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Optimising Tasmania’s ‘Battery of the Nation’ plan

March 21, 2024

How Tasmania could profit from electricity storage and dispatchable generation by hoarding water in hydro dams

Key Takeaways:

Tasmania could significantly reduce its energy costs by optimising its energy assets: importing more cheap electricity, exporting more high-priced electricity, and slashing electricity costs of residential and commercial buildings. 

By optimising its existing and planned assets, Tasmania could multiply its winter exports five-fold, meeting up to 18% of Victoria's maximum daily winter electricity demand.

Improving the energy productivity of its buildings and expanding renewable generation would help Tasmania to 'hoard water' in existing dams, freeing up hydro generation for high-value uses.

Batteries could help Tasmania cost-effectively increase both imports and exports of energy, while a broader review of market incentives and rules may be required to optimise the opportunity represented by water hoarding. 

21 March 2024 - (IEEFA Australia): New research from the Institute for Energy Economics and Financial Analysis (IEEFA) published today reveals how Tasmania could maximise its benefits from storing electricity in hydro dams and exporting it to mainland Australia in winter.

The Tasmanian government aims to establish the state as the ‘Battery of the Nation’ with its ambitious project to expand its hydro generation and storage capacity. Tasmania already provides substantial seasonal storage for mainland Australia, importing cheap electricity from Victoria via the Basslink interconnector in summer, and exporting it at a profit in winter.

The new report examined the opportunities to optimise this process. It found that through the right actions and policies, Tasmania could cost-effectively increase its winter exports to the mainland five-fold. This could meet up to 18% of Victoria’s maximum daily winter demand, helping to compensate for lower seasonal renewable generation.

“Tasmania’s ‘Battery of the Nation’ plan has enormous potential to support the clean energy transition, not just to Tasmania itself but Australia more broadly,” said Amandine Denis-Ryan, CEO of IEEFA Australia. “Our research shows how by optimising its existing and planned assets, Tasmania can enjoy a range of benefits while supporting Australia’s energy transition.

The report explores how utilisation of the Basslink interconnector between Tasmania and Victoria can be optimised to deliver greater value to Tasmania, as well as to the mainland. Installing batteries on the mainland could support the increased utilisation of Basslink, enabling greater imports and exports between Victoria and Tasmania.

It also reveals how Tasmanian hydro generation utilisation can be increased by hoarding water in hydro dams. This can be done by improving Tasmanian energy productivity and increasing Tasmanian renewable electricity generation. These measures could significantly reduce the need for Tasmanian hydro generation to meet local needs, retaining it for more high-value export opportunities. Improving energy productivity could also deliver large cost savings for Tasmanians. Resistive heating appliances, currently dominant in Tasmania, consume three to five times more electricity than efficient heat-pump based appliances.

“Increasing exports from Tasmania to Victoria can provide dispatchable power to the mainland when needed,” said Alan Pears, IEEFA guest contributor. “This would help reduce the need for costly and emissions-intensive peaking gas generation. It could also support Tasmania, by generating additional export revenue that can be filtered into public services.”

IEEFA explored a range of ways in which seasonal import and export levels could be increased:

  • Energy productivity: Water hoarding could be increased by reducing local electricity demand, improving the energy productivity of residential and commercial buildings through thermal and equipment upgrades.
  • New renewables: Planned new renewable generation capacity could also increase water storage reserves. The state plans to double renewable energy production by 2040, decreasing the need to meet daily Tasmanian demand using hydro generation, which could then be diverted into high-value exports.
  • Mainland battery storage: Tasmania could profitably export more electricity by utilising mainland battery storage as ‘virtual transmission’ capacity to increase Basslink utilisation, as well as the planned Marinus 1 interconnector if built.

In addition to these measures, a broader review of market incentives and rules may be required. Existing incentives may not be sufficient to drive the behaviours required to optimise the broader system and societal benefits.

“The interventions and investments described in our report will require careful coordination by government and other stakeholders in Tasmania’s energy system,” added Ms Denis-Ryan. “But the opportunities are large. The energy productivity improvements and the increase in cheap imports from the mainland could slash energy bills for Tasmanians, while hoarding more water in hydro dams would increase energy security in Tasmania.”


Read the report:  Optimising the ‘Battery of the Nation’ - How Tasmania could profit from electricity storage and dispatchable generation by hoarding water in hydro dams

Media contact: Amy Leiper, ph 0414 643 446, [email protected]

About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. (


Alan Pears

Alan Pears is a guest contributor at IEEFA. Alan has worked across all sectors of the economy on energy policy, with emphasis on demand-side issues since the late 1970s, and on climate issues since the mid-1980s.

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Amandine Denis-Ryan

Amandine Denis-Ryan is CEO of IEEFA's Australia team. Amandine is a recognized expert in net-zero emissions transitions across the economy and led the development of the first domestic net-zero emissions pathway for Australia and subsequent updates.

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