Construction of the first 750-megawatt capacity stage of Marinus Link, enough to power roughly 750,000 homes, is due to begin in 2026 and is expected to be completed by 2030.
Why is it a big deal?
Tasmania is rich in renewable energy, sourcing most of its electricity from dozens of hydroelectric dams, which release water downhill to spin turbines and create energy.
The cost of the project, which has faced significant blowouts since its inception, will be recouped from consumers in Tasmania and Victoria via network charges on their power bills.
Marinus Link is intended to enhance the flow of cheap and reliable power from the island into mainland Australia’s populous south-eastern states.
Building the project is considered vital to helping compensate for the fast-approaching next wave of coal-fired power station closures in Victoria and NSW in the coming years, by enabling more electricity to flow from Tasmania at times when it’s needed most.
It will be especially important to help meet demand after the sun sets in the evenings and output from solar panels recedes, a problem that currently causes wild swings in the wholesale price of electricity, and which could get worse once more coal plants are retired.
Marinus Link will also allow electricity flow in the other direction, giving large industrial energy users in Tasmania more access to low-cost wind and solar resources from the mainland.
Federal Energy Minister Chris Bowen has called it “one of the most important energy projects in our nation’s history”.Credit: Luis Enrique Ascui
Australia is experiencing one of the fastest energy transitions in the world. More than half of the eastern seaboard’s remaining coal fleet is scheduled to close within a decade, and renewable energy’s share of the grid continues to expand each year.
However, the lack of high-voltage power lines to connect faraway wind and solar regions to major cities and better facilitate the flow of energy from one part of the country to another has emerged as one of the biggest roadblocks to the shift proceeding smoothly.
Officials warn that thousands of kilometres of new transmission links are urgently needed to ready the grid for a future without coal, but key projects are running into years-long delays as developers face soaring construction costs, shortages of skills and equipment, and pushback from rural and regional communities worried about impacts on their farming practices, property values and the environment.
Who pays for it?
The $3.8 billion federal loan will cover about 80 per cent of the estimated $5 billion cost of the first phase of the project. The remainder is covered by the federal, Victorian and Tasmanian governments through equity contributions. The Commonwealth holds a 49 per cent share of Marinus, the Victorian government has 33 per cent and Tasmania 17 per cent.
The vessel Leonardo da Vinci will be used to lay the Marinus Link electricity cable between Tasmania and Victoria.
Marinus Link is deemed a regulated network investment, meaning its cost will be spread among the electricity consumers who benefit from it. The cost of the project, which has faced significant blowouts since its inception, will be recouped from consumers in Tasmania and Victoria via network charges on their power bills.
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The Clean Energy Finance Corporation said the ability to access concessional finance was expected to deliver $900 million in benefits for Tasmanian and Victorian consumers in the first five years, and would reduce the impact of transmission-related costs on people’s bills by 45 per cent. Governments estimate that building the project will cut typical household electricity bills in Victoria and Tasmania by between $25 and $36 a year.
The loan announced on Wednesday has enabled Marinus Link to reach financial closure on the first stage of the project, the company said, adding that it had given contractors notice to begin pre-construction works.
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