Both major parties seek to make Tasmanian taxpayers and electricity consumers pay for a vast new grid (the NWTD) supporting the $6.7+ billion Project Marinus Links and the Battery of the Nation concept.
While government and big business argue it’s essential for our economy, independent analysis finds little to no benefits compared to the costs.
But Marinus, and the private energy market it subsidises, looks even worse when the claims of ‘jobs and growth’ are analysed against one of the most likely users of new renewables – AI data centres.
While “AI” is touted as the new industrial revolution, the claims, and any benefits, may be vastly outweighed by the costs.
In a letter to Murchison MLC Ruth Forrest, Kim Phillips-Haines has analysed the claims, the risks and the intersections between the energy sector, corporate, AI and environmental outcomes; she comes to some very sobering, and worrying, conclusions.
This is essential reading for all politicians and planners, and Phillips-Haines has addressed the following letter to the Chair of the Joint Select Committee on Energy Matters.
To: The Hon Ruth Forrest MLC, 28 July 2025
Dear Ms Forrest,
First of all, I would like to thank you for your excellent work as the chair of the Joint Select Committee on Energy Matters. Although the work of the Committee was cut short by the election, it still provided the public with valuable information, to which they would otherwise have had no access.
It was recently announced in the news that one of Australia’s largest Artificial Intelligence data centres is soon to be built in Launceston. Since data centres are extremely energy intensive, plans to establish an AI industry in Tasmania are closely related to the issue of energy. In fact, the CEOs of Marinus Link Pty Ltd. and TasICT have both said that the Marinus Link will enable “database industries” including Artificial Intelligence data centres, because Marinus is not only an energy cable but will also come bundled with fibre optic cables that will have a bandwidth capacity more than 150 times the capacity of all current data fibre cables in Bass Strait.
How many data centres could potentially come to Tasmania is not yet clear.
However, an article in the Financial Review newspaper stated, “Australia’s data centre capacity is forecast to more than double by 2030, requiring 175 new facilities.” Also, Tasmania’s cool climate has been described as being ideal for data centres, while our renewable energy makes it possible for AI companies to “create a new type of green AI token”, marketed as being “clean and powered by renewables”. The Office of the Coordinator-General writes that, “Tasmania provides an exceptionally strong proposition for data centres.” It therefore seems likely that there could be considerable interest in data centre investment in Tasmania. However, before jumping headlong into enabling the establishment of an Artificial Intelligence industry in our state, it is important for the government to be aware of the problems that may arise and to give careful consideration to whether it is even desirable to have a large AI industry in Tasmania, especially considering the government’s current energy plans.
Energy Requirements of Data Centres
The Launceston data centre will begin as a 45-megawatt project, will expand to 90 megawatts soon afterwards, and is expected to increase to 300 megawatts in its second stage. That is an enormous amount of energy. To put it into perspective, the total capacity of Tasmania’s energy system is somewhat more than 2,600 megawatts, according to Hydro Tasmania. The Boyer Mill, which is one of the state’s largest power users, currently uses around 100 megawatts. Boyer plans to replace its coal-fired boilers with electric ones, which will require an additional 45 megawatts. However, Hydro Tasmania has responded that it will not be able to supply this additional energy from the Tasmanian grid due to a lack of availability.
The question then naturally arises, if the Launceston data centre is planned to eventually use 300 megawatts, with more data centres possibly to follow, where will the energy come from?
Before exploring this question further, I would first like to discuss some other problems related to data centres.
Job Creation
AI data centres are not expected to generate many jobs. A recent ABC News article quoted Tim Rosenfield (Co-chief executive of Firmus Technologies) as saying that 50-100 full time staff would be needed to operate the Launceston facility for every 50 megawatts or so of capacity. However, Professor Toby Walsh, chief scientist at UNSW’s AI Institute expressed doubts over this number. He told ABC News, “I have to be honest with you, it won’t be bringing that many jobs.” He also added, “There will be a significant number of jobs to build these factories in the first couple of years, but…
…once those factories are built, they don’t employ that many people to run them.”
