The global energy sector is in a state of flux, with the pace of change faster than anything we’ve experienced since the industrial revolution corralled humanity into the modern era. Yesterday’s assumptions are tomorrow’s chip wrappers.

Our Tasmanian Liberal government made a brave call in 2020 when it legislated the 200% Tasmanian Renewable Energy Target, which relies on two new high voltage cables under Bass Strait to deliver our hydro and wind energy to mainland Australia.

Fast-forward three years, and the energy dynamics on Australia’s eastern seaboard have changed. The election in May last year of a federal government with an acceptance of climate science and at least the semblance of an energy policy has given some certainty to investors in renewable generation and storage. There’s a carbon emissions target and an acceptance that fossil fuel usage will decline (with a nod and a wink to the industry lobbyists).

The Tasmanian ‘vision’, having started on the basis of exporting electricity, has morphed into a dual plan to also use new wind power to produce hydrogen – a largely unproven technology which backers believe will replace diesel fuel in large transport vehicles, heavy machinery and ships.

Fourth in line

Simple maths says Tasmania can never support a major hydrogen industry.

While the state Liberal government churns out the mantra of ‘battery of the nation’ and ‘powerhouse of Australia’, the troubled Marinus Link on which all its policies hinge is undergoing an image makeover.

Much is made of Tasmania’s renewable energy production. It’s true that most of the state’s annual output is derived from hydro and wind generation, aided by rooftop solar. Government spin leads people to believe that the island state is the biggest producer of renewables in the country, and that Victoria, via the National Electricity Market(NEM), will pay big bucks for our clean, green energy.

However, the truth lies in figures from the Department of Industry, Science, Energy and Resources. Its Australian Energy Statistics of April 2022 indicates Tasmania’s 10,576 Gigawatt hours (representing 98% of our energy production capabilities) places us fourth in renewable energy rankings. It falls well behind the NSW output of 17,128GWh (24% of production) Victoria‘s 15,293 GWh (30%) and Queensland’s 12,607GWh (18%).

Every state has plans to double its total energy output to meet the demands of electrification, and Tasmania’s share of the NEM will never increase above its 4% contribution. The Renewable Energy Framework assumes an additional 9,950 megawatts of wind and solar generation will be built in the state to reach the 200% target by 2040. That would require around 2,000 wind turbines to be added to the current 198, supported by large corridors of transmission towers.

However, with all this expansion in capacity, the Hydrogen Plan Action which Renewable Energy, Climate and Future Industries Tasmania (ReCFIT) embraces is just pie-in-the-sky stuff.

 World’s first green hydrogen

Back in 2021 Andrew Forrest was out and about in the state, promising the world’s first commercial scale green hydrogen facility at Bell Bay. His pipe dream was spoiled when the CEO of Hydro Tasmania contradicted Energy Minister Guy Barnett, and publicly announced there was no capacity to deliver the required energy.

It was reported that Forrest was angling for an energy price of $20 per megawatt – or about half of the rumoured rate which our major industrial users currently pay. That would have amounted to a $50 million subsidy per year.

Within days Forrest popped up in Queensland, where millions in subsidies were garnered for his alternate vision – not the manufacture of hydrogen, but the production of electrolysers to separate the gas. Also within days, Hydro CEO Evangelista Albertini was gone, silenced with a $475,000 golden handshake.

The problem which the Hydro boss identified was the guarantee of firming power to keep a hydrogen or ammonia plant running 24/7.

As well as Forrest Future Industries’ 250 megawatt plant, Woodside Energy proposes a 300 MW pilot plant, Origin a 600 MW facility, as well as two proposals for smaller scale bio-energy factories. All of them see proposed wind farms as their energy source. In Tasmania, a wind farm has a ‘capacity factor’ of around 40% – which means that each one produces less than half of its nameplate capacity.

Hydrogen energy demands

Using a 300 MW hydrogen plant as an example, a 300 MW wind farm (such as the proposed St Patricks Plains development) leaves a 60% shortfall in its ability to supply constant power. This firming power would need to be guaranteed by Hydro Tasmania.

A 300 MW hydrogen plant requires 2,628 gigawatt hours of electricity annually – which is 24% of the state’s current production. Hydro’s firming power contribution at 60% of 2,628 GWh would require 1577GWh – which would be 19% of our water-powered generation. This would be for just one pilot plant.

Another way to look at the energy demand is to calculate the requirements needed to make the 250,000 tonnes of gas which is continually cited as targeted annual production. One tonne of hydrogen requires 49.5 megawatt hours of power to produce and compress, which means an annual consumption of 12,375 GWh – 20% more than the entire state output.

The Government faces a dilemma: How to store water in the lakes as a potential battery for the Victorian market, while simultaneously backing-up the Bell Bay Hydrogen Hub.

Enter Marinus Link

For the past five years Tasmanians have been told we will export our highly desirable, green, renewable energy to a desperate Victorian market via the NEM. It will be a money-spinner for the state. Minister Barnett was enthusiastic in a Government Business Enterprise hearing in late 2020: “We have the trifecta in Tasmania, which is affordable, reliable, clean electricity.  That is what the rest of Australia wants, that is what the rest of the world wants and desires.”

But to realise this windfall, Tasmanians must accept the unchecked proliferation of wind farms – all privately owned – and the borrowing of $3.6 billion to construct a pumped hydro scheme at Lake Cethana in the state’s north-west, plus another $1 billion loan for transmission infrastructure.

This is in addition to the latest estimate of $3.8 billion needed to build the twin undersea cables from Heybridge to Gippsland. The only concrete fact that’s emerged thus far is that the construction cost has risen from about $2.5 b to the current price (which was nonchalantly upped by another $300 million late last year).

