Tasmania’s electricity grid is often held up as a national advantage. Powered largely by hydroelectricity and backed by growing wind generation, the state already operates on close to 100% renewable energy in an average year. In theory, it should be Australia’s clean energy anchor—exporting firm, low-emissions power to the mainland while supporting the broader transition away from fossil fuels.
In practice, it’s more complicated. This is because the state’s grid is small, geographically constrained, and heavily dependent on a limited number of interconnections to Victoria (VIC). Although hydro offers flexibility, it is not infinite. Several factors affect how much energy the system can reliably supply, such as water levels, maintenance schedules, and dry years. As demand for clean, dispatchable power grows across the National Electricity Market (NEM), TAS’ role is being tested in ways it hasn’t faced before.
This tension sits at the heart of the state’s energy story. Tasmania is being asked to do more (store energy, stabilise the mainland grid, and support new developments ) while managing the physical and environmental limits of its hydro assets.
In this instalment of our Electricity Grids: State by State series, we explore how TAS’ hydro-led system works, where it’s under strain, and what its storage dilemma means for the future of Australia’s clean energy transition.
The current grid
The state’s electricity system is small, highly renewable, and unusually flexible, but it also runs close to its limits more often than many realise. Unlike mainland states that rely on a mix of coal, gas, and renewables, its grid is built around hydroelectric power, supported by wind and a single gas plant used mainly as insurance.
At a high level, the grid looks like this:
Tasmania’s electricity mix (typical year)
- Hydro: ~60-70%
- Wind: ~30-35%
- Gas:
In strong wind years, TAS can meet almost all of its demand with renewables and still export power to the mainland. In dry or low-wind periods, that balance tightens quickly.
Hydro Tasmania operates a network of more than 30 power stations and 15 major dams, spread across the central plateau and western regions. This gives the state a level of dispatchabiliy that other renewables can’t match — hydro can ramp up quickly, pause generation, and respond to market signals. That flexibility is why TAS is often described as the “Battery of the Nation.”
But hydro is constrained by water availability. Storage levels fluctuate with rainfall, seasonal inflows, and long-term climate patterns. In dry years, hydro output must be carefully rationed to ensure supply through peak demand periods, particularly winter. This makes TAS’ system highly sensitive to weather over weeks and months, not just hours.
Wind power has become the system’s second pillar. Large wind farms across the north-west and central highlands contribute to a growing share of energy, helping preserve water in storage when conditions are favourable. However, wind output is variable, and without large-scale electrical storage, excess generation can’t always be captured for later use.
Tasmania’s connection to the mainland is limited. The state relies on Basslink, a single high-voltage undersea cable linking Tasmania to VIC. Basslink allows TAS to export surplus renewable energy or import power during shortages, but it also represents a single point of vulnerability. When Basslink is constrained or offline, TAS must rely almost entirely on its own resources
In short, TAS’ grid is clean and flexible, but finely balanced. Hydro provides control, wind provides scale, and Basslink provides access—yet none of these elements offer unlimited capacity. As the rest of the country looks to the state for firm, renewable support, those limits are becoming increasingly important.
The challenge: A renewable system with finite storage
The challenge in the state comes from limits: how much energy the system can store, how long it can sustain exports, and how exposed it is when conditions turn against it.
Although hydro gives the state flexibility, it doesn’t equate to a limitless system. Water stored in dams in the primary form of energy storage here, and once it’s used, it can’t be instantly replaced. In dry years or during extended periods of high demand, Hydro Tasmania must carefully ration generation to ensure supply through winter. That becomes more evident as the mainland increasingly looks to the state for firm renewable support.
Wind has helped ease that pressure, but it introduces a different problem. When wind output is strong, the state can preserve water in storage and even export power through Basslink. When it’s weak, the system leans back on hydro (sometimes heavily). Without large-scale electrical storage to capture surplus wind or smooth extended lulls, the grid relies on careful forecasting and conservative operation.
Interconnection is another pressure point. Basslink is essential to the state’s energy role, but it is also a bottleneck. It has finite capacity and represents a single major pathway in and out of the state. When Basslink is constrained, under maintenance, or offline, the state effectively becomes an energy island. In those moments, the system’s reliance on hydro storage is exposed, and gas generation may be called on as a last resort.
Climate variability adds further uncertainty. Changes in rainfall patterns, snowmelt timing, and inflows affect how much energy TAS can store year to year. While hydro remains reliable over the long term, short- and medium-term variability is becoming harder to ignore, especially as demand for firm renewable energy grows across the NEM.
These factors create the storage dilemma in the state. Despite the abundant renewable generation here, there are limited ways to bank excess energy for later use or move it freely to where it’s needed. As expectations rise around the state’s role as a clean-energy stabiliser, the question is not about whether hydro works but whether the system has enough depth, redundancy, and storage to do more without increasing risk.
The renewable expansion
The renewable growth in the state is about layering new generation on top of hydro so the system can do more without draining its storage too quickly. Wind, in particular, has become the state’s primary expansion pathway because hydro needs support.
Over the past 10 years, large wind farms in the north-west and central highlands have reshaped the state’s supply mix. These projects generate electricity when water would otherwise need to be released from storage, effectively preserving hydro reserves for later use. In strong wind periods, the state can meet demand, maintain dam levels, and export power to the mainland at the same time.
This complementary relationship is central to the state’s energy. Wind doesn’t replace hydro’s role as dispatchable energy, but it reduces how often hydro has to be used, extending the system’s effective storage capacity across seasons rather than hours.
