With regard to what's going on in Tasmania, well a few things have changed in a broader context so at the stage it's simply a case of re-evaluating all the options.
What changed?
Electricity prices in Victoria have almost tripled.
Brown coal is now a post-peak and declining energy source. There's not much future, at least at an economical cost, for gas or black coal either.
So the harsh reality is that approximately 90% of Australia's present power generation is either becoming uneconomic to operate or is ceasing production altogether. Swanbank A, B, C and D, Collinsville, Callide A, Munmorah, Redbank, Morwell, Hazelwood, Anglesea, Playford B and Northern are all gone with Smithfield Energy Facility about to join that list in a few weeks. Then there's the reality that Liddell is going in 2022, Torrens Island is getting very tired, Yallourn is old and so on.
Meanwhile in Tasmania we've got plenty of opportunities to add either energy, peak power or both. Technically they're doable, they're not new ideas and have been looked at in the past, but the questions are about economic viability.
Pumped storage - we could build more of that than anyone's likely to want so it's a question of picking what's cheapest and seeing if that's cheap enough.
Energy - there are certainly some opportunities to enhance the existing hydro system. They're not new ideas, just things that weren't viable economically in the past or which simply weren't necessary in a situation where Vic had coal-fired plant running 24/7 and there's only one cable across Bass Strait such that Tas needs to run at least some hydro 24/7.
One specific idea is to put another machine into Gordon power station. There's physically space for 5 but only 3 have ever been installed as the rest just haven't been needed. The other part of that story is that due to an environmental constraint introduced well after the original construction, the power station spends a lot of time with one machine running at low output to maintain the minimum required water flow downstream.
That mode of operation is inefficient, hydro turbines are optimally efficient at higher output levels, so some gains could be made by adding an additional smaller machine to the station specifically to provide that minimum flow whilst operating at its optimum efficiency.
So basically that means using the space that's available for 2 extra machines to install one smaller machine and keeping open the option of a 4th large one at a later time. That gains energy via reducing losses at times of low output (and that's a very common situation).
Another specific idea is to redevelop Tarraleah power station.
When first proposed (1934) Tarraleah was a "make work" project in response to the Great Depression. Generating power would pay the bills but the real aim, at that time, was to put people to work building it and later via the use of that power in industry.
Out of necessity there were an awful lot of compromises made. Those canals were hand dug for the first part of construction. Getting concrete was a problem. Money was a problem too. Heck there wasn't even a road to or anywhere near the site - Hydro had to build that too.
To cut a long story short, the canals are the "weak link" and are sufficient to operate the present Tarraleah power station at an average 80% of capacity over 24 hours. It can reach 100% certainly, but it can't do that constantly as the canals aren't big enough.
That worked just fine back in the 1930's and indeed it still works pretty well at the moment but it's not going to be a good way to operate if we put more transmission across Bass Strait. Do that and then it becomes desirable to shut down Tasmanian generation when the wind and solar is going well interstate and then run at high levels when the reverse occurs. Those canals then become a problem of significance.
So the idea is to look at ways to get more flow from Lake King William to Tarraleah power station, a distance of 17 km in a straight line or about 20 km along the present canal route. That could be in conjunction with using either the present or a replacement power station depending on the economics - a new one of higher capacity has a lot of merit technically but obviously adds to the cost.
A point to mention there is that Tarraleah presently runs base load and does so to a greater degree than even coal-fired plant generally does interstate. It just sits there and runs 24/7 at the maximum flow rate of the canals. Only real exception is due to maintenance outages. Being able to operate intermittently but at higher output has a lot of advantages if the state is more strongly linked to the mainland and we're moving toward wind and solar.
Related to that is that a further 6 power stations re-use the water discharged by Tarraleah. Where part of the benefit of a capacity increase at Tarraleah comes from is being able to better manage that flow downstream. Hold back water when it's wet but then run at higher than presently possible rates when it's dry. That reduces water spilled over the dams downstream and increases overall production.
It's not really a past mistake that it is this way, it's just a case of nobody back in the 1930's having foreseen how it would be operated in 2020 or later. And even if they had foreseen Basslink and interstate reliance on wind and solar, amid the Great Depression they couldn't likely have afforded to build it with higher capacity anyway.
Gordon and Tarraleah aren't the only options by the way.
For example back in the early 1990's interest rates were high but electricity wasn't worth overly much hence Hydro decided to reduce the height of the dam being built at Lake Plimsoll so as to reduce costs. That comes at the expense of losing some water to spill during high rainfall events and with electricity now far more valuable it could well make sense to go back and raise the height. It was built to allow that to be done later, previous effort won't be wasted, but it just wasn't economic at the time to build it higher but it might be now so it's another one to look at.
So there's a lot of options. Most are individually small but collectively they are significant. With prices having tripled in Vic plus various governments in a panic about power supply now's the time to have a look at the economics of those options and see how they stack up.
Adding more peak generating capacity does, in order to be useful, require an increase in transmission capacity across Bass Strait. On the other hand, that's not really a requirement for things which simply add energy to the system but with no or minimal change in peak output. So intertwined with questions about adding to or improving the hydro system is a related question about building Basslink No. 2