Tax Avoidance by Multinational Tech Companies
The ATO is investigating several multinational technology companies for tax avoidance, in which profits from local data centres are allegedly being underreported in Australia. These companies are suspected of artificially splitting their businesses and claiming “low-value services” in order to reduce or avoid Australian tax. Under this scheme, for every $100 worth of data centre storage space sold in Australia, a tech company can shift $95 to its parent company in a foreign country with a lower tax rate, thus paying tax on only $5 locally.
For example, Google Cloud Australia paid only approximately $9 million in tax out of a total income of $158 million in 2022/2023.
It remains to be seen what decision the ATO will make at the completion of its audit. Meanwhile, Google is warning that the ATO’s statements have created uncertainty which is having a “chilling effect” on investment and spread of AI technology, and that “jurisdictions perceived as overly burdensome or uncertain are likely to see capital and talent flow towards those seen as more dynamic and supportive of innovation.”
The picture that is emerging for Tasmania is one of a major new industry arriving on our island that will create few jobs and pay little tax, with profits largely flowing offshore.
Yet, this AI industry will at the same time consume vast amounts of power – at a cost of billions of dollars to Tasmanian taxpayers for required energy infrastructure – and will degrade prime agricultural land and environmentally sensitive locations like Robbins Island with the wind turbines needed to make it all happen. Could this really be called progress, or is it more akin to exploitation?
Security/Military Risks of AI Data Centres
AI data centres have military strategic significance (including for drone warfare), which could make them military targets and potentially put the local population at risk. Former Google CEO Eric Schmidt co-authored a paper in which he described how the race for supremacy in AI among nations will resemble the nuclear arms race, and introduced the concept of “Mutual Assured AI Malfunction”, in which “any state’s aggressive bid for unilateral AI dominance is met with preventive sabotage by rivals”. This can range from cyberattacks to physical attacks on the data centre. The paper went on to recommend placing data centres in remote locations, far from major population centres, so as not to “put cities into the crossfire”. Additionally, Ted Theisen (a former FBI Special Agent as well as the Branch Chief of Cyber Integrity at the White House, and now the Managing Director at FTI Consulting) has predicted, “It is highly likely that data centers will become targets of physical attacks in the next five years.” In the Australian context, there was an announcement made last year on ABC News radio that the Federal Government plans to build three top secret data centres in undisclosed locations which will host Australian military and intelligence information. Taking into account that Tasmania’s cool climate and high water availability is considered ideal for data centres, it is possible that our state could be one of those locations.
Marinus Link, again, is currently a central component in plans for any major Tasmanian- based AI data centres.
Where Will the Energy for Data Centres Come From?
No matter what industries Tasmanian energy will be used to power – whether AI or anything else – that energy needs to be affordable, reliable, and produced by means that are respectful to the environment and communities.
Unfortunately, the government’s energy plan fails to meet these criteria.
As regards cost, current estimates are shockingly high. The latest figures are: $3.89 billion for Stage 1 of Marinus Link, $1.14 billion for the NWTD, $1.05 billion for a full redevelopment of Tarraleah Power Station, and $1.5 billion for the Lake Cethana Pumped Hydro project, with Tasmania to pay a disproportionate amount of the total. These expenses create a risk of higher power bills. The Liberals have so far refused to release the Project Marinus Whole-of-State Business Case (WoSBC) to the public, so no specific estimates are yet available.
However, some who have received a high-level briefing on the document told The Australian newspaper that “it includes significant price impacts to pay for the transmission infrastructure”. Ray Mostogl (CEO of the Tasmanian Minerals,
Manufacturing and Energy Council), said there are “some ugly numbers in it”. We get an indication of what these might be from Craig Garland MP, a member of the Joint Select Committee on Energy Matters. The Advocate newspaper reported him as saying, “TasNetworks told big North-West miner Grange Resources its network charges were
projected to climb by 29.6 per cent because of Marinus. ‘Households should expect the same.'”
