The Morrison government has flagged another $93.9m for the $3.5bn Marinus Link project as part of a new energy agreement with Tasmania.
The memorandum of understanding (MOU) between the Morrison and Gutwein governments creates a special purpose vehicle to move the proposal to a final investment decision. The plan is for a 1,500 megawatt undersea electricity cable connecting Burnie, in north-west Tasmania, and the Latrobe Valley in Victoria.
The Marinus Link was nominated by Scott Morrison in June as one of 15 major projects on a fast-track for regulatory approvals. The two governments claim the undersea transmission link and other “battery of the nation” projects will eventually create 2,800 jobs.
The Morrison government allocated $56m back in 2019. But an initial feasibility study suggested 7,000 megawatts of coal-fired power – equivalent to five or six large plants on top of the Liddell power station, which is scheduled to close in 2023 – would need to exit the market for the Marinus Link to be economically viable.
That study said the “largest single influencing factor in the economic feasibility and timing of Marinus Link [was] the trajectory of coal-fired generation retirement in the national electricity market”.
The project, assuming it proceeds, would allow renewable energy to be exported from Tasmania to the mainland, but the development is opposed by the Bob Brown Foundation.
Director of the foundation, former federal Greens leader Christine Milne, said there were still no answers about who would pay for the “unnecessary and economically unviable” projects, the Marinus Link and the battery of the nation.
“All these announcements are to build momentum for the idea that these projects are inevitable and going ahead in spite of no cost-sharing agreements being signed for the $7.1bn they are estimated to cost,” Milne said.
“The only costs being announced are to the taxpayers and people of Tasmania via a $93.9m convertible loan.”
As well as establishing the corporate vehicle that allocates 62.5% of the shares to the commonwealth and 37.5% to Tasmania, the Morrison government has also agreed under the MOU to look at underwriting a pumped hydro site at Tarraleah that is part of the “battery of the nation” project.
The Tarraleah redevelopment is a $650m project. The proposed underwriting could allow early construction to begin next year.
The Tasmanian premier, Peter Gutwein, insisted on Tuesday that the Marinus Link was technically feasible and economically viable. But he sidestepped who would fund the totality of the project and who would own it on completion.
Gutwein said the energy MOU provided the next step, which was making a concept a bankable project. “Once it becomes a bankable project, there will be a range of options to consider in terms of who finances it and who ultimately owns it,” the premier said.
“It could be owned privately, it could be owned by the commonwealth government in partnership with the state government.”
Morrison said his expectation was the Marinus Link would “be a business that will stand on its own two feet” and “a business that supports itself based on its customers”.
“We’re setting up a special purpose vehicle,” the prime minister said. “That means we expect this to wash its face”.
Morrison said the project would create local jobs and would “support itself”.
The MOU indicates Tuesday’s projects would be supplemented by other “emissions reduction projects” in 2021.
