fossil fuels is set. It is a matter of when, and on what terms Tasmania tackles the challenges and seizes the opportunities that will come.

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Charting the Path The Future of Energy in Tasmania report models an energy system in Tasmania that is using no fossil energy by 2050.

The report uses the Australian Energy Market Operator’s Integrated System Plan (AEMO ISP) 2024 Step Change scenario as a baseline. The Step Change model is the consensus scenario among Australia’s expert energy planners and engineers.

The ISP has over 2,100 expert contributors and is updated every two years which makes it an ideal foundation for this research.

Carbon Zero Initiative has published a separate report which describes the AEMO ISP Step Change 2024 scenario for Tasmania in depth.

However, The Future of Energy in Tasmania report departs from AEMO assumptions and conclusions where they did not capture changes underway in Tasmania.

In preparing the report, Carbon Zero Initiative conducted an in-depth analysis of Tasmania’s projected energy demand, including announced changes in fuel use and electrification across: • Tasmania’s six largest industrial energy using facilities - coal, liquid fuels, fossil gas and electricity • Other commercial energy users - fossil gas in low and high temperature heat applications 1 • The transport sector - liquid fuels; and • Electrification of households - gas and biomass.

The report uses this analysis to model demand for fuel and electricity use out to 2030, 2040 and 2050. Finally, using development costs published by Aurecon for AEMO, Carbon Zero Initiative estimates the private and public investment and subsequent number of employees required to build generation and infrastructure to meet the modeled demand.

Figure 1 (Figure 14): Findings - Electricity Consumption Forecast (Sent to to the grid) by Sector, Carbon Zero Tasmania scenario

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4 5 rangeLow temperature range is 800°C2024. up to 250°C, high Low temperature range is up to 250°C, high temperature is between 250°C up to temperature range is between 250°C up to 800°C

Key Findings The report finds that in a scenario where Tasmania decarbonises in line with our 2050 carbon zero target, the on-island

consumption of electricity increases significantly from AEMO’s Step Change.

Table One: Findings - Electricity Production Forecast

Step Change predicts on-island electricity consumption to increase from 10,710 GWh in 2023 to 16,200 GWh in 2050. This report finds a greater increase to 21,200 GWh in order to meet the 2050 target.

The increased demand for electricity is met with a modeled generation of 3,226 MW of onshore wind, 420 MW of offshore wind, 2,435 MW of utility scale solar, 1,323 MW of rooftop solar (residential and commercial premises) and a combined 890 MW of batteries; in addition to existing hydropower of 2,180 MW. The total Tasmanian generation capacity in this scenario would be 10,475 MW, up from 3,509 MW in 2023.1 The primary source of increased consumption for electricity compared to Step Change is increased production of green hydrogen to replace high temperature coal and fossil gas.

The report projects that hydrogen production uses 7,733 GWh of electricity, compared with 3,700 GWh in Step Change.

Other increases on Step Change include residential and commercial premises which increase by a combined 821 GWh and line losses which increase by 166 GWh. 6 Modeled generation derived from the least cost energy mix, per Aurecon for AEMO 2024.

with

electric

vehicle

use

unchanged.

The total predicted consumption figures for the Carbon Zero Tasmania scenario are industrial and commercial 8,100 GWh, hydrogen 7,733 GWh, all electrification 1,818 GWh, Electric Vehicles 1,560 GWh, residential 1,193 GWh and losses 804 GWh. In addition, given the Tasmanian government and its business enterprises’ ambitions to continue to be net exporters of electricity, Carbon Zero Initiative modeled electricity demand in Tasmania from Basslink and the proposed Marinus 1 and 2 with an assumption that the cables’ export electricity three quarters of the time on average. In this scenario Basslink and Marinus 1 are estimated to export 7,963 GWh of electricity annually, whilst Basslink, Marinus 1 and 2 would export up to 12,890 GWh of electricity annually.

In order to meet this additional consumption, Carbon Zero Initiative estimates an additional 1,500 MW of generation from renewable sources is necessary for Marinus 1 and Basslink, and 3,000 MW for Basslink, Marinus 1 and 2.

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When added to the totals required to phase out all fossil energy in the Carbon Zero Tasmania Scenario, the total Tasmania generation capacity rises to 11,975 MW with one additional cable, and 13,475 MW with two additional cables, up from 3,509 MW in 2023. When combined with the electricity needed to phase out fossil fuels, the total

amount of renewable electricity produced in Tasmania would rise in this scenario to between 29,163 GWh and 34,090 GWh. Using the Tasmanian government’s 200% by 2040 target as a benchmark, this would be an increase of 272% and 318% as soon as 2040, but by no later than 2050.

*This would allow Tasmania to turn off all fossil fuels, but does not allow for major exports of energy, or for big new energy using factories to open.

Tasmania Needs More Renewable Energy

Tasmania Needs More Renewable Energy

Three more wind farms

Three more solar farms

120,000 One offshore wind farm

more houses with rooftop solar.

One big battery or pumped-hydro plant

*This would allow Tasmania to turn off all fossil fuels, but does not allow for major exports of energy, or for big new energy using factories to open.

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Job Opportunities in Renewable Energy The Cradle Coast Authority and Future Energy Hub are key partners in publishing this report. The Cradle Coast Authority (CCA) is a regional development and natural resource management organisation in Tasmania that represents eight councils in the Cradle Coast region.

The Cradle Coast region is on the north west and west coast of Tasmania, including King Island and West Coast, with a population of around 120,000 people and existing economic strengths in agriculture, manufacturing, mining, tourism and retail.