Despite calls from energy experts and the public, a business case has yet to be released for its construction, with ‘a final investment decision’ to be made by the end of 2024. A lifeline announcement in October 2022 by the Albanese Government to spread the cost between the Commonwealth, Victoria and Tasmania has been embraced by officials here.

Minister Barnett assured us: “Equitable cost sharing arrangements…have been agreed, meaning that Tasmanian consumers will only pay their fair share [and]…low-cost financing…will reduce the annual cost of Project Marinus for electricity customers by up to half. Once Marinus Link is built, Tasmanian customers [will] pay no more than 15% of estimated total project costs”.

The Federal Minister for Climate Change and Energy Chris Bowen will not be drawn on precisely what the Commonwealth and Victorian contributions will entail, except to repeat that Federal loans at a concessional interest rate will now make the project viable.

Victorian priorities

However, it has become apparent that an acceleration in renewables projects on the mainland has taken the gloss off the rosy profit predictions made earlier. Indeed, Victorian Energy Minister Lily D’Ambrosio stated in June 2022 that the KerangLink was the focus for Victoria’s transmission extension, forecasting electricity exports to NSW of 1930MW by 2026.

A spokesman for D’Ambrosio wrote in response to enquiries: “KerangLink is a key priority for the Victorian Government, and our preference is to see KerangLink complete before Marinus Link. Regarding how Marinus Link will be paid for, that is still to be determined. The Victorian Government will support what we determine to be in the best interests of Victorian consumers.”

At the moment, Victoria and the Commonwealth have only agreed to fund two thirds of 20% of the project cost – that’s just $252 million each. The remaining $3 billion will be debt.

With the troubled Basslink interconnector as a living reminder, there’s a growing wealth of evidence which paints Marinus as a debt-ridden white elephant. So why does the Tasmanian Government persist in its determination to see the link constructed?

Political ideology might be the simple answer.

New message

With the quiet departure in January of Marinus Link Pty Ltd CEO Bess Clark, there’s been a subtle shift in the narrative. This might well be part of the strategy of Melbourne PR firm 89 Degree East, who are engaged in a $1.1 million campaign to sell Marinus to the Tasmanian public. Clark’s in-house successor was also massaged into her role only recently, coinciding with The Mercury’s in-step advertorial feature ‘Future Tasmania’, which culminated in a cheer-squad of corporate and government employees at a $150-a-head business lunch.

The message has now shifted from the cable paying its way through the export of high margin hydro power to its ability to import power at give-away prices when there’s an oversupply in the Victoria. The fact that massive Large Scale Batteries are now multiplying in that state (Hornsdale, Moorabool, Mortlake) and elsewhere throughout the other four states in the NEM seems not to have pervaded the pro-Marinus argument.

Eight new grid-scale lithium-ion batteries have been partially funded by the Australian Renewable Energy Agency. According to ARENA, the new batteries have a combined capacity large enough to power the entire state of Tasmania for more than three hours using stored renewable electricity.

While this doesn’t match Hydro’s claim  that pumped hydro will result in deep storage of 12 hours duration, these facilities will be in service by 2025, while ‘battery of the nation’ and Marinus will not be fully commissioned until 2033. That’s plenty of time to build dozens more batteries – many using emerging technologies. These recharge every day, and don’t require huge energy draws to push water 3.5 kilometres back uphill.

The new narrative is that there will be so much unwanted power in the NEM that we can import it for next to nothing – which fits conveniently into a model where hydrogen manufacture could soak it up. But if surplus energy is truly the case, surely it would be far cheaper for a manufacturer to source the energy on the other side of Bass Strait. Not only would this alleviate the cost increase from transferring the power via Marinus, but negates the expense of shipping hydrogen or ammonia interstate.

So how will these evolving generation and storage issues affect the Marinus business case? Apparently we’ll need to wait until December 2024 to learn the details. In the meantime, millions of dollars are being spent as Marinus Link Pty Ltd acquires land, has a vessel at sea plotting the cables’ path, and is engaging in an orchestrated campaign to win our hearts and minds. It’s parent company, TasNetworks, is scoping high-voltage transmission corridors to get new generation to the converter station at Heybridge.

Huge amounts of taxpayer-funded effort is being expended on Marinus Link, and by extension, hydrogen manufacture and Tasmania’s subjugation by wind farms. Applying some simple sums could redirect the time and effort being put into a project which appears increasingly unwanted (and unviable) by the day.

Monumental plans and waste

The Australian Energy Market Operator (AEMO) sees Marinus as a necessary link in its integrated grid – but its perspective is one of corporate self-interest, and admits in various reports that the financial case must be made to the satisfaction of individual states before construction is locked in.

Federal Minister Bowen is a zealous advocate of the need for complex interconnection, and his Rewiring The Nation budget of $20 billion will provide cheap loans needed to get Marinus included in his plan for 10,000 kilometres of new transmission infrastructure.

Victorian Energy Policy Centre researchers Prof Bruce Mountain and Prof Simon Bartlett believe we should be focussing on local production, storage and consumption of energy. In a detailed submission to AEMO last week, questioning the viability of the Western Renewables Link and the Victoria-NSW Interconnector West, they state:

“Instead of making the best use of the wonderful grid we already have, AEMO want the community and renewable generation developers to wait on it to deliver its monumental plans… Its own analysis shows that the most monumental thing about its plans is the amount of time, natural resources and money it wastes.”

Tasmania is one of the first places on the planet which can run entirely on renewable energy, and has a net zero carbon footprint. Why not build carefully sited, publicly-owned wind farms; update existing hydro turbines; and keep the energy on-island to attract sensibly-sized businesses to our state? It seems a far more achievable goal, and we could see positive change immediately – not in a decade.