An analysis of the economics and greenhouse gas impact of Marinus Link and Battery of the Nation: 2021 update
A report prepared for the Bob Brown Foundation – Professor Bruce Mountain, November 2021
Executive Summary
This document updates our 2020 report “Marinus Link and Battery of the Nation: Wrong Way Go Back”.
The main conclusions of that report are that 1,500 MW of four-hour battery can be provided for less than half the cost of Marinus Link; that the same capacity of six-hour battery can be provided for 79% of the cost of Marinus Link and that 1,500 MW of eight-hour battery storage is still cheaper than Marinus Link.
In other words, even if Hydro Tasmania is able to provide, for no additional cost, 1,500 MW that it could export to Victoria day-in day-out for eight hours at a stretch for the foreseeable future, it will still be cheaper to build 1,500 MW of batteries in Victoria rather than to build Marinus Link. Of course the Tasmanian electrical system has no-where near the power or energy capability needed to provide 1,500 MW of supply to Victoria for 8 hours every day and so many billions will be needed to expand its storages and energy production in Tasmania in order to be able to provide the capacity that Marinus Link claims to offer.
In the year that has passed since that report was released, various things have changed. These changes reinforce our earlier conclusions:
• CSIRO’s cost estimates (which we relied on for our battery cost estimates) have become even more favourable to batteries than their earlier estimates which we used.
• Several studies in other countries that point to the likely dominance of (chemical) storage in electricity decarbonisation have been published.
• Large investments in batteries have been made in Victoria and the list of highly prospective chemical battery projects has grown bigger.
Hydro Tasmania has not suggested it will be able to provide a storage service without incurring additional cost. Rather, it has suggested that the cost of Marinus and Battery of the Nation will be up to $7.1bn, which suggests that the cost of establishing the storage capacity (i.e. “Battery of the Nation”) will be about $3.6bn – about the same as the capital cost of the Marinus Link cable needed to make that storage available to the main land. 3 But if Marinus alone is more expensive than eight-hour battery1, how can it be the case that building Marinus plus spending a similar out to build storage capacity in Tasmania, can be preferable to building 1500 MW of batteries in Victoria?
A possible reason that Marinus and Battery of the National could be valuable is that long duration storage (i.e. longer than eight hours) is valuable. In its Project Assessment Conclusions Report, TasNetworks asserts that long duration storage is needed. However this is just assertion, TasNetworks provides no analysis or evidence to substantiate this. For example, TasNetwork has not analysed the Residual Demand from AEMO’s Integrated System Plan data traces. Instead, TasNetworks “encouraged” us to extend our analysis of Residual Demand (in our 2020 report) to AEMO’s Step Change scenario, from our analysis of the Central scenario in our previous report. Presumably, the intention was that by such “encouragement” we would come to a different conclusion than we had in our initial report.
We have responded to TasNetwork’s encouragement in this report and we comes to the same conclusion for the Step Change scenario as we came to for the Central scenario: there is no reason to believe that long duration storage will be valuable based on AEMO’s projection of demand and production from variable renewable generation up to the end of the period it forecasts (i.e. to 2042). Furthermore, it is not even clear that either Hydro Tasmania or Marinus Link will be able to provide long duration storage (however they might define it). In absence of any evidence that there is a demand for long duration storage, or that Marinus Link and Battery of the Nation can supply it (whatever it might be), and in view of the compelling evidence that eight-hour battery is cheaper than Marinus alone, how can it be plausible to claim (as TasNetworks does) that Marinus will deliver benefits that exceed its costs?
As we set out in this update, our updated analysis and our original analysis of residual demand is consistent with the conclusions of major studies elsewhere. In particular, in this report we cite studies published in the last few months by the National Renewable Energy Laboratory and the United States Government’s Department of Energy (DoE). Neither envisage that pumped hydro will have a big role to play in the decarbonisation of electricity supply in the United States. DoE in particular forecast that a fully decarbonised electricity system in the United States will involve the expansion of 2, 4, 6, 8 and 10 hour (chemical) battery capacity from their current capacities of 2, 1, 0, 0 GW in 2021 to 117, 393, 618, 212 and 336 GW by 2050 in the scenario that involves complete decarbonisation of electricity supply and also deep electrification of the United States economy. By comparison, pumped hydro capacity remains unchanged from its 2020 level of 23 GW in all scenarios except the complete electricity sector decarbonisation plus deep electrification scenario where it stays at 23 GW until the 2040s, and then expands to 26 GW by 2050.
Finally, contemporary developments in Victoria since our last report provide confidence that battery storage capacity will be built and operational in Victoria long before Marinus Link and the “Battery of the Nation” developments in Tasmania are close to operational. For example, in the 12 months since our report was published, the Victoria Big Battery (300 MW/450 MWh) was announced and will be commission soon. Another 300 MW/1400 MWh battery in Victoria has been announced for commissioning at Jeeralang by 2026. In addition to these, since our report was released there are now four more gridscale batteries with aggregate capacity of 1,150 MW/3500 MWh that are not yet under construction but seem likely to proceed. Three of the five (80% of total capacity) are colocated with generation.
