Mr BAYLEY – Minister, given the cost of large-scale batteries has reduced by a third since Battery of the Nation and Marinus Link was first contemplated and the cost of transmission and cable infrastructure has doubled, we’re interested in the government’s continued assertion that Marinus Link is a viable investment and that it would reduce power prices for Tasmanians. What’s the current projected cost to Tasmania of Marinus Link, for one cable and for two? Also, in relation to the business case that’s being prepared and will be publicly released – you’ve made that commitment – can you confirm it will have social and environmental parameters built into the cost‑benefit analysis, or is it a business cost‑benefit analysis alone?
Mr DUIGAN – I note there is a reasonable amount of scope in the question. In regard to Marinus Link as opposed to potentially the notion of battery storage, I think battery storage will be and is an important part of electricity delivery going forward, but it is limited in the time of storage that it offers – battery storages are measured in a few hours. What Tasmania has in its hydroelectric system is deep storage that offers renewable energy storage over a much longer duration. That is the opportunity in front of Tasmania: to leverage the highest and best use of those storage opportunities.
I believe that Marinus has and will continue to have absolute relevance, noting that batteries will perform a function in the NEM. In terms of the whole‑of‑state business case, which will be delivered and made public 30 days before the FID determination for Marinus Cable 1, it’s a piece of work that is absolutely ongoing. It’s being led by Treasury. In terms of the scope and things that are being considered in that, I would ask the CEO of ReCFIT to make some comments about things that may or may not be included in the whole‑of‑state business case.
Mr BOWLES – While Treasury is leading the whole‑of‑state business case, ReCFIT is engaged in terms of being involved on the steering committee. They are looking at a range of factors in terms of costs and benefits. That includes fiscal costs and benefits to the state Budget; economic benefits in terms of support to industry, both in terms of supply of and security of energy, as well as the stimulus from the jobs that may be created from the rollout; as well as the impact on customer prices, so that’s the potential for wholesale price decreases compared to what they’d otherwise be, as well as the transmission cost. All of those factors are in there.
Mr BAYLEY – To confirm, the question around social and environmental cost‑benefit as well, is that in there?
Mr BOWLES – In terms of social, social will be included in terms of jobs impact and, to a degree, regional jobs impact. The degree to which it covers environmental impact, I’d have to refer that to Treasury.
Mr BAYLEY – Minister, in terms of the final investment decision being pushed back to 2025, what’s the reason behind that? Is it the work that’s going into this business case?
Mr DUIGAN – The FID plan is a matter for the board of MLPL, and they have requested that the FID decision be moved from December 2024 to May 2025. I think that’s mostly around the quality of the information that would feed into the FID plan and having a better understanding of what the numbers are so we can make that determination with more certainty.
Mr BAYLEY – Are there particular areas that are difficult to ascertain? Are you having trouble coming to those numbers?
Mr DUIGAN – Again, it’s a matter for the board to determine what they see as the most appropriate time to make an FID determination. I would imagine having recently secured converter stations procurement and also a slot for the cable manufacturer helps to continually firm up what the ultimate cost of the project will look like and what the cost to customers will be as we go.
Mr BAYLEY – The first question, what is the current cost?
CHAIR – Mr O’Byrne has the call.
Mr DUIGAN – I am happy to provide that. The current estimate for Marinus stage one is $3.1 billion to $3.3 billion.
Mr BAYLEY – And stage 2?
Mr DUIGAN – I believe that in totality it takes us to $5.5 billion.
Mr BAYLEY – Minister, back to Marinus and Tasmania’s 17.7 per cent equity stake in that project. The Budget, in budget paper 1, page 22, under risks, notes that ‘Tasmania may be required to contribute additional equity which has not been budgeted for’. What additional equity is contemplated? Is there an upper limit and why do we need to do this?
Mr DUIGAN – It should be known that Tasmania’s investment in Marinus Link up to date, in that Marinus Link was, prior to March 2024, a wholly owned subsidiary of TasNetworks that has since passed into a tripartite arrangement with the Commonwealth, Victorian and Tasmanian governments, as part of that process Tasmania’s equity expended – so far $103.5 million is being recognised as an equity contribution. We would not expect any further calls on our equity, certainly before the final investment decision date of May 2025. Should the Marinus project progress positively, which we certainly hope it does –
Mr BAYLEY – The Budget contemplates it though.
