A record dry spring and the failure of the main power link to the mainland have forced Tasmania to turn to expensive gas and even diesel generators to meet electricity demand.
Tasmania's key hydro storages are at less than 19 per cent capacity, or enough to supply about four months' total state demand, energy consultants Pitt & Sherry said.
"Tasmania is facing an unprecedented set of circumstances that are providing significant challenges for Hydro Tasmania in the provision of energy security to the state," a spokeswoman for Hydro Tasmania, said.
While the state is not reliant solely on hydro power, authorities have had to return to service the 208 megawatt-capacity Tamar Valley gas power station, and it started importing 24 1MW diesel generators from January 29, she said. It was also "working to secure" 34 MW more diesel-generation capacity.
The state had been importing electricity from Victoria through the Basslink high-voltage interconnector until the cable failed on December 20.
Basslink is continuing to hunt for the fault and expects to resume service by March 19, a spokesman said. Wholesale electricity prices have tripled since September to $120 per megawatt-hour, as Tasmania has turned to more expensive gas to fill the shortfall. (See chart below.)
"It's quite serious for Tasmania," Hugh Saddler, principal consultant with Pitt & Sherry, said.
As a result of the loss of Basslink, Hydro Tasmania has had to ramp up water releases from its already depleted storages.
"While important to have in place and able to operate, this contingency diesel-generation option is only likely to be required if Basslink does not return to service as planned and - or if - low inflows continue through autumn [into the dams]," the Hydro Tasmania spokeswoman said. "It's expected these units would be ready to operate, if required, by early March."
As a share of the National Electricity Market (NEM), hydro power from Tasmania and the Snowy Hydro system increased from 6.2 per cent in December to 8.2 per cent in January in part because of the state's power troubles, Dr Saddler said.
While Tasmania had its driest spring on record last year, the last couple of years have been particularly dry - creating conditions for the severe bushfires over the past month in areas that rarely burn.
Over the past 18 months, all but a sliver of the state's east coast has had below-average rain, the Bureau of Meteorology reported. (See chart below.)
The spokeswoman for Hydro Tasmania said electricity demand was being met by a range of sources, including wind generation, which typically averages 200 gigawatt-hours between February and April.
"There was useful recent rainfall and, with normal rainfall for the next two months, storages will be at around 14 per cent on March 19," she said.
One side consequence of the disruption of the mainland cable is that Victoria's brown coal-fired power stations have had to scale back output by nearly 10 per cent from December levels as demand from Tasmania temporarily ended, Dr Saddler said.
Even so, coal's share of the NEM has remained about 75.9 per cent, with black coal filling the shortfall from Victoria, Pitt & Sherry said.
Since the Abbott government scrapped the carbon tax in July 2014, carbon emissions from the NEM have risen about 5 per cent, or 7.5 million tonnes, on an annualised basis, Dr Saddler said.
Much of the increase has come from a switch to more carbon-intensive fuels but demand has also edged up. Total annual demand has rise each month since February 2015 and is now 1.7 per cent higher than at that point, Pitt & Sherry said.
The share of wind energy in the NEM eased to 5.2 per cent in January, while gas continued its retreat as supplies were diverted to more lucrative export markets and made up 10.2 per cent last month, Dr Saddler said. (See chart below of fuel type changes in the NEM.)
Renewable energy opportunity
Emissions from the power sector are likely to rise further once the Basslink cable is repaired. Another increase is likely to come once South Australia closes its Northern Power Station next month.
The closure will remove 530 megawatts of coal-fired generation capacity from the NEM, although the impact will be less than the restoration of supplies to Tasmania from the mainland.
"It's replacing one pretty dirty power station with an even dirtier one," Dr Saddler said.
The interruption of Basslink also highlights Tasmania's under-developed renewable energy options. Despite having some of the best wind energy resources in the country, the state now has only 373 MW of wind farm capacity.
Wind "is such a terrific complement to the hydro", Dr Saddler said.