The federal government has stepped in to rescue a multi-billion dollar renewable project connecting mainland Australia with the island state of Tasmania agreeing to fund nearly half its initial cost.
The Labor government struck the agreement while raising its stake in the joint venture to 49 percent.
As a result, the Victorian government will pay to own a third of the equity, and the Tasmanian government will own the remaining 17.7 percent.
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The latest move comes after the Tasmanian government revealed a considerable cost blowout in the project in August and threatened to walk away from the project.
Federal Energy Minister Chris Bowen touted the new agreement as a “game-changer,” saying it would help kick off the project.
“This updated agreement will not only deliver the benefits of Marinus Link, it will be cheaper to Tasmanians,” he said.
In addition, the minister said the changes reflected rising global costs.
“We’re not going to let that get in the way of getting the job done because it’s so important for renewable energy, it’s so important for Tasmania’s energy security, and it’s so important for jobs,” he said.
Tasmanian Premier Jeremy Rockliff also praised the agreement, saying it was a fair deal and would bring jobs, economic growth, energy security, and lower power prices to his state.
“I’m very pleased we’ve been able to land this on the right side of our line in the sand. The deal has landed very firmly on Tasmania’s side,” he said.
“We understand the importance of this project, not just for Tasmanians but for the whole country. That’s why we wanted the best deal.”
The Marinus Link Project
The Marinus Link is an ambitious cable project that plans to turn Tasmania into the “battery of the nation.”
The project involves constructing two 750-megawatt cable and fibre-optic cables that run through the Bass Strait and connect electricity generation and storage facilities in Victoria to Tasmania.
It will allow excess energy generated on the mainland to be transferred and stored in Tasmania’s hydro storage.
This energy will then be released for use when demand in the National Electricity Market surpasses supply.
Marinus Link was expected to “save” up to 140 million tonnes of carbon dioxide equivalent by 2050.
The federal government also said it would generate economic stimulus of over $2 billion and over 2,400 jobs.
While the project has not officially started, it has encountered financial problems.
The project was first estimated to cost around $3 billion (US$1.94 billion).
In August, the Tasmanian government announced that Marinus Link would be subject to massive cost blowouts but did not disclose how much it would be.
At the time, the Rockliff government said it would not fund the project “at any cost,” casting down on whether it would eventuate.
However, the new agreement revealed that the first stage of the project alone would cost around $3-$3.3 billion, which was equal to the total estimates before.
The Tasmanian government was expected to contribute $106-$117 million to the project.
Furthermore, the project will focus on one cable, with negotiation on a second cable subject to further negotiation.
The Tasmanian government will also have the option to sell its equity share to the federal government once it commences the project.
Marinus Link is expected to commence in 2025 and has a planned completion date of 2028.
Response from Other Parties
The announcement has triggered
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