Australia's last paper mill, Boyer, faces a significant hurdle in its ambitious plan to transition from coal-fired boilers to electric, with state-owned utility Hydro Tasmania advising insufficient local grid capacity to meet the mill's increased power demands. The mill's new owner, businessman David Marriner, aims to replace the legacy coal burners, which have powered the facility since 1941, with electric alternatives to cut on-site carbon emissions by approximately 95 percent, equivalent to removing one-third of Tasmania's cars from the road.

The Boyer Mill, Tasmania’s fourth-largest carbon emitter, currently consumes around 100 megawatts (MW) of electricity, with the proposed electric boilers requiring an additional 45 MW. Marriner expressed frustration, stating Hydro Tasmania indicated it could not supply the necessary power from the Tasmanian grid without importing it from Victoria at a significantly higher price. The new boilers, sourced from a Norwegian company, are expected to be ready for installation within 15 months, putting immediate pressure on energy supply negotiations.

Hydro Tasmania Chief Executive Rachel Watson confirmed that while the state's power supply is currently in balance, any substantial increase in baseload demand would necessitate increased gas generation or mainland imports. She emphasized that energy sourcing would prioritize the cheapest available options, which may exceed a customer's desired price, aligning with Hydro Tasmania's mandate for commercial returns. The mill currently incurs a $12 million annual cost for importing 88,000 tonnes of coal from Newcastle, New South Wales, highlighting the financial incentive for electrification.

This is not the first time the mill’s electrification plans have faced energy supply roadblocks; a similar request for 50 MW was refused under previous ownership in 2023. Despite federal Labor government funding of $24 million for decarbonization upgrades, the core issue of grid availability persists. Tasmania’s total grid capacity stands at over 2,600 MW, with the last major addition being the 112 MW Granville Harbour Wind Farm in 2020. While the 288 MW Northern Midland Solar Farm is slated for commissioning in 2027, and the 250 MW Weasel Hill solar farm recently received federal approval, numerous other projects, like the proposed Robbins Island wind farm, remain stalled in approvals processes.

Adding to operational challenges, Marriner noted Hydro Tasmania has exercised contractual rights to cut power supply to the mill multiple times since his acquisition, leading to production shutdowns. While these curtailments come with credits, they disrupt schedules and underscore the precarious balance of the grid. Michael Bailey of the Tasmanian Chamber of Commerce and Industry reiterated concerns about an ongoing “energy crisis” in the state, emphasizing that insufficient power hinders industrial growth. He stressed the critical importance of the proposed Marinus Link, a 750 MW interconnector project with Victoria, to unlock new generation investments. Ray Mostogl of the Tasmanian Minerals, Manufacturing and Energy Council advocated for strategically located large-scale generation projects to minimize transmission costs and community opposition. The stability of Tasmania’s major industrial customers, including Boyer Mill, is crucial for the overall grid, as their closure could lead to increased transmission costs for households and heightened network insecurity.