More wind is now in the pipeline. Projects such as Robbins Island and other proposals across the north-west coast aim to significantly lift generation capacity, particularly during winter when mainland demand is highest. These developments are designed with export in mind, timed to align with stronger interconnection rather than purely local demand.
Hydro itself is also evolving. Rather than building entirely new dams, the focus has changed to upgrading existing assets, improving turbine efficiency, increasing ramping capability, and extending operational life. These changes don’t dramatically increase total energy output, but they make the system more responsive and better suited to balancing variable wind generation.
What Tasmania is building, then, is not a bigger grid but a more strategic one. Wind adds volume, hydro adds control, and together they allow the state to stretch its renewable resources further. The expansion is measured rather than aggressive, shaped by geography, environmental constraints, and the reality that every new megawatt must ultimately be stored, used, or exported.
That balance sets the stage for the next question Tasmania must answer: how to move and store more energy when it’s available, without over-relying on a single cable to mainland.
New infrastructure
The state’s future role in the national grid depends less on how much renewable energy it can generate, and more on how much it can move and store. This is where infrastructure becomes the central constraint and the source of the state’s storage dilemma.
At present, Basslink is Tasmania’s only electrical connection to the mainland. It allows the state to export surplus hydro and wind power, or import electricity during dry periods or maintenance outages. But Basslink has finite capacity and no redundancy. When it is constrained or offline, Tasmania must operate as a closed system, relying almost entirely on hydro storage and limited gas backup. That single point of dependence shapes every planning decision.
To address this, the state has long proposed Marinus Link – a second undersea interconnection to VIC. In theory, it would transform Tasmania’s role in the NEM, allow far greater exports of firm renewable energy and provide backup import capacity when conditions tighten. In practice, Marinus Link has become a case study in complexity. Rising costs, uncertain demand forecasts, and questions about who ultimately pays have slowed progress, leaving TAS’ export ambitions tied to a project that remains unresolved.
Without additional interconnection, the state’s hydro assets face natural limits. Hydro acts as long-duration storage, but only within the bounds of water availability and environmental constraints. Unlike batteries, it can’t be quickly expanded, and unlike mainland states, TAS can’t easily absorb excess energy local during high-wind periods. When storage fills and export capacity is maxed out, renewable generation must be curtailed because there’s nowhere for it to go.
Smaller-scale storage upgrades are underway. Pumped hydro feasibility studies, battery trials near load centres, and operational improvements to existing dams are all designed to squeeze more flexibility out of the current system. These measures help at the margins, but they don’t fundamentally change the equation. The state’s ability to support the national transition will ultimately hinge on whether it can move more energy off the island when conditions are favourable.
This is the trade-off the state now faces. Its grid is clean, controllable, and well-suited to balancing renewables… but only up to a point. Until interconnection and storage capacity expand in tandem, the state’s role as Australia’s renewable backbone will remain constrained by the very geography that made hydro possible in the first place.
What it means for the future
The state already runs one of the cleanest grids in the world. The challenge now is deciding how far that system can be stretched and what role it should realistically play in supporting the rest of the country.
If interconnection expands, it could become a critical stabiliser for the NEM. Hydro offers something mainland renewables struggle to provide at scale: long-duration, dispatchable power that can respond over days and weeks. With sufficient export capacity, it could release stored energy during mainland shortages and absorb excess wind and solar when other regions oversupplied. That would turn Tasmania’s hydro system into a strategic national asset, not just a local one.
Without that expansion, the future looks more restrained. Hydro will continue to underpin local reliability, wind will keep reducing emissions, and the state will remain largely self-sufficient. But its ability to grow exports or take on a larger balancing role will stay limited by storage depth and a single interconnection. In that scenario, the state’s priority shifts from serving the national market to protecting its own security during dry years and peak demand periods.
Climate variability adds urgency to the decision. Rainfall patterns are becoming less predictable, and prolonged dry spells place real pressure on hydro storage. That makes flexibility and redundancy more valuable and raises the stakes around infrastructure decisions that lock in TAS’ role for decades.
Ultimately, the state can remain a highly renewable but relatively contained system, or it can remain a highly renewable but relatively contained system, or it can invest in becoming a larger, more influential layer in Australia’s energy transition.
What it means for homeowners
For households, the state’s hydro-led grid provides a level of stability that many mainland regions still struggle to achieve. Electricity prices tend to be less volatile, outages are relatively rare, and renewable supply is already the norm rather than the exception. For most homes, the transition has been gradual and invisible. The system works, so there has been little pressure to change behaviour.
That may start to change. As wind capacity increases and export limits are tested, households are likely to see more emphasis on when electricity is used. Time-of-use pricing, smarter how-water control, and greater encouragement to use power during high-wind periods could become more common. Rooftop solar still makes sense for many homes, but its value will increasingly depend on how well it aligns with local demand and grid conditions.
Homeowners are unlikely to face the same urgency around batteries seen on the mainland, at least in the near term. Instead, the state’s grid evolution leans toward quieter changes: better demand management, more active pricing signals, and a growing role for households in smoothing peaks and preserving hydro storage during dry or high-demand periods. The system remains reliable, but expectations around participation are slowly rising.
Tasmania’s electricity system shows what’s possible when renewables are built around flexibility rather than speed. Hydro and wind have delivered a low-emissions grid that works, but the limits of storage and interconnection mean growth now comes with trade-offs. As Australia’s transition accelerates, Tasmania’s value will be measured not just by how clean its power is, but by how reliably and selectively it can support the wider market.
In the next part of our Electricity Grids: State by State series, we turn to the Australian Capital Territory — a jurisdiction that consumes almost entirely renewable electricity, despite generating very little of it within its own borders.
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