Claim that Tasmanian paper mill wanted more power, but was denied

Opposition leader Rebecca White claimed in parliament that the Norske Skog Boyer newsprint mill in New Norfolk had wanted to begin a new project that required an additional 50 megawatts of power, but was told by Hydro Tasmania that the extra capacity was unavailable.

"The plant employs hundreds of people in my electorate of Lyons and is a major contributor to Tasmania's manufacturing base," Ms White said in Question Time on Wednesday.

"The mill has a new project critical to securing its future, which requires 50 megawatts of new power supply.

"But they have been told they cannot access any more power, which means their project cannot proceed.

"Isn't it the case that the power constraints that you've created over the past ten years are now putting a handbrake on our economy and impacting growth plans at Boyer mill?"

In response, Premier Jeremy Rockliff denied the suggestion the state's industrials were running out of power, and joked that it was Labor that was out of power and in administration by its federal branch.

But he said the government recognised the significant contribution that Norske Skog and other major industrials made to the state as major manufacturers and employers and drivers of economic activity.

He said the government contributed $2 million in support to Boyer.

"This support is aimed at ensuring the Boyer site remains an important employment and infrastructure hub for the region," Mr Rockliff said.

Ms White asked whether it was true that the gas-fired Bell Bay Power Station was running and whether it was an indication that Hydro was out of power.

Mr Rockliff said the plant was not operating, but later said he'd been advised that Hydro operates the plant occasionally for commercial reasons.

According to the Tasmanian Economic Regulator's latest electricity market bulletin, the gas-fired station contributed less than 1 per cent to the state's energy mix in the week of July 9-15.

Labor energy spokesman Dean Winter claimed that the Regulator's analysis showed there was no power available for any new energy projects in the state at least until the middle of next year.

The bulletin showed demand slightly lower than supply in the week July 9-15, while its analysis showed there was "no head room available" in availability of capacity for wholesale customers in the fourth quarter of this year through to the end of the second quarter of 2024.

"It's saying that Tasmania, on your watch, has no ability to supply power to new projects," Mr Winter said.

"What are you going to do to ensure there is new generation available for existing customers to expand production and create new jobs or to attract new customers to Tasmania?"

Energy and Renewables Minister Guy Barnett said the government had always acknowledged that there Tasmania faced a power supply challenge and that supply and demand was "tight".

"It's in balance, I've said that for a long time," Mr Barnett said.

But Hydro planned to expand the state's renewable resource through investments into the Tarraleah power station and the construction of the Lake Cethana pumped hydro project, Mr Barnett said.

There was a further $250 million going into West Coast wind and solar upgrades, he said.

"We are about growing our economy and creating more investment in wind and solar and in our hydro power stations and facilities, and to make the most of that we want to keep investing in Tasmania."

Tasmanian Chamber of Commerce and Industry chief executive officer Michael Bailey said it was confirmation that demand for electricity was outstripping supply.

"We have businesses asking the government for more power to expand and create more jobs, yet today we've heard that the government is turning them away because we simply do not have enough generation to meet demand," Mr Bailey said.

"If that's not the definition of a crisis, then what is?

"Even the Economic Regulator has said in its weekly market watch that there is no "head room" in the Tasmanian grid, which confirms the business community's worst fears.

"If the Government doesn't commit to Marinus Link the result will be a recession, increasing power prices and an increasingly unreliable grid," Mr Bailey said.

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