The Liberals have claimed that they will subsidise those affected by higher bills through the extra revenue they say Marinus Link will generate. Yet, can we truly believe that an extra $200m-$400m will flow in from exporting energy to the mainland, as has been asserted?
According to Professor Bruce Mountain (Director of the Victoria Energy Policy Centre), Marinus has “no chance of competing with battery alternatives” on the mainland because “batteries in Victoria could provide a comparable services to MarinusLink, and more cheaply“, even for the comparable-length storage provided by 24-hour batteries. Professor Mountain has also said,
“There is simply no prospect at all that adding the cost of Marinus Link will be profitable. […]
“It’s frustrating for us as economists that the Tasmanian government and the Federal government continue to proceed with this. It will almost certainly be an enormous deadweight loss around both Victorians and Tasmanians and as a consequence will leave Tasmanians much poorer for it for a very long period of time.”
Marinus Link is a very large, expensive risk to take on, particularly in light of Tasmania’s current budget crisis and an expected $13 billion debt by 2028. If the government provides subsidies to help with rising power costs due to Project Marinus, but the estimated large revenues from the cable never materialise, then the government would likely have to raise taxes to cover the cost – or else sell public assets (an idea that proved very unpopular during the election).
It is dangerous to just keep increasing government debt.
As prominent economist Saul Eslake warns in his Independent Review of Tasmania’s State Finances, if nothing is done to correct Tasmania’s debt situation, then that “would almost certainly result in Tasmania’s credit rating being downgraded, probably by more than one ‘notch'”, and could even lead to a fiscal crisis.
Energy Reliability/Security and Sovereignty
The current plan to increase Tasmania’s energy production mainly through wind and solar also creates issues of energy reliability and security. Our hydro currently provides stable, baseload power with plenty of inertia to cope with load/frequency changes. In contrast, wind and solar do not provide spinning reserve or inertia like traditional power plants. What this means in practical terms is that the higher the proportion of wind and solar in the energy mix, the greater the chance of power blackouts and grid collapse because it becomes increasingly difficult to balance energy supply and demand and to respond to unexpected shocks to the energy grid. We see an excellent example of this with the recent major power blackout in Spain. Moreover, if any massive Spain-like blackout should take place on the mainland (which will become increasingly likely as mainland states approach their 82% renewable energy target), such a blackout may even carry over into Tasmania because of our connection through the Marinus Link. According to AEMO, earlier this year, Bass Link had oscillating power direction from the mainland putting Tasmania’s frequency outside the acceptable range despite the inertia of our hydro. The new Launceston AI data centre discussed above will be another major user soon to put extreme load on our grid.
It is also important to note that at a recent press conference with Anthony Albanese, Amazon CEO Matt Garman suggested that wind and solar projects may not be adequate to meet the energy needs of AI data centres, and that in the US nuclear energy will be part of the solution. The Prime Minister tried to stop the journalist who asked Matt Garman the question on energy, but the reality is that we cannot afford to sweep these important issues under the rug.
If Artificial Intelligence is on our doorstep, then we need to be giving serious thought to how we will reliably meet the energy requirements. Obviously nuclear is not an option for Tasmania, especially under current legislation.
Energy sovereignty is another critical issue that deserves serious consideration.
High reliance on wind and solar can put Tasmania at risk by creating excessive dependence on foreign nations, especially China, for our energy needs. The European Council on Foreign Relations (ECFR) describes how China has rapidly gained dominance in the renewables industry. Where once Europe was a pioneer in the wind industry, it is now struggling to compete. China has replaced the EU as the largest wind market in the world and in 2024 accounted for 70% of new wind installations globally (up from 60% in the previous year). Some of the reasons for China’s extraordinary growth in the wind industry is that it dominates supply chains of many components and raw materials needed for turbines, and that manufacturers receive substantial government subsidies. The coming wave of technological advances in wind is expected to give China a further advantage over its European competitors. There are currently calls for EU nations to take action to save their wind industry from being swallowed up by China. However, they may have difficulty doing so given Europe’s current rapid de-industrialisation.
