Bruce Mountain, of the Victorian Energy Policy Centre (VEPC), has politely handed a grenade to the Tasmanian Select Inquiry on Energy Matters – with the pin removed.
Having forensically checked the claims of economic benefit from TasNetworks’ Project Marinus, Professor Mountain reveals their numbers are close to fictional.
Firstly, it’s “now evident that Marinus Link will cost much more to build than first claimed.”
Then there’s the economics of trading Tasmanian energy on the National Energy Market: “Tasmania’s comparative advantage in wind generation relative to Victoria is small if it exists at all.”
Therefore…
“…it would not be reasonable for Tasmanian or Victorian electricity consumers to be asked to contribute any part of the cost of Marinus Link…”
The VEPC also finds the Battery of the Nation concept won’t provide Tasmania with a net benefit. Despite the millions spent on PR to justify Project Marinus – the Link plus the North West Transmission Development (NWTD) – it’s clear that TasNetworks, Jurisdictional Planners of the Energy Sector, have been less than honest about the actual benefits, economics and costs of all it.
‘‘We expect that such cost underestimation will prove to be the case not just for Cethana and Marinus Link but also for the NWTD and the expansion of Hydro Tasmania’s existing hydro generation capacity.”
TasNetworks’ vast new grid, the NWTD, is designed to feed Marinus with new renewable energy, but it primarily serves the NEM rather than us – despite the reality we’ll pay for it all via higher power bills. The NWTD serves renewables companies by exporting their wind energy via TasHydro, which will buy and sell that power according to the whims of the mainland market. But there’s a problem with that.
Despite the positive spin from AEMO (the Australian Energy Market Operator) backing any and all expansion to the market they serve, “AEMO’s analysis of the costs and benefits of Marinus Link is biased… AEMO is a formally a company limited by guarantee, answerable to its members which include the State of Tasmania, TasNetworks and Hydro Tasmania.”
In other words, AEMO is talking up the project which is controlled by the entities who’ll benefit from it.
We’ve already had clear warnings in how Basslink has been managed by our state governments, who remain indifferent to the net costs of Basslink to Tasmanians. Those costs, “which we estimate at $650m over the last 13 years, has been borne by Tasmanians.”
The VEPC’s analysis of other factors, including trade (importing and exporting energy to and from Tasmania), and comparative storage capacities here and the mainland, indicates “trading over Basslink is unlikely to become more valuable in future than it has been in the past: arbitrage profits can be expected to decline as ever cheaper storage reduces the price differential at which arbitrage becomes profitable.”
In addition, the enormous new Tasmanian transmission grid required to make Marinus Link work will cost 1.5 billion dollars “to be recovered from Tasmanian electricity customers.”
While “Marinus Link can’t be justified on the basis of comparative advantage in wind generation”, the Tasmanian government appears to suggest the Battery of the Nation concept will be less the point of Marinus than the two-way nature of the link. TasHydro, now primarily an energy arbitrage speculator, may import more energy from Victoria than vice versa – making Marinus another Basslink.
As Basslink has proved to be an exemplar of public energy sector mismanagement, and will be in competition with Marinus Link, what will stop it and TasNetworks’ NWTD from being yet another burden for Tasmanian taxpayers?
Marinus Link has just quietly announced that the total costs for Stage 1 of the project are now forecast at $3.86 billion, an increase of around 17% compared to pre-tender completion estimates. This is on top of already admitting earlier in 2024 that Marinus Link ‘would cost at least twice as much as what they had previously said it would.’
And TasNetworks have another three Marinus Links in planning.
Professor Mountain’s analysis concludes that our current “hydro production is not sufficient to meet Tasmania’s demand plus net exports. This suggests limitations in hydro generation, not interconnector capacity, in providing a storage service to Victoria.”
Only by a massive expansion of hydro storage in Tasmania could we potentially provide for ourselves, with excess for sale on the Mainland – a massive cost to us, one that ignores cheaper and more efficient options (solar + batteries), simply to serve the interests of the energy market and Victoria power consumers.
