Hydropower’s role in supporting Tasmania’s changing energy needs

Hydropower, which has long been the backbone of Tasmania’s energy system, is adapting its role as the state’s energy needs change.

Instead of being an ‘always on’ baseload system, it is adapting to one that can switch on and off at the right time, to work in coordination with wind, solar and batteries.

Hydro Tasmania, Australia’s largest renewable energy generator, says doing so will help meet growing demand; ensure power stability; and support the state’s industrial expansion and economic development.

With this in mind, it has plans for two major hydropower projects, explains Erin van Maanen, Executive General Manager of Strategy.

Project 1 – Tarraleah Redevelopment

The Tarraleah Hydropower Scheme is an 85-year-old asset in the Tasmanian Central Highlands, which Hydro Tasmania has plans to breathe new life into.

A proposed redevelopment will more than double peak capacity, from 90 to 190 megawatts (MW), and generate 30 percent more energy from the same water, at the “flick of a switch”. This will help meet fluctuations in demand and increase the value of its output.

“We must invest in it – there is no ‘do nothing’ option,” Ms van Maanen said. “Our analysis consistently shows that a full redevelopment delivers the greatest value for investment, and supports Tasmania’s future energy needs, including anticipated load growth.

“It will deliver more energy for Tasmanian homes, businesses and industries, and up to 250 jobs during construction, along with significant local investment.”

Hydro Tasmania will seek parliamentary approval and commence procurement later this year, ahead of a Final Investment Decision in 2026.

Project 2 – Cethana Pumped Hydro

The proposed Cethana Pumped Hydro project will be the first of its kind in Tasmania, with a capacity of 750MW – almost one third of that currently installed – and a deep storage duration of up to twenty hours.

“It would significantly strengthen our storage capacity, helping the State get through any extended periods of drought or low wind. It would also help attract the wind and solar the State needs to meet growing demand,” Ms van Maanen said.

The project also has significant revenue potential.

“It can deliver firming for the NEM, balancing out the gaps in supply when wind and solar aren’t generating. It can also soak up excess wind and solar in the NEM,” Ms van Maanen said.

“With big reserves of energy in storage, we can sell that energy back when prices go high. That means more revenue for Hydro Tasmania but critically, more dividends back to the State Government to support vital services and infrastructure in the state.

“We’re lucky to already have infrastructure at the Cethana site, and great natural site attributes, making it one of the most cost-effective pumped hydro projects in the country,” she added.

The proposal for Cethana is well advanced with geotechnical work, and environmental and social impact assessments progressing. Hydro Tasmania is also identifying potential sites for future workforce accommodation and progressing development approvals.

“We are working towards a final investment decision in 2027,” Ms van Maanen said.

Enabling more renewable energy development in Tasmania

Hydro Tasmania is also committed to enabling the development of new variable renewable energy in Tasmania. An example of this is an EOI process, conducted in 2025, to identify sufficiently progressed VRE projects. This resulted in an offtake agreement with TasRex, to enable the 288MW Northern Midlands Solar Project at Cressy.

In addition, Hydro Tasmania recently released a draft Market Engagement Approach for consultation, which follows guiding principles to enhance collaboration, transparency and sustainability.

“This outlines our principles and processes to engage with prospective Tasmanian generators and large energy consumers. It is intended to provide confidence and clarity to proponents exploring contracting opportunities with Hydro Tasmania,” Ms van Maanen said.

Hydro Tasmania also has an ‘open door’ and welcomes proponents at any time. It offers a variety of energy contracting options, including traditional energy contracts, and firming, and is open to engagement with a range of market participants.

“Projects that demonstrate clear economic benefits, financial viability, and long-term value to Hydro Tasmania will advance.

“There will also be times when we identify a specific market need – either within our own portfolio or to facilitate new developments – and we’ll run a tender or EOI process for that.”

Hydro Tasmania will be seeking industry feedback and, following consultation, will finalise and publish the approach on the company website.

Further insight

Sharing more on its approach and current projects, Erin van Maanen will present at the upcoming Tasmanian Energy Development Conference.

This year’s event will be held 4-5 June at the Paranaple Convention Centre in Devonport.

Learn more and register here.

About Erin van Maanen

Erin van Maanded is an experienced energy sector leader with two decades’ of experience in the energy sector across large-scale energy project development, wholesale trading, corporate finance, strategy and operational management.

Erin has deep knowledge of the market and regulatory environment in the Australian energy sector. Erin is currently Executive General Manager, Strategy at Hydro Tasmania, responsible for setting Hydro Tasmania’s strategic direction including progressing business cases and approvals for Hydro Tasmania’s major projects.

Erin was recently Head of Commercial on the Marinus Link project and has held prior senior leadership roles at Hydro Tasmania in corporate finance, governance and wholesale energy and most recently spent six months as Acting CEO. Erin has also worked on wind developments in Australia and Asia, and in renewable energy project advisory at Macquarie Capital in Hong Kong. Erin is proud to be making a positive contribution to Australia’s low carbon energy transition.