Q&A with Steve Davy, Hydro Tasmania

Please introduce yourself and tell us about your business and Tasmania.

I’m originally from New Zealand, but people are possibly less familiar with Tasmania, which is an island state to the south of Australia’s mainland. People often think of Australia as having an ideal Pacific climate. Tasmania’s weather is more like San Francisco or the south coast of England, but the West Coast of Tasmania is very wet and rugged, which is a perfect fit for hydropower. Hydro Tasmania has existed for over 100 years and helped to build modern Tasmania, as the construction of hydropower attracted people, heavy industry and manufacturing to the state.

We’re Australia’s largest generator of renewable energy and its largest water manager. We operate 30 hydropower stations, a gas-fired power station, wind farms and 54 major dams. We’ve been connected to Australia’s National Electricity Market (the NEM) since 2006. 

We’re a government-owned business and our role in Tasmania is generation. Tasmania has separate government businesses that look after transmission and retail. Hydro Tasmania also operates an international engineering consulting business, Entura, and our own retail business for Australia’s mainland states, Momentum Energy.

Up to 2019 I was a director of the Australian Energy Council, the peak body for Australian Electricity generators and energy retailers, and recently became both a Fellow of Engineers Australia and a Fellow of the International Hydropower Association (IHA). In fact, Hydro Tasmania played a key role in developing the IHA’s Hydropower Sustainability Protocols in the early ‘90s, which are now used by the industry globally.

Our State Government has recently delivered on a goal of creating enough renewable energy generation on this island for it to be 100 per cent self-sufficient in renewable electricity by 2022, with two windfarm developments recently completed. So the Tasmanian Government has recently announced a new goal to double Tasmania’s renewable energy generation to 200 per cent of current needs by 2040, and launched the Tasmanian Renewable Energy Action Plan to get us there.

Hydro Tasmania will very much be a part of that with our Battery of the Nation project, working with TasNetwork’s proposed Marinus Link interconnector. There have also been some very exciting developments announcing a local hydrogen strategy, powered by renewable energy, which gives Tasmania a real advantage in that emerging industry.

What attracted you to working within the sector to start with? And how did you start working at Hydro Tasmania?

I have a university degree in physics and mathematics, and as a young person in New Zealand I found my way into financial markets. My first financial markets job was writing computer code for commodity and currency trading, back in the ‘80s when there weren’t many people doing that. But I was interested in science, because I was interested in how things really work and the history of how technology has advanced communities, society, and ultimately how that’s helped people.

So after about 15 years in markets, I wanted to be involved in something that had more meaning to me. I was working for a bank in Sydney and they wanted to start a power trading desk, as Australia’s NEM was just beginning. I was interested in being part of the energy markets and the carbon markets that the Kyoto Protocol was setting up, so I became part of setting up that trading operation.

A few years later, I was working for a New South Wales generation company and an opportunity came up here in Tasmania. I joined Hydro Tasmania in 2005 to help set up and run their energy trading operation. In 2007, I became part of the Leadership Team and in 2013 was appointed as CEO.

What would you consider to be your greatest achievements during your time as CEO?

Our Hydro power stations range in age from about 30 to over 100 years old. Keeping our assets in a suitable state for future generations has been our biggest single task over the past 15 years and we now spend more than $100 million a year on refurbishments which will keep our businesses and Tasmania powered.

I hope Hydro Tasmania is seen externally and by our people as a contemporary organisation that has purpose, looks after customers and clients, supports Tasmanians and the communities we operate in, and looks out for our own people too. That last point is particularly the case through the coronavirus pandemic, where many of our staff are working from home, or continue to work in the field with many new hygiene controls in place. I want our people to feel proud and supported, and that’s not my achievement, it’s all of the Hydro Tasmania group. 

Our Battery of the Nation project is an important part of this contemporary purpose. Hydropower is currently the largest source of flexible and controllable renewable energy generation in Australia and the world, with terawatt hours of deep storage available. As Australia’s coal-powered generation phases out, we’re expecting that increasing amounts of energy generation will come from wind and solar, making it much more variable in its output.In that scenario, pumped hydro energy storage is an efficient way to match generation with load, so hydropower can be the backbone of a stable, reliable energy system. That’s what the Battery of the Nation project is all about. Storage, pumped hydro and batteries will support decarbonising our economy with renewable electricity, combined with customer responses such as energy efficiency and demand side management, and new transmission investment. 

Just as the Basslink interconnector was a major project when I joined Hydro Tasmania, the key to this next chapter for the business is the Marinus Link interconnection project, which will see 1500MW of new interconnection across Bass Strait in two 750 W cables. This is being managed by our colleagues at TasNetworks and is progressing well. 