The Cradle Coast is well positioned to play a leadership role in Tasmania’s transition to a renewable energy future, with over $10 billion of renewable energy projects on the horizon.

This investment is a significant opportunity to enhance regional growth, environmental sustainability, and create long-term economic and environmental resilience.

As previously noted, the trend towards phasing out fossil fuels is set. It is a matter of when, and on what terms Tasmania tackles the challenges and seizes the opportunities that will come.

The Cradle Coast can ensure that traditional sectors like manufacturing, agriculture, mining and tourism continue to thrive in this new energy landscape; but it will require a

coordinated effort to ensure opportunities are taken and challenges are managed in a way that benefits all stakeholders.

Like all regional parts of Tasmania and Australia, the Cradle Coast needs development that strengthens its economy and promotes job creation, while safeguarding the social fabric of communities. In practice this means ensuring that wider investment occurs in supporting infrastructure, transport, healthcare, workforce development, and social procurement initiatives.

Over the next two and a half decades, local councils and communities have an opportunity to engage with the energy transition to ensure the unique needs and priorities of the region are addressed; and that the benefits of development in the renewable energy sector are widely shared.

The Future of Energy in Tasmania report gives an estimate of the scale of the opportunity in terms of economic development that accrues in Tasmania as a direct result of new renewable energy infrastructure, including transmission, and one 500 MW hydrogen producing facility.

To view the full technical report go to: w w w. c r a d l e c o a s t . c o m /e n e r g y- h u b/

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Carbon Zero Initiative found that the infrastructure investment totalled $17.1 billion over 25 years, with the majority

conservatively assumes each full-time equivalent position has an average length of 18 months. The total number of jobs created can therefore be expressed as 6,475 jobs, each lasting an average of 18 months, or as 9,712 full-time equivalent job years.

the north west and west where much of the new infrastructure should be built

The report did not estimate the flow on effects, or indirect investment resulting from this infrastructure build. In addition, the report does not estimate the investment created by upgrading existing facilities, or building new facilities that use large amounts of additional renewable electricity such as data centers. These are opportunities for further research, pending funding.

of the investment occurring in the next 10 years. Importantly, 66% of the $17.1 billion was estimated to be private investment that would significantly boost regional Tasmania, particularly according to AEMO’s transmission roadmap and the state government’s

priorities.

The combined investment was estimated to create 259 direct full-time jobs per year, on average over the 25 year period. The report

Summary The Future of Energy in Tasmania report charts a pathway to a Tasmanian economy running entirely without fossil fuels - a carbon zero economy. If this pathway were followed, it would be the first of its kind in the world.

The report asked if Tasmania needs more clean energy to phase out fossil fuels, and if so how much. It has demonstrated that there is a need, estimating that Tasmania requires at least 21,200 GWh of electricity annually in order to fully phase out fossil fuels across heavy industry, large commercial energy users, transport and households.

Other key outcomes include quantifying the opportunities arising from new energy infrastructure, the reduction in carbon emissions, and the amount of new infrastructure required. In order to model these opportunities, the report used the Australian Energy Market Operator’s (AEMO) forecasts for Tasmania and added significant fuel switching away from industrial coal and gas to renewable energy.

Tasmania stands at the forefront of a major economic opportunity in renewable energy, driven by global

shifts away from fossil fuels.

The Future of Energy in Tasmania report emphasizes that Tasmania can leverage its expertise in hydropower, wind, and solar energy to expand clean energy production and become the first carbon zero economy anywhere in the world.

Investment in renewable infrastructure is projected to exceed $17 billion over the next 25 years, with two-thirds expected from private sources. This growth is set to create nearly 10,000 full-time jobs, with much of that in Tasmania’s northwest and west, where new infrastructure will likely be developed.

For the Cradle Coast region, this transition represents a transformative economic boost that aligns with its existing strengths in agriculture, mining, and manufacturing.

By focusing on local workforce development, supporting traditional industries, and expanding renewable energy infrastructure, Tasmania can secure a sustainable economic future and establish itself as a leader in low carbon innovation.

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Glossary AEMO - The Australian Energy Market Operator is a national government body that administers the electricity and gas markets and energy roadmaps. AEMO’s purpose is “to ensure safe, reliable & affordable energy and enable the energy transition for the benefit of all Australians.”

Fuel Switching - Fuel switching is replacing one fuel with another to reduce environmental impact or save costs.

Generation Capacity - Generation capacity is the maximum amount of electricity a power plant can produce when operating at full capacity, measured in Megawatts (MW).

Electrification - Electrification is the process of replacing fossil fuels with electricity to power systems and perform tasks.

Interconnectors - Interconnectors are high-voltage cables that connect the electricity grids of neighboring regions, states or countries, allowing lots of electricity to flow in both directions between them.

ISP - Integrated System Plan. AEMO produces the ISP every two years in collaboration with around 2,100 energy experts from around Australia.

MW - A megawatt (MW) is a unit of power that measures one million watts, or 1,000 kilowatts.

A one megawatt (1 MW) turbine running at 100% capacity for one hour produces one megawatt hour (1 MWh) of electricity.

MWh - A megawatt hour (MWh) is a unit of measurement that describes the amount of electricity produced or consumed over a period of one hour.

Renewable Energy - Renewable energy comes from natural sources that are replenished faster than they are consumed and have a low or zero-carbon footprint.

Step Change - The Step Change scenario in the Australian Energy Market Operator’s 2024 Integrated System Plan is a rapid energy transition that supports Australia’s commitment to limit global warming to below 2°C.

For more detail view the full technical report at www.cradlecoast.com/energy-hub/

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www.cradlecoast.com/energy-hub/