The situation with solar is similar. China has “eradicated Europe’s solar industry” and produces about 90% of the world’s solar panels. Australia currently imports approximately 99% of its solar panels from China. Anthony Albanese has announced plans to develop Australian manufacturing of solar panels and parts. However, Australia is twenty years behind in solar technology and would therefore have to rely on China to share its technological knowledge with our country. China has previously announced that it is considering banning the export of technology used to make solar panels, and if any sharing of technology does occur, it will likely involve Chinese ownership of solar manufacturing companies in Australia. Finding investment funding for solar manufacturing is also proving to be a challenge. The Productivity Commission has warned against Australian government subsidies for production, saying that the spending may prove wasteful considering that China can make solar panels more cheaply.
The alternative – heavy dependence on China for wind turbines and solar – is unwise, especially considering that Australia’s relationship with China is complex and may become increasingly so in light of rising tensions globally. The ECFR states, “Disruptions to energy supplies, once rare, have become recurring features in a world increasingly shaped by geopolitical rivalry. Recent history lays bare how over-dependencies in energy, trade and security – on any single source – can, and will, be weaponised by foreign powers.”
For instance, because wind farms are monitored and controlled remotely, manufacturers can shut off their turbines anywhere in the world within an hour. Remote access can also be exploited to “create a voltage depression that destabilises the grid, or, in the worst-case scenario, cause serious physical damage to turbines.”
Increased vulnerability to cyberattacks is another problem.
As for solar panels, Reuters reports that US energy officials have found rogue communication devices in some Chinese solar power inverters, as well as undocumented cellular radios in Chinese batteries. “Using the rogue communication devices to skirt firewalls and switch off inverters remotely, or change their settings, could destabilise power grids, damage energy infrastructure, and trigger widespread blackouts.” Furthermore, “NATO […] said China’s efforts to control member states’ critical infrastructure – including inverters – were intensifying.” In response, some countries (including the US) are reassessing the risks posed by Chinese-manufactured devices. We would be wise to do the same. Tasmania’s energy policy must take existing realities into account and minimise dependence on foreign nations for our energy needs. We need to explore alternative energy options.
In fact, the Tasmanian people have been calling on the government to undertake such investigations, including in last year’s Parliamentary petition on wind farms and Marinus Link.
Unfortunately, Energy Minister Nick Duigan was unable to do any better than reply that, “The government is agnostic to the type of renewable generation”, and neglected to carry out even the most basic comparison of different energy alternatives for Tasmania.
I have therefore ventured to offer my own brief suggestions below, but first I will say a few words about the public response to the government’s current energy policy.
Public Opinion on Energy in Tasmania
Community opposition groups have formed in every region of Tasmania where wind farms are being proposed – the Northeast, Northwest, and Central Highlands. The Robbins Island wind farm has drawn especially strong criticism; twenty-six environmental and community groups signed an open letter to Environment Minister Tanya Plibersek, calling on her to deny approval for the project.
If more wind farms are announced and Renewable Energy Zones are declared, the magnitude and strength of public resistance is likely to increase significantly.
Additionally, farmers have recently rejected the government’s low compensation offer for the NWTD transmission lines running through properties, the “offer being well below every other state and well below the acceptable range endorsed by landholders at the Sheffield meeting”. Energy Minister Nick Duigan had previously remarked at an Energy Committee hearing that, “There is a substantial tension between keeping power prices as low as they can be and providing a further level of compensation and incentive to landowners to host transmission,” to which Michael Ferguson MP answered, “I think for anybody that supports the principle of Strategic Benefit Payment, I want to be cautious that it doesn’t lead to unreasonable increase in power prices for our everyday Tasmanians, because I think it is very clear that that is exactly what will happen.”
