Release the Business Case on Marinus!

There are those who claim energy policy in Tasmania is doing well. Large-scale projects Marinus Link and the new North West Transmission Development grid (NWTD) are set to sail us into a renewable energy future. All big tickety-boo: stakeholders have been consulted, alternatives assessed, community heard, the two major parties are fully on board, Nirvana beckons.

Or is it just a con?

There are others (outside the TasNetworks and Hydro Tasmania boardrooms, and Liberal and Labor parties) who regard the current plans very poorly indeed.

TasNetworks, originally designer and lead on Project Marinus but no longer leading the Marinus Link process since the creation of Marinus Link Pty Ltd last year, continue however to have 100% ownership of the proposed NWTD without which the link is just an extension cord without power or a plug.

TasNet and their sole shareholder, the state government, insist the NWTD is needed to support Marinus Link and any large renewable energy projects attracted by free Tasmanian wind energy and a cable to sell it on to the mainland energy market (NEM).

Tasmanian electricity customers will need to pay for all of that infrastructure, whether they be residential, business or industrial customers. Some are quietly asking if the government is seeking to bend to big business and exclude their share of costs.

So, on the one hand Project Marinus is lauded by TasNetworks, HydroTas and the two major parties, but most independent expert costs-benefits analysis says otherwise. Even TasFarmers are complaining of bad-faith negotiations and warning landholders not to sign any agreements.

Into this conflicted scenario comes recent analysis from an expert anonymous source* raising serious concerns about the costs and risks imposed on Tasmanian electricity customers to repay the costs of Project Marinus and NWTD.

The following is a summary of the analysis seen by Tasmanian Times.

Currently there is only a commitment to Marinus Stage 1 (1 cable) estimated at $3534 million (July 2023) plus NWTD Stage 1 estimated cost of $950 million; total Stage 1 = $4484 million.  

The intention is for the Federal Government, Victoria and Tasmania to provide 20% equity for the first Marinus Link ($707m split 3 ways : 49% Feds = $356m, 33.3% Vic = $242m; 17.7% Tas = $125m).

The remainder will be 80% debt funded via concessional finance from the federal government.

The AER regulatory process determines the maximum dollar amount to be recovered annually from the Tasmania and Victoria electricity customers, and the two governments have agreed the split be 27.6% Tasmania / 72.4% Victoria based on agreed benefits arising to each State.

NWTD is to be 100% owned by TasNetworks and also funded by concessional finance from the Feds. The Marinus submission in November 2024 to the AER “Revenue Proposal Stage 1 – Part B (Construction Costs)” states that the Federal Government provision of concessional finance to both Marinus and NWTD is estimated to reduce the Allowable Cost Recovery from customers by 40% from that required if financed by non-concessional sources, with this arrangement via the Clean Energy Finance Corporation was yet to be finalised at the time that report was submitted.

On this basis, analysis shows the annual costs to be recovered from Tasmania for the first Marinus Link plus the NWTD could be around $100 million, with approximately 25% of that to be recovered from residential customers and the $75 million remainder from business and industrial customers. Residential customer bill impact could be around $100 per annum.

The analysis indicates that there are disproportionately low benefits for Tasmania when compared to Victoria in consideration of population, energy flows and relative economy size.

The benefits attributed to Tasmania have varied from just 6% in the early Marinus business case (around 2020) to the now agreed 27.6%. There could be a business viability issue and therefore political risk to recover costs from the business and industrial sectors in Tasmania and if that was the case it will require the government to subsidise those costs.

Thus the analysis suggests the need for Federal government recognition of the risks and unfair costs allocations to Tasmania which may require additional Federal subsidies and financial guarantees. Tasmanian costs also appear to include paying for a share of the 90km land based (underground) cable to connect to the grid in Victoria.

If Marinus Stage 2 and NWTD Stage 2 were to proceed in the future, the last published capital cost estimates were $2010 million and $525 million (2023) respectively, however these figures are likely to be significantly lower than the reality.

Analysis also highlights the need to consider alternative energy strategies for Tasmania which to date have not been made public and hopefully may be included in the yet to be published in the Treasury’s Tasmania Whole of State business case.

One such option would include a ‘no Marinus’ starting point, continuing to use Basslink for system security during low hydro inflows, for TasHydro to move to direct investment in wind and solar generation in Tasmania (supported by the existing hydro storage “battery”), to plan the grid to avoid the costs of Marinus, NWTD and Cethana pumped hydro (estimated capital cost in 2020 was $1500 million), whilst lowering overall risk in the energy system, leveraging the Tasmania clean green image and brand, and attracting new business to Tasmania.

Such alternative scenarios are complex and Tasmanians deserve to be fully briefed on them before any Final Investment Decision can be made by our government.

All of the above is why communities and independent politicians like Ruth Forrest are calling out Project Marinus.

“We need to see the Whole of State Business case for Marinus currently sitting in the Treasurer’s in-tray which he may have discussed with the Opposition. We don’t know. We deserve to know what the future may look like without Marinus.

“We are always being told how much better we’ll be with Marinus, but rarely what may happen without it.

What are the possibilities, and will they be cheaper and/or less risky than Marinus?”

Why should Tasmanian electricity consumers pay for the operation, maintenance and debt servicing for a cable designed to enable HydroTas and private wind farms to export their products to the mainland? There is no direct benefit to Tasmanians – it is a massive cross-subsidy that socialises costs and privatises profits.

Without the Marinus Business Case, currently locked away from scrutiny, the Tasmanian people and political candidates are denied critical information just as we all head to the polls.

With a budget already blown, and a successful no-confidence motion passed because of it, shouldn’t everyone see just how much more debt this government, and their backers in Labor, are insisting is for the ‘greater good’?

*Editor’s note: Tasmanian Times has established the identity of the source, that they are legitimate, that their analysis offers insights and genuine alternatives to current planning, and that the source has good reason to remain anonymous.

Tasmanian Times (TT) is a community-based news and current affairs service covering the island state of Tasmania. It exists to provide a diverse view of Tasmanian issues. TT creates and supports independent media content utilising the best of modern technologies and tried-and-true practices of public-interest journalism.

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