Fate of $5bn Marinus Link project blowing in the Tasmanian political wind

It is supposed to make Tasmania the renewables battery of the nation, but the Marinus Link is up in the air as the government suppresses ‘ugly’ power price impacts.

Tasmanian Premier Jeremy Rockliff. Picture: Nikki Davis-Jones

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One of the nation’s largest energy projects – a $5bn-plus undersea cable and transmission scheme – is “at risk” due to Tasmania’s political standoff and concerns over “ugly” power price impacts.

Sources told The Australian the federal and Victorian governments were ready to proceed with the Marinus Link, which aims to spark a wind and solar boom in Tasmania and export clean energy to Victoria.

However, the third, minority partner – Tasmania – is struggling to make a final decision on the 750-megawatt “Stage 1” cable that was promised by July 31.

Its Liberal government is stuck in caretaker mode following the July 19 election and is scrambling to negotiate its survival in minority with crossbenchers, some of whom oppose Marinus.

The government – whose fate will likely not be known for weeks – is suppressing the final “whole of state” business case received 10 weeks ago, and is accused of breaching caretaker conventions by refusing to brief Labor.

Political and business figures say the delay and uncertainty is placing the 345km link – and the associated NW Tasmanian transmission project – at risk, with a window about to close on the purchase of cabling that, if missed, could kill off the project.

An artist’s impression of the proposed Marinus Link between Tasmania and Victoria.

There is real concern that the potentially transformative project may fall over. “That’s the risk,” said Tasmanian Minerals, Manufacturing and Energy Council chief executive Ray Mostogl, who has received a “high-level” briefing on the business case.

He believed the Liberals should engage with Labor in an urgent ­bipartisan approach to secure the potentially transformative project. “They do need to do that,” he said. “The issue is that it’s so complicated that if you try to run it up a flagpole in the middle of an election campaign, or in the current situation of trying to cobble ­together a government, I think you’re going to lose it.

“People are just going to go ‘I’m not sure about this, so the answer’s no’. And we can’t afford for that to happen. The government has to get … sorted and then present it.

“There will be some ugly numbers in it, which people who are against will make a big deal about. But there are also some good numbers in there.”

Independent MP Craig Garland at the site of the proposed Marinus Link interconnector. Picture: Elise Kaine

The handling of the issue is causing division within the government, with Liberal sources accusing Premier Jeremy Rockliff or his staff of blocking a briefing to Labor by Energy Minister Nick Duigan.

Mr Duigan’s office is understood to have been keen to brief Labor and create bipartisan support for a timely decision.

Power-sharing talks with crossbenchers could take weeks to conclude, even after the final seats are determined by August 2.

By the end of August, Marinus Link must “issue notice to proceed” or lose a €600m ($1.07bn) contract for supply of the 345km of cable with the Italy-based ­Prysmian Group.

One of the independents both parties are courting for supply and confidence – Braddon MP Craig Garland – is staunchly opposed to Marinus, while several others are sceptical of its benefits.

At least three balance-of-power independents are demanding to see the whole-of-state business case. Those briefed on the document say it includes significant price impacts to pay for the transmission infrastructure.

The Liberals have told business leaders they will negate these by effectively subsidising those affected, including big industrial power users that employ thousands.

This offsetting will come from an estimated $200m to $400m in extra revenue for the state that would allegedly flow from exporting clean energy to the mainland.

An artist’s impression of the proposed Marinus Link undersea-HVDC-cable that would connect Tasmania to the mainland.

The key to industry and public support will be how believable the promised compensation is, as the state grapples with a budget crisis and the trebling of debt to $13bn over three years.

Mr Rockliff has promised a final business decision by July 31 and had vowed to release the business case a month earlier. Labor is accusing the Liberals of breaching caretaker conventions.

“This is the largest infrastructure project in Tasmanian history. It has been on the drawing board for 11 years, but the Liberals have been hiding its final business case for two months,” Labor energy spokeswoman Janie Finlay said. “We have been expecting a briefing throughout the caretaker period and received nothing. What are they hiding, and why?

“We are concerned the business case shows price shocks for households and businesses – kept hidden by the Rockliff government for its own political gain.”

Ms Finlay said Labor understood Mr Duigan and his office “have been wanting to brief the opposition but (have been) prevented from doing so by the Premier’s office”. “This raises serious integrity concerns,” she said.

Tasmanian Labor energy spokeswoman Janie Finlay has asked what the Rockliff government is hiding. Picture: Richard Jupe

Tasmanian Energy Minister Nick Duigan. Picture: Nikki Davis-Jones

The government denied Mr Rockliff or his staff had blocked a briefing for Labor on the business case, while citing the election as the reason for its suppression.

“It will be released soon,” Mr Duigan said.

He denied the government was breaching caretaker conventions or delaying a decision to avoid alienating crossbenchers.

Labor would be “provided information in accordance with caretaker provisions”, he said.

“The (cable) contract and the project are not at risk.”

Mr Duigan would not detail the increases in power prices outlined in the business case.

On Thursday, Mr Rockliff gave conflicting statements on the project, saying Marinus was “a good deal for Tasmania” but he would not support it “if it is going to cost Tasmanian taxpayers more”.

“We need to ensure power prices do not go up,” he said.