Marinus Link: Tasmania’s new deal a ‘ripper’, energy minister says, as TasNetworks, Hydro laud action
Business and energy market players such as Hydro Tasmania and TasNetworks have lauded a new plan to lock in at least one of two undersea interconnector cables, but Labor say hidden costs remain.
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Updated, 3pm Sunday: Energy Minister Guy Barnett says a new agreement with the Commonwealth on Marinus Link is a “ripper deal” that would ensure the state still receives the lion’s share of economic stimulus but at a fraction of the cost.
On Sunday, it was revealed that a deal had been struck with the federal government on the 1500MW two-way undersea interconnector, wherein the first of two cables would be prioritised, and Tasmania’s equity stake in the project would reduce from 33 per cent to 17.7 per cent.
As a result, the federal equity share would rise to 49 per cent, and Tasmania would only have an initial outlay of between $106–$117m, with the majority of the project’s funding – 80 per cent – sourced via a concessional loan from the Commonwealth’s Clean Energy Finance Corporation.
Tasmania also has the option of selling its remaining stake to the Commonwealth post commissioning, further reducing the debt it incurs from the project.
Mr Barnett said the first cable, which has new-found certainty and is expected to be operational by 2028, was projected to deliver 1400 jobs and $1.8bn of economic activity for Tasmania.
The new arrangements are still subject to a final investment decision in late 2024, during which point the second, deferred cable will be considered.
The first cable alone has an estimated price tag of $3–$3.3bn. Both cables were initially estimated to cost a combined $3.1bn–$3.8bn, but the estimate subsequently rose to $5.5bn, leading Tasmania to seek greater Commonwealth support.
Speaking to the media on Sunday morning, Mr Barnett described it as a “ripper deal” for the state.
“I’m certainly one of the happiest energy ministers in Australia today, with a smile as wide as the Bass Strait itself,” he said.
Mr Barnett said Marinus would particularly benefit regions including the North-West and Central Highlands, with private energy investors and utilities such as Hydro Tasmania obtaining certainty they will be able to export renewable electricity they generate to the mainland at a profit.
Hydro chief executive Ian Brooksbank said Marinus was the “linchpin” that made its proposed Tarraleah Power Station redevelopment and long-duration pumped hydro at Lake Cethana make sense.
The $1.05bn Tarraleah redevelopment would see an energy efficiency increase of 30 per cent, adding an additional 100MW of peak capacity. A final investment decision is due in late 2024.
TasNetworks chief executive Sean McGoldrick said the new deal locked in the utility’s North West Transmission Developments (NWTD), 240km of new and upgraded transmission lines and other energy infrastructure that will increase the capacity of Tasmania’s electricity network.
“The jobs and economic stimulus benefits from both Marinus Link and the NWTD are significant, and will ensure that Tasmania is well placed to benefit from the ongoing national transition to renewable energy,” he said.
Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey described Marinus Link as a “transformative project for the entire Tasmanian community”.
“We are in an energy crisis and [Sunday’s] announcement gives investors and developers the green light to begin building the vital clean energy generation projects that will power Tasmania’s economy for generations to come,” he said.
More renewable energy projects getting over the line was the key to reducing the cost of energy bills for everyday Tasmanians, he said.
The new deal was savaged by Labor’s energy spokesman Dean Winter, who said that Mr Barnett and Premier Jeremy Rockliff had been “essentially stripped of their responsibility for delivering Marinus”.
“Tasmania will pay less because it will own less. The Victorian and Australian governments will own 82.3 per cent of the asset,” he said.
Mr Winter said that a focus on the headline cost of Marinus Link failed to take into account the additional cost of the NWTD needed to facilitate the project, which Labor believes will be $1–$1.5bn.
Further, Mr Winter said there had still been no reliable evidence placed into the public domain that Marinus Link would in fact lead to lower energy bills for Tasmanians.
A statement on the new deal will be made to parliament on Tuesday.
Tassie strikes new Marinus Link deal with feds after ‘line in the sand’ moment
Earlier, 5am Sunday: The state government has struck a new deal with the Commonwealth on Marinus Link, promising that Tasmanian taxpayers will now shoulder less of the financial burden associated with the massive infrastructure project.
Premier Jeremy Rockliff and Energy Minister Guy Barnett will announce the revised agreement in Devonport on Sunday morning, less than a month after Mr Rockliff drew a “line in the sand” and expressed doubts about the “material and significant cost increase” associated with the twin cables.
The Premier said then that he had written to Prime Minister Anthony Albanese and spoken to him about his reservations concerning Marinus Link, which would run between North-West Tasmania and Victoria and has been projected to cost between $3.1bn and $3.8bn but is now expected to cost up to $5.5bn.
It appears Mr Albanese has taken Mr Rockliff’s concerns on-board, with the new deal being touted as a win for Tasmania.
In the original agreement announced in October last year, it was revealed that 80 per cent of the financing for the 1500MW undersea interconnector would come from a concessional loan through the Commonwealth’s Rewiring the Nation scheme, using the Clean Energy Finance Corporation (CEFC).
The remaining 20 per cent would come from a joint equity venture shared equally between the Commonwealth, Tasmania and Victoria.
Under the new deal, however, the Commonwealth’s equity share will increase to 49 per cent, Tasmania’s will fall to 17.7 per cent, and Victoria’s will remain at 33.3 per cent.
Mr Rockliff said it was a “great outcome” for Tasmania.
“It will mean jobs, economic growth, energy security and lower power prices with Tasmania investing its fair share and no more,” he said.
In another major change of plans, the focus of the controversial project will now shift away from two cables to just one, with a call to be made on whether a second is built once a final investment decision is made on the first next year.
It’s hoped cable number one can be delivered “as close as possible” to 2028 or possibly even earlier.
The agreement also outlines that Tasmania will have the option to sell its share of Marinus Link to the Commonwealth following completion.
The federal government has pledged to work with the CEFC to provide low-cost debt for Hydro Tasmania’s Battery of the Nation project at Tarraleah and for TasNetworks’ North West Transmission Developments.
Federal Climate Change and Energy Minister Chris Bowen said Marinus Link would be a “game-changing project” for both Tasmania and the rest of the country.
“The Albanese Government’s commitment is a win-win-win – for Tasmanian consumers, for Tasmanian energy security and to put downwards pressure on energy bills,” he said.
A November 2021 report by Professor Bruce Mountain at the Victoria Energy Policy Centre warned that Marinus Link could end up as a stranded asset.
Marinus Link’s own economic analysis shows that stage one of the project is projected to create more than 2400 jobs – with about 1400 of those being in Tasmania – and economic stimulus of more than $2bn.
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