In Tasmania, the island state of Australia, the generator, Hydro Tasmania, is pushing technical, environmental and business boundaries in its plans to integrate a relatively high proportion (up to 20 percent) of large wind generators into its current complex mix of large and small hydropower plants. Its plans include projects to increase the efficiency of its older hydropower equipment as it prepares to supply much needed peaking capacity to the market in southern Australia via the groundbreaking Basslink undersea cable, which is due for completion in November 2005. Taken as a package these developments are creating a globally significant reference site for renewable energy systems. The paper will describe what is happening, and more importantly what is underpinning the developments, including: the harnessing of Tasmania's world-class wind resource, where recently constructed 1.75 MW wind turbines are achieving capacity factors of over 45 percent – some of the best productivity in the world today; the application of leading environmental science measures to ensure the sustainability of both the new wind farm developments and the transformation of the hydropower system to meet peak capacity demands; the relevance of the existing large hydropower storages that can operate in synergy with the wind resource; the contribution of Australia's renewable energy certificate scheme, which is effectively doubling the value of new renewable energy developments compared with existing generation sources; the application of the latest technology in hydropower turbines, combined with power system expertise from the world's leading manufacturers, to increase the efficiency of older hydropower generators, thereby more effectively harnessing the existing environmental footprint; and the transformation of Hydro Tasmania's business into a significant supplier and trader of premium value peak energy into the sophisticated Australian National Electricity Market.