Mr DUIGAN – Yes, it is certainly something that would need to be taken care of in the Budget. There is the prospect of a further equity call over time –
Mr BAYLEY – What would that be for though? I guess that is the question.
Mr DUIGAN – The way Marinus is constructed is that it’s 80 per cent debt-funded through the Clean Energy Finance Corporation, concessionally debt-funded at the Commonwealth and the remaining 20 per cent would be met in equity by the project partners along the lines of their amount of ownership. My understanding is, at the current cost, Tasmania’s exposure to equity is around $140 million out to 2030 and I believe –
Mr BAYLEY – If costs escalate.
Mr DUIGAN – I’ve taken that number off the top of my head.
Mr BOWLES – I believe that’s around about the number.
Mr BAYLEY – Former premier Mr Gutwein argued that Tasmania should pay no more than 10 per cent of Marinus Link’s costs because Tasmania would get no more than 10 per cent of the benefits. What evidence is there that the benefits are greater now for Tasmania? What’s underpinned your decision to up our equity stake by that 7.5 per cent or thereabouts?
Mr DUIGAN – The important piece of work that we’re doing to firm up all of those numbers is the whole-of-state business case to understand that Marinus continues to stack up for Tasmanians. We’ve been quite clear in our enthusiasm for the project. We understand that it has a very positive impact on supporting new renewables in Tasmania and supporting our renewable energy target and jobs and industry. But we have also been really clear in the understanding that from the Tasmanian perspective, it should only proceed if it stacks up in the best interests of Tasmanians. So, the whole‑of‑state business case gives us the opportunity to test the numbers at that time, noting that all project partners need to take a positive bid for the project to commence. I also point to the fact that if the project does commence and at a later time, after commissioning, Tasmania wishes to sell down its stake in Marinus Link then it has the ability to do so.
Mr BAYLEY – But back when there were two cables, Mr Gutwein was –
CHAIR – Mr O’Byrne has the call.
Mr BAYLEY ‑ Minister, what is your projected cost of the use of the Basslink cable to TasNetworks? It is now before the Australian Energy Regulator for a decision. Has there been a provision made for it and how much is that?
Mr DUIGAN – I don’t believe there would be a cost to TasNetworks. The Bass Link cable is currently undergoing a process to make it a regulated asset. That’s a conversation between Bass Link’s owner, APA, and the Australian Economic Regulator (AER). The Tasmanian government supports the move of Bass Link becoming a regulated asset. I have written to the chair of the AER and met with her to highlight the importance of an equitable outcome between Tasmanian and Victorian customers.
Currently, all the costs of Bass Link are born by Tasmanians in one way or another through a services agreement with Hydro Tasmania. We think that it’s highly appropriate that Victorian customers pay their share for access and use of the Bass Link interconnector. That’s the Tasmanian government’s position. The Victorian government has a contrasting view, as you probably appreciate, but in terms of costs to TasNetworks, I’m not aware of there being an attributable cost to TasNetworks in the regulated outcome.
Mr BAYLEY – In terms of conversations with the other shareholder governments in Marinus regarding the cost of the use of that cable, should it ever be laid, what percentage of the cost of the use of the cable would be borne by Tasmanian businesses? How will that be absorbed? Will that be absorbed by customers?
Mr DUIGAN – As a regulated asset, yes, the cost of the cable through the life of the asset would be borne by the customer bases in Victoria and Tasmania. That is the answer.
Mr BAYLEY – With such a massive upfront capital investment in a project like that, how can you say that power bills will come down with an investment such as that, if the costs are going to be passed on?
Mr DUIGAN – Marinus Link will have a profound effect in terms of delivering more megawatts of energy into the Tasmanian market, whether it’s supporting the development of new renewables on island or the ability to access other energy. For example, if you look at what the cost of energy is on an average sunny day in Victoria – and it’s minus $40 a megawatt hour ‑ our ability to import that into Tasmania at that price when we’re getting paid to take it, getting paid to keep water storages in our hydro system, and in the converse opportunity, when prices are higher on the mainland, the opportunity to send some of that saved water back across the –
Mr BAYLEY – If we’re paying for the use of that asset hugely, and we’re tied to mainland prices, how can you say that it will bring prices down?
Mr DUIGAN – Because, fundamentally, it’s a question of supply and demand in the wholesale energy availability in Tasmania. There will be a substantially greater supply of energy.