With the evidence that has come to light in the year since our previous report, we now feel able to conclude that not only does Marinus Link have no chance of competing with battery alternatives but that if Hydro Tasmania develops pumped hydro capacity in Tasmania it is very likely that, like Snowy 2.0, it will not be viable not least because it will be rarely used. This does not show in AEMO’s modelling because that modelling assumes that Tasmanian pumped hydro capacity (and Snowy 2.0) will crowd-out battery development. But we have already seen investor response in the development of batteries, as cited above. It seems to be increasingly likely that necessary storage capacity in the form of chemical batteries will be operational long before pumped hydro capacity in either Tasmania or from Snowy 2.0 is operational. Considering the much higher 5 efficiency and responsiveness of chemical batteries than pumped hydro, if pumped hydro is developed in Tasmania it is surely likely that it, not batteries, will sit idle.
1 TasNetworks has not disputed our analysis of this, though they chose to say that our analysis found that Marinus was more expensive than four-hour battery (which indeed it is, but it is also more expensive than eight hour battery).
Media release – Bob Brown Foundation, 23 November 2021
Project Marinus Rendered Obsolete by Mainland Batteries: New VEPC Report
Battery technology has already leapfrogged Project Marinus and Battery of the Nation rendering them economically unviable is the major conclusion of Dr Bruce Mountain of the Victorian Energy Policy Centre in his damning updated report released today by the Bob Brown Foundation.
“Our initial report released last year focussed mainly on the economics of Marinus Link and this update confirms that Marinus Link continues to have no prospect of competing against battery alternatives in Victoria,” said Dr Bruce Mountain.
“This is the exact opposite of Premier Gutwein’s claims that ‘independent analysis has confirmed Project Marinus is economically viable and will place downward pressure on power prices.’ Premier Gutwein needs to release that advice immediately as the VEPC has produced the figures which demonstrate otherwise,” Christine Milne AO of Bob Brown Foundation said.
“In the year that has passed since our report, the official projections of battery costs have come down, Marinus’ cost has gone up and pumped hydro cost estimates have gone up,” Dr Mountain said.
“Not only that, the Victoria Big Battery (300 MW/450 MWh) was announced and construction will be completed soon. Another 300 MW/1400 MWh battery in Victoria has been announced for commissioning at Jeeralang by 2026. In addition to these, four more grid-scale batteries with an aggregate capacity of 1,150 MW/3500 MWh that are not yet under construction but are likely to proceed have been announced. Three of the five (80% of total capacity) are co-located with generation. We now feel able to conclude that if Hydro Tasmania develops pumped hydro capacity in Tasmania it is very likely that, like Snowy 2.0, it will not be economically viable,” said Dr Mountain.
“No matter how hard Premier Gutwein tries to spin Project Marinus, it is uneconomic and will be a huge burden on taxpayers and will drive up energy prices if Tasmania persuades Prime Minister to come up with the $3.5 billion as part of the federal election campaign,” Christine Milne said.
Project Marinus was included in the AEMO ISP on the assumption of having effectively ‘free’ excess renewable energy in Tasmania because Tasmania passed legislation for 200% renewable energy. AEMO might assume it is free and already built but we know that is not the case. Hydro Tasmania and Aurora are already accumulating debt to pay for this ‘free’ energy for the mainland.
Tasmanians also resent developers treating the environment, migratory species and Tasmanian devils as ‘free’ and able to be destroyed for renewable energy. Destroying biodiversity for energy not being a climate solution was a major conclusion of the recently ended COP26 in Glasgow.
There is such a thing as being too late. It is time for the Tasmanian Government to frame a futuristic vision for Tasmania using our renewable energy for the benefit of Tasmanians and stop chasing expensive duds like Project Marinus,” Christine Milne concluded.
Ben Marshall
November 23, 2021 at 14:12
Thank you to Tasmanian Times, for covering this issue.
I’d only add that when politicians, media and corporate interests talk about costs, they largely ignore the true costs of their proposed infrastructure. By ‘true costs’ I mean not just the cost of building the infrastructure, but the costs of the impacts on communities, small business tourism, property values, forest habitats, farms, iconic views, threatened and endangered animals, water catchments, and the fire risk. Then there’s the industrialising and drying out of our North West, over which hundreds of kilometres of TasNetworks transmission lines will link foreign renewables companies to the Mainland market where Tassie wind energy, now privately owned, will be sold.
Tasmania won’t get power from Marinus, we’ll wave the profits (and ‘jobs and growth’) offshore, we’ll lose out on the true costs, and yet we’ll be the ones paying for the whole mess.
It doesn’t matter which way you vote, Marinus is a truly rotten deal for all of us, and it’s time we told the politicians we vote for to reject it, lock, stock and barrel.