The cost for consumers is certainly a valid consideration. Yet, it may be very difficult if not impossible to find a level of compensation that meets public expectations of fairness to affected farmers while also keeping energy prices low, because the NWTD is a very expensive project, and the size of Tasmania’s population is relatively small. Obtaining the necessary social licence for the transmission lines could therefore prove to be a significant problem.
Instead of forcing wind farms and high voltage power lines on an unwilling populace, would it not be better to instead look at other ways in which we could produce energy that might be more acceptable to the public and better for the environment?
There is still time to change course.
Yes, it will take some political will to turn around from the self-destructive path on which Tasmania is currently headed, but it can be done.
Alternative Energy Options
Hydropower
Hydro is widely recognised as being among the cheapest, cleanest sources of energy, and it has served our state well for over a hundred years. Tasmania’s mountainous terrain, numerous rivers and lakes, and high rainfall make it exceptionally well-suited for hydroelectricity production. We have 27% of Australia’s freshwater dam storage capacity, so there is potential to produce more hydropower if additional energy is needed. The Tasmanian government in the late 1970s certainly considered expanding the state’s hydro system as a viable option when it proposed the Franklin Dam. The project never went ahead due to environmental concerns over the location. However, there are many other possible locations, including for small-scale hydro projects. In a report, the ANU identified approximately 2,050 sites that could potentially be used. Additionally, modern advances in hydro technology offer options such as no-dam hydro. See, for example, Peru’s new vertical hydropower plant built into a cliff, which requires no dam at all and is therefore better for the environment.
Alternative Solar Options
Another alternative for energy production that has been put forward is rooftop solar with batteries as well as community solar (as opposed to large solar farms or rooftop solar without batteries). Although this option still has the problems discussed above and should therefore not be relied upon to an excessive degree, community solar can nevertheless be useful as part of the energy mix, especially in the short to medium term. Moreover, there is greater public acceptance of solar than wind.
Gas
Gas should not entirely be discounted as a source of energy in Tasmania. While gas does contribute to CO2 emissions, it must also be remembered that Tasmania has achieved net carbon negative status, meaning that our state removes more greenhouse gas from the atmosphere than it emits. This accomplishment was primarily due to a reduction in native forest logging and a significant increase in carbon sequestration within forests. It is also worth considering that gas is a cleaner burning fuel than coal. When the choice comes down to installing a wind farm in a place like Robbins Island or instead burning some gas to meet any energy shortfall, it seems sensible to choose gas. The goal of helping reduce global CO2 emissions should not come at the expense of our own environment right here in Tasmania, especially when we have the ability to offset CO2 emissions through improved forest management.
Instead of ruining Tasmania with wind farms, we should perhaps instead be looking into reducing native forest logging, especially for uses such as woodchips.
Tasmania’s “Elite Cartel Corruption” and Implications for Energy Policy
A very important and interesting series of articles was posted on the University of Sussex (Centre for the Study of Corruption) website. It is a four-part series that explores the particular type of corruption that exists in Tasmania, and the resulting costs for the population. Three of the articles have already been published, and the fourth on suggested reforms is still to be released. Please see the links below:
Tasmania – the corruption isle?
Elite Cartel corruption in Tasmania – the nature of the game
Tasmania’s Hidden Tax: Elite Cartel Corruption and Its Real Costs
These articles are very relevant to the issues discussed here. The author describes Tasmania’s Elite Cartels (ECs), which are close-knit, elite networks of business, news media, political leaders and others who form strong informal alliances and use their power and influence to achieve self-serving policy outcomes and economic benefits. Their activities are often legal, with bribery rarely being necessary. Instead, ECs operate through secret deal-making, collusion, bullying, excluding competitors, and charade public consultations. “Critics are marginalised or denigrated as ‘blockers'”. Yet, though in many cases the actions of ECs are not clearly illegal and may appear to be “business as usual”, they are still termed “corruption” because they result in “duplicitous exclusion”, in which citizens are denied the opportunity to take part in decisions affecting their lives, which is considered “the essence of corruption in a democracy”.
