How a lot is Australia’s poorest state ready to assist one of many nation’s richest folks?

That is one of many questions on the coronary heart of negotiations between Andrew “Twiggy” Forrest, the Tasmanian authorities and its enterprise enterprise Hydro Tasmania over the mining magnate’s proposal for a hydrogen hub on the state’s northern tip.

If agreed to by the Fortescue Future Industries board, Mr Forrest has pledged to spend “effectively over” $500 million on the mission — a 250-megawatt inexperienced hydrogen plant able to producing 250,000 tonnes of inexperienced ammonia per 12 months.

“Now it is coming right down to the high quality level,” Mr Forrest instructed ABC Hobart presenter Leon Compton in August.

“Is Tasmania going to produce that hydroelectricity?

Forrest’s pitch consists of evaluation from Deloitte that exhibits the mission may improve employment within the state by greater than 3,000 full-time equal positions and inject $18 billion into the state’s financial system over about 30 years.

The assumptions behind these spectacular figures are lower than clear.

What additionally hasn’t been mentioned is how a lot the plan may price the state.

Premier disagrees with Hydro’s recommendation

The historically job and cash-strapped Apple Isle likes to pin its hopes on a giant concept — assume the Tamar Valley pulp mill, the forest and salmon industries and relations with China.

The actually power-hungry Hydro was as soon as among the many state’s untouchable establishments.

Now, Premier Peter Gutwein is brazenly disagreeing with Hydro’s recommendation.

To recap: Power Minister Man Barnett launched the federal government’s Hydrogen Motion Plan early final 12 months.

Mr Barnett wrote: “Entry to low-cost and dependable Tasmanian renewable power makes us the proper location for renewable ‘inexperienced hydrogen’ manufacturing, for export and to be used in Tasmania”.

Hydrogen pipeline with blue sky background.
Evaluation by Deloitte exhibits the mission may improve employment within the state by greater than 3,000 full-time equal positions(Getty: Akio Kon/Bloomberg)

“Importantly, with our present renewable power, this may begin now.”

Solely, it appears Hydro could not agree. In one other August interview with Compton, Mr Forrest revealed Hydro had instructed him it had “no electrical energy to supply to [Fortescue Future Industries] at any value”, which “got here as a terrific shock to us”.

(That is the place Mr Gutwein is available in: he instructed a price range estimates listening to in early September he didn’t agree with Hydro’s evaluation that no power was out there.)

It is price noting that Mr Forrest desires to pay Hydro solely no matter energy-intensive main industrials like Rio Tinto, Nyrstar and Norske Skog hand over for his or her energy.

How Mr Forrest appears to know a value lengthy deemed commercial-in-confidence is one query — what his plan may price the state in subsidies is one other fully.

Fears Forrest’s plan may price hundreds of thousands per 12 months

Professionals Australia state director Luke Crowley stated senior Hydro workers had been frightened the pursuit of Mr Forrest’s plan may price the enterprise — and finally taxpayers — hundreds of thousands of {dollars} per 12 months.

“Members estimate that each greenback per megawatt hour saved by Twiggy may price Tasmanians taxpayers $2 million per 12 months,” he stated.

Mr Crowley stated one estimation had this at $50 million per 12 months.

The explanations for this are advanced. One is that whereas Tasmania is taken into account 100 per cent renewable, the state already imports some (non-renewable) energy from Victoria as a result of it may be cheaper than producing its personal.

Any addition to the state’s capability would imply importing extra energy, in all probability at a better price.

And in reverse, Tasmania would have much less energy to export to Victoria, Mr Crowley stated.

A man in a blue suit sits in Parliament
Power Minister Man Barnett launched the federal government’s Hydrogen Motion Plan early final 12 months.(ABC Information: Maren Preuss)

“Members are very involved that offering extra electrical energy at low costs to a hydrogen operation would considerably scale back the revenue that Hydro may in any other case make for Tasmania promoting that electrical energy on the nationwide market by way of Basslink,” he stated.

Mr Barnett, Hydro and Fortescue Future Industries had been every requested a collection of questions on Mr Forrest’s Bell Bay proposal, together with the character of present discussions, the subsidies being requested and provided, and whether or not the federal government was in search of any job ensures if taxpayer help was on the desk.

A Hydro spokesman stated the enterprise was “in common communication with the Tasmanian authorities and all the varied events who’re presently exploring choices for producing inexperienced hydrogen”, whereas Fortescue Future Industries chief government Julie Shuttleworth stated her firm was “working carefully with stakeholders”.

On whether or not FFI’s current cope with the Queensland authorities to construct electrolysers affected how a lot could be spent in Tasmania, Ms Shuttleworth stated solely that the announcement “demonstrates the quick tempo we’re shifting to assist the world de-carbonise now”.

For his half, Mr Barnett stated that “whereas discussions with proponents are commercial-in-confidence, choices will all the time be made in the most effective pursuits of Tasmania”.

At this stage, with a lot nonetheless to be revealed, it appears taxpayers should take his phrase for it.