I’m proud that Hydro Tasmania is able to prosecute the vision of a major project like Battery of the Nation and how it will benefit our state and our community. Promoting a positive path for Tasmania is part of our job.

What have been the greatest challenges?

In 2015-16 we experienced an energy security challenge that was caused by a combination of unprecedented events, namely: the driest spring rainfall on record causing very low inflows into our storages, and a long-term Basslink outage, meaning we could not import additional energy when needed.

Certainly, this was a very challenging time for our people. Together with the Tasmanian Government and TasNetworks, and some hard working suppliers, we had to keep the Tasmanian community confident that supply would be maintained. The team did a huge job to install 240MW of diesel generation, which kept the lights on until Basslink was fixed and we got through to the other side. Life and business in Tasmania was able to continue thanks to a lot of hard work and quick thinking.

Some of your initiatives have looked at community involvement and inclusivity. Why should these continue to be important considerations?

You cannot assume that you know what’s best for your communities and stakeholders. You’ve got to be inclusive and engage with your stakeholders, which for Hydro Tasmania is everyone in the state, and take the time to understand their needs and concerns.

We work for Tasmania, but when I started out we made our own assumptions of what was good for Tasmania, and our job was to then convince Tasmanians that we had their best interests at heart. I was guilty of making those assumptions as well. As time has gone on, we’ve become much more of a listening organisation. We now work to understand what the community and stakeholders are telling us and can use that information to inform what we’re doing.

Inclusion is about fairness and reflecting the communities we operate in, but also about giving everybody the opportunity to contribute. We have made great inroads but have a long way to go and I would hope that the COVID-19 economic slowdown does not reverse or slow the progress for Hydro Tasmania and our community in being more welcoming to everyone.

Over the past 15 years at Hydro Tasmania, have you seen any changes in the key issues you have tackled, like climate change or the focus on renewable energy?

If you think about where we were a couple of decades ago in Australia, there was a determination and understanding that we had to reduce our carbon footprint, particularly in energy production. There were all sorts of ideas about where that could come from.

Over those decades since, what we’ve seen is that renewable energy, particularly solar and wind, has come to the forefront of the debate. Twenty years ago, not many people in the power sector would have said it would now be dominated by renewables. That was a race with many runners, but that’s how it’s turned out, and government-led incentives and programs around the world have helped create the scale that led to these technologies now winning on cost.

The challenge now is having reliable, secure power systems that have a lot of renewables in them and Hydro Tasmania is at the front of that through Battery of the Nation, our Bass Strait Island renewables integration program and what we’re contributing to the national debate. And our contribution is recognised through the Independent Review into the Future Security of the National Electricity Market by Dr Alan Finkel, and the work the Energy Security Board is doing on designing a secure energy market for after 2025. Our contribution is acknowledged globally.

What have been your greatest lessons?

That technology is moving very, very quickly. To be competitive and efficient and to have a satisfying place to work, we’ve got to be continually learning about the technology that’s available to help us do our jobs. That’s not just generation technology. It’s business and customer technology. Being on top of that, innovating and adopting each opportunity we can develop, has been really important.

This approach is at the heart of our response to coronavirus, when the majority of our staff began working from home. It’s only after making the investment to bring our technology up to date, and making it resilient and secure that we can now operate the business while many of us are working at our homes.

That we adapt to new technology is one of the expectations of the younger people who come to work here. We’ve got to provide them with the workplace that matches their expectations in terms of culture and technology. We want them to come here and do things that interest them, rather than just be a cog in a machine. From a distance, working for a company that’s in renewable energy looks pretty attractive, but you also want it to be the case when they look more closely at us, and to be even more attractive when they come in the door and start working for us!

I started work decades ago in environments that were very hierarchical and when someone disapproved of what you were doing, you got yelled at or worse. Over my career, that’s changed a lot and that’s a good thing. To be a leader and to help others, I have had to let go of all that garbage. We all know that kind words of support do more good than a climate of unease, so getting control of yourself and fronting up each time in a way that helps your team members thrive is the main task of a leader.

What are your future plans and why is it the right time for you to step away from Hydro Tasmania now?

I want to keep working in the transitioning part of the energy sector, and benefit Tasmanians and Australians. After 15 years and seven as CEO, I have become very attached to what I’ve done at Hydro Tasmania. So when people tell me that something needs to change, I can remember why it was changed to the way it is now. That gets in the way. We need to keep changing, so leadership includes accepting that change and driving it further with a fresh approach. I am confident in our future and that the Board will find a leader to get Battery of the Nation done.