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- In short: The costs carve-up between the federal, Tasmanian and Victorian governments to pay for the multi-billion dollar undersea interconnector project has been renegotiated after the Tasmanian government threatened to walk away
- What's next? An industry expert warns Tasmanians "can expect bills to increase by around 10 per cent from 2028 for the next 40 years"
A new deal has been struck to keep the Victoria/Tasmania Marinus Link undersea power cable project – central to the "battery of the nation" dream – afloat.
In a joint announcement on Sunday, the federal and Tasmanian governments said they were "acting with a new deal to keep the critical Marinus Link project plugged in – driving economic growth and putting downwards pressure on prices across Tasmania and the national east coast grid".
The project, which was to deliver a connection via more than 300 kilometres of undersea and underground high voltage cable between Tasmania and Victoria's Latrobe Valley, was originally estimated to cost between $3.1 billion and $3.8 billion.
However, the financial burden of the project saw the Tasmanian government announce last month it wanted to renegotiate the terms of the deal.
Today, in a joint statement the federal and Tasmanian governments said they had "worked closely to ensure the project continues" – with amendments made to the deal including:
- The original vision of two cables downgraded to one, with "negotiations to continue on a second cable"
- Tasmania's contribution towards construction drops by almost half, with the Commonwealth's share to increase and Victoria's to stay as originally negotiated
- Tasmania to "have the option to sell its stake to the Commonwealth upon commissioning of the project"
Marinus Link is part of Tasmania's "battery of the nation" strategy and is also listed among the Australian Energy Market Operator's top five priority projects.
Tasmania has enough green hydro energy capacity to power the entire state and also has five wind farms, with several other wind projects under consideration.
However, some analysts have argued that as Victoria invested more in its own wind farms and battery storage, it made less business sense to fund an expensive multi-billion-dollar cable between the mainland and Tasmania.
Tasmania has long argued the largest benefits of the project go to the mainland and Tasmanians should not pay a disproportionate amount.
Today, both governments conceded Marinus Link was "competing in a global market with tight supply chains and is facing similar inflationary pressures to other major energy and infrastructure projects around the world".
Stage one of the project, the proponents say, would "deliver economic stimulus over $2 billion and over 2,400 jobs, with around 1,400 in Tasmania".
Minister for Climate Change and Energy Chris Bowen said it was "a game-changing project for both Tasmania and the mainland and this updated agreement will not only deliver the benefits of Marinus Link, it will be cheaper to Tasmanians".
Tasmanian Premier Jeremy Rockliff said it would mean "jobs, economic growth, energy security and lower power prices with Tasmania investing its fair share and no more".
The governments said they were "working towards a delivery time frame as close as possible to 2028, or earlier if possible".
In a statement, Marinus Link's chief executive Caroline Wykamp said today's announcement was "a signal of confidence for the project, which stood to deliver significant environmental, economic and social benefits".
"Marinus Link is more than an interconnector; it's an enabler," she said.
"This project will deliver more renewable generation development in Tasmania and the mainland, more energy security to both Tasmania and the mainland and more movement and access to lower-cost renewable energy sources, helping deliver lower energy costs in the long term."
Ex-Liberals question deal, condemn Father's Day timing
In a joint statement, Lara Alexander and John Tucker — former Liberals who quit the party in part over the Marinus deal — said the renegotiated deal "raises more questions than answers", saying the Tasmanians premier's "numbers simply do not stack up".
"Today's announcement from the premier reveals nothing of the cost blowouts which the government has admitted would have sent the state broke if it pursued the deal it signed last October. It conveniently leaves out how much we have already spent on this project.
"It also does NOT address the impact of these massive energy projects on Tasmania's power bills with the exception of an unsubstantiated claim by the premier that it will deliver savings.
"Savings on what? Can we please see the cost-benefit analysis? We have no doubt the Tasmanian people will be happy if this ratio is simply presented, in black and white, and not as another glossy brochure."
The pair, whose defection saw the Liberals go into minority government in Tasmania, condemned the Father's Day announcement of the deal.
"If this announcement is such a great result for Tasmania why not make a big fanfare and announce it when the prime minister was in [Tasmania] the other day? Why not announce it at the start of the week?
"Why make this announcement on a Sunday which happens to be Father's Day as well and everyone is busy spending time with family?
"What is the government hiding? Enough of the smoking mirrors, can we please be open about the real cost of Marinus Link and associated projects? The government has had enough time to get this right and clearly is not up to the job.
"Parliament needs to assert its authority and we will be moving this week for a joint house committee of inquiry to get to the bottom of it before the government locks us into catastrophic consequences, which if we get it wrong, will last forever."
Tasmania's state-owned operator happy
Hydro Tasmania, the state-owned hydro-electric company, welcomed the announcement and described it as a "good outcome for Tasmania and for Tasmanians".
"Electricity consumption in Tasmania is set to almost double over the next 30 years, with our lives and our businesses undergoing rapid electrification," Hydro's chief executive Ian Brooksbank said.
"A century ago, our hydro pioneers set [Tasmania] up for economic success with a bold vision for homes and industry powered by clean, green energy.
"Marinus Link and redevelopment of Tarraleah [power station] will underpin economic growth for another century to come."