The Commonwealth and Tasmanian Governments have agreed to a new deal to keep the critical Marinus Link project plugged in, after the project’s viability came into doubt due to spiralling costs.
Federal Energy Minister Chris Bowen said his government had reached a new funding deal with Tasmania under which the Commonwealth would increase its share in the joint venture entity to 49%.
Bowen said the agreement was a “game-changer” that would get the project off the ground.
“This updated agreement will not only deliver the benefits of Marinus Link, it will be cheaper to Tasmanians,” he said.
Related article: Spiralling costs threaten Marinus Link project
Marinus Link will unlock renewable energy generation and storage for the mainland through Tasmania’s Battery of the Nation projects, and unlock the next wave of renewable energy development in Tasmania, attracting investment and jobs in the state.
The Commonwealth and Tasmanian Governments have worked closely to ensure the project continues, with the following amendments to the original MarinusLink agreement:
- The project will be focused on one cable in the first instance, with negotiations to continue on a second cable, to be considered after FID on cable 1. AEMO ISP modelling finds the majority of the benefits from Marinus Link are realised from the first cable – close to two thirds. In addition, Tasmania will also get an added energy security benefit from cable one, providing critical redundancy for Basslink.
- Working towards a delivery timeframe as close as possible to 2028, or earlier if possible, while still seeing a value for money and lowest cost outcome.
- Increasing the Commonwealth’s equity share in a joint venture entity to 49%, with Tasmania’s equity share to be approximately 17.7% and Victoria’s remaining at 33.3 per cent, significantly reducing costs to Tasmania.
- Tasmania will have the option to sell its stake to the Commonwealth upon commissioning of the project.
- Increasing concessionality of Commonwealth debt financing via the CEFC subject to CEFC independent decision making and due diligence, delivering lower costs for consumers.
Related article: Marinus Link: connecting Tasmania’s clean energy future
The Commonwealth will also work with the CEFC to provide low-cost debt for the Battery of the Nation Project at Tarraleah, and for the North West Transmission Developments (NWTD), which will increase the capacity of the network in Tasmania.
Marinus Link’s latest cost estimates indicate that stage one of the project will cost in the range of $3-3.3 billion, which will deliver two-thirds of the economic benefits of the project. Based on the updated arrangements the Tasmanian Government estimates its investment to be $106-117 million.
Updated economic analysis from Marinus Link Pty Ltd demonstrates that stage one is projected to deliver economic stimulus over $2 billion and over 2400 jobs, with around 1400 in Tasmania.
Adjacent to this, the agreement with Victoria will be revised to increase the concessionality of Commonwealth debt financing via the CEFC of the VNI West project, further lowering costs.