The result for Tasmanians is a “corruption tax”, seen in the form of lower prosperity and poorer services/facilities.
Where beneficial legislation could destabilise the elite-serving status quo, it is deliberately delayed or never enacted. At the same time, poorly thought-out government decisions are pushed through without social licence, as “corruption distorts government priorities towards big-ticket projects (e.g. infrastructure) – where corruption is easily concealed and enormously lucrative […] – at the expense of public health and education, where illicit profits are smaller and accrue more slowly.”
The elite portray “their schemes as Tasmania’s only short-term opportunities” and then reap the benefits of such projects, while costs are socialised. “The result is a situation that may seem sustainable but produces a long, gradual, self-perpetuating decline.”
The government’s approach to energy policy provides an excellent example of the ideas expressed in the University of Sussex corruption articles. While our health, housing, and literacy rates are in a dire state, the government wants to pour billions of dollars into Marinus and associated infrastructure, disregarding advice from energy experts such as Professor Bruce Mountain of the VEPC and John Devereaux of Goanna Energy, and sweeping aside environmental concerns. As for public consultation, community groups have said it was a “farce” and “disingenuous“.
Energy Minister Nick Duigan has eagerly reached out to proponents, yet he has refused all requests to meet with affected residents and address their concerns, or even to provide adequate public consultation through ReCFIT. He has also ignored public calls for greater scrutiny of proposed energy projects and a more democratic decisionmaking process. Instead of listening to the people, the government prefers to solve its problems with the DAP Bill – which, if passed, will further reduce community voice and remove appeal rights, reinforcing feelings of disenfranchisement within the population.
Tasmanians deserve better.
Conclusion
As a new government is formed and Parliament resumes, it is important to think carefully about what Tasmania’s future should look like. What industries do we want, and how large should they be? How will the energy needed to power them be produced, and how much will it cost? Who will pay? And most importantly, will ordinary Tasmanians be better or worse off as a result? We cannot afford to have these decisions made in secret backroom deals for the benefit of a privileged few at the expense of the many. The future of more than half a million Tasmanians depends on the energy policy that the government chooses in the upcoming months.
During the election period that just passed, Tasmanians indicated that health and housing are their top priorities. Regardless of whether it is the Liberals or Labor who eventually form government, it is extremely important that the government listen to the wishes of the people, as should always be the case in a modern democracy. Voters have not given either of the two major parties enough seats in Parliament to form a majority government, which indicates that they do not trust either party with such responsibility and instead rely on the crossbench to negotiate the best outcomes for our state. For example, it is difficult to see where the government will find the money to fund health and housing if it spends billions of dollars on Marinus Link and associated infrastructure. The Liberals unfortunately refused to release the Project Marinus Whole-of-State Business Case, which prevented Tasmanians from making an informed vote on the issue of energy in the state election. Therefore, when the business case is finally released, the duty will fall all the more heavily on the crossbench to hold the government to account and ensure that the energy decisions made are truly in the best interests of Tasmanians.
In addition, deep reforms are needed to address the underlying problem of “Elite Cartel corruption”, which is at the root of many of the problems we are seeing, including on energy policy. We cannot afford to accept that this is “the way things work”, and that change is too hard. Otherwise, the situation in Tasmania will almost certainly grow worse, and we can expect continued decline in the prosperity of our state as described in the University of Sussex corruption articles. I therefore urge you – and all members of the Tasmanian Parliament – to do everything necessary and all that is in your power to bring about the changes that our state desperately needs.
Yours sincerely,
Kim Phillips-Haines
Owner/Director of Leven River Cruises and Coastline Tours Tasmania
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