VEPC studies have already shown, however, that “even if we assumed that Tasmania had surplus power and storage capacity in its system and so could provide a storage service with no incremental cost, it would be cheaper to develop batteries in Victoria than to develop Marinus Link.”
Review of current battery storage leads to “the conclusion that 24-hour electro-chemical storage will be much cheaper [and more efficient] than Cethana.” Therefore “it is now very unlikely that Tasmania has a comparative advantage in the provision of long duration storage.”
Why has AEMO fudged figures to back Marinus Link?
“It is answerable to its members [which] include the State of Tasmania, TasNetworks and Hydro Tasmania. AEMO’s analysis of MarinusLink has evidently been crafted to deliver conclusions in line with the clear wishes of these organisations.”
Dodgy figures, hyperbolic claims and slick corporate PR from ReCFIT and TasNetworks, costs blowouts before a single pylon has gone up, a promise of increased transmission costs (ie. your power bills), and a total disregard for the realities of the energy market or the actual needs of Tasmanian citizens and businesses characterise the current debacle that is energy ‘policy’.
The case for current Tasmanian settings “is even weaker with MarinusLink than Basslink.
It follows from this that MarinusLink will be a dead-loss, even more so than Basslink has proven to be.”
Professor Mountain concludes his submission with a vastly cheaper, more staged, more scalable solution, one that directly benefits Tasmanian businesses and households using off-the-shelf tech – large-scale rollout of rooftop solar with battery storage. “Tasmania would be very much better off expanding its own rooftop solar supply… rather than incurring the enormous expense… to build Marinus to increase imports of a product that can be made just as cheaply in Tasmania.”
In conclusion, mismanagement and political self-interest currently dictate energy policy. Short-term thinking that only seeks to ‘create investment opportunities’, ignores not just the costs to taxpayers and electricity users but the costs to our wild forests, bulldozed for new transmission. Our local tourism small businesses will shut due to destroyed views and habitat, rural people will face higher fire risks, and we will see reduced grid resilience from cheap overhead transmission through forests.
Marinus and all its associated planning is a train crash we can prevent. However, without political will to plan well and equitably for Tasmanian interests, our two major parties will continue with the worst designs possible for our energy future.
Ben Marshall is a member of SOLVE, a community group seeking to defend the Loongana Valley from the unwanted, unnecessary and destructive industrialisation of TasNetworks’ proposed North West Transmission Development. More information can be obtained from solvetasmania.org
Chris
December 22, 2024 at 12:26
“Electric Eric” believed that development of hydro would aid Tasmanian industries by using electric power to manufacture goods and secure minerals. Some of that plan required cheap power which would be partially provided by the consumers, namely you and I, to subsidise industry. Guarantees were given that the generating assets would not be sold.
It was assumed, or hidden, that we would not realise that wind generated income is partly Chinese owned.
Hydro power has never been sufficient to meet its needs in this state, and so these are assisted by the importation of power from the mainland.
Ted Mead
December 24, 2024 at 11:17
What a surprise it was to read the conclusions of professor Mountain! Anyone who thought another Bass Strait Cable was going to be a game changer for Tasmania’s economy has obviously been smoking too much funnyweed.
The whole fantasy that Tasmania was to become ‘the battery of the nation’ is ludicrous. Even if all the proposed wind farms were built, the numbers would never stack up to benefit the average Tasmanian as this article quotes: “Dodgy figures, hyperbolic claims and slick corporate PR from ReCFIT and TasNetworks.”
With unreliable rainfall, even the state’s dams will struggle to export any surplus power. More undersea power cables means more Tasmanian debt. It may come down to the federal government funding the Marinus link, though there’s no futuristic big power users looking at it for supply in Tasmania. So where are the benefits of the scheme?
As Professor Mountain concludes .. “Tasmania would be very much better off expanding its own rooftop solar supply .. 24-hour electro-chemical storage will be much cheaper, and .. more efficient options (solar plus batteries) simply to serve the interests of the energy market and Victoria power consumers.”
Now that the Marinus Link project has been clearly identified and forecast as an economic disaster, Tasmania’s history shows that the likelihood of it being supported and approved by the Tasmanian parliament for construction is inevitable!