Concerns over power station fire on Tasmania's power network

An overnight fire that gutted one of Tasmania's hydro power stations has raised questions about the impact it may have on the state's power network.Emergency services were called to the fire at the Tungatinah Power Station in the Central Highlands about 9pm on Wednesday night.While they managed to put out the blaze, the building is now just a shell and the station is non-operational.Does Tasmania have enough power to keep the state running?Tungatinah contributes about 5 per cent of the state's energy, making it Tasmania's fifth-largest hydro power station.But at a capacity of 142.5 megawatts (MW), it's dwarfed by the largest of the state's 30 stations — the 432MW Gordon Power Station.Both Hydro Tasmania and network operator TasNetworks have confirmed the power network is secure.Fire broke out at the Tungatinah Power Station in Tasmania's central highlands on Wednesday night. (ABC News: Jano Gibson)TasNetworks acting CEO Renee Anderson said the transmission network was "designed to withstand an incident like this".While power supply to around 300 customers in the area has been impacted, none of Tasmania's major industrials have been affected.Due to the recent closure of the Liberty Bell Bay manganese smelter and the Nyrstar zinc smelter running at lower capacity, there is lower demand for energy in Tasmania at the moment.There is also the 250 MW Basslink cable, which can be used to import energy to meet demand.Emergency services spent several hours bringing the blaze under control. (Supplied: Tasmania Police)How is Hydro Tasmania mitigating the impact?Hydro Tasmania is looking at its contingency plans, which include the Tamar Valley Power Station's gas generator.That generator has a capacity of 342 megawatts, and is expected to be up and running by the end of the week."Even before it gets back, we're very confident that we've got sufficient generation capacity running and ready in the state," said CEO Rachel Watson, who noted it had already been running at times over winter.The Tungatinah Power Station under construction, circa 1953. (Supplied: Tasmanian Archives)According to the openNEM website, it contributed around 7.5 per cent of the state's energy over July and August.Premier Jeremy Rockliff told parliament this morning that Tasmania's dams were at their highest levels in 10 years.Goanna Energy analyst Marc White said the dams were around 50 per cent, which is 15 per cent above the prudent storage level for this time of year."We probably couldn't have asked for a better time for this sort of catastrophic event to happen — in terms of our low demand, strong wind resource, high dam levels, both Basslink and the gas-fired generation plant available," he said.Inside the Tungatinah Power Station, circa 1954. (Supplied: Tasmanian Archives)Will this outage affect other power stations?Tungatinah is part of a larger hydro scheme in the Derwent, consisting of 10 major stations and one minor station.Water from Tasmania's highlands flows through several of these on its way down, generating electricity multiple times.Water flows through the Lake Echo Power Station, along the Nive River into Tungatinah.Hydro Tasmania has numerous power stations, including Tarraleah. (ABC News: Simon Cullen)After that, it combines with outflows from the Tarraleah Power Station into Lake Liapootah to another power station.Mr White said it was hoped the valves allowing water to be diverted around Tungatinah would be undamaged."I think it's unlikely that the fire would have impacted those valves given the nature of hydro stations, so I think it's unlikely at the moment to impact the whole Derwent system," he said.How much will it cost to rebuild? And how long could that take?Fixing the power station could cost hundreds of millions of dollars. (Supplied: Hydro Tasmania)As it is early in the investigation, Hydro Tasmania has not been able to give a rebuild price.However, it will likely cost hundreds of millions of dollars.Rachel Watson said the power station was fully insured, so the company may not have to foot the bill.It is also unclear how long that rebuild may take.Premier Jeremy Rockliff told parliament this morning it would take "at least a year, certainly many months".What could the impact on Hydro Tasmania be?While Hydro Tasmania's insurance policy means it may not be forced to foot the bill for the rebuild, it will still hit the state-owned power company's balance sheet.Less power being generated means less power to sell.Mr White estimates Tungatinah has produced $33 million worth of electricity over the past 12 months.Hydro Tasmania will have less power to sell without Tungatinah in the mix. Pictured here is the Gordon Dam. (ABC News: Luke Bowden)It may also need to buy more energy from the mainland via the Basslink cable.Independent economist and former Hydro Tasmania board member Saul Eslake said: "Hydro will make less revenue than it otherwise would.""The main impact of this is likely to be lower profits and revenue for Hydro [Tasmania], and hence smaller payments into the Tasmanian state budget than would otherwise be the case," he said.Will that also hurt the state budget?Hydro Tasmania is the state's biggest government business.It regularly pays dividends of $100 million or more to the state government, although its profits have been down in recent years due to lower rainfall.A further drop in dividends would be a big hit to Treasurer Eric Abetz, who is relying on them to help balance the budget.Mr Eslake said the station, and the power it could produce, would still be important going forward."Especially if demand for electricity is going to increase from data centres and they are more willing to pay commercial power prices than the traditional major industrials," he said.