The Link reshuffles risks and ownership designed to make it look palatable without addressing its flaws: Sometimes the worst deals come dressed in the language of triumph.
This may well be the case with Tasmania’s much-heralded “great deal” with the Federal Government over Project Marinus — a so-called nation-building initiative that’s increasingly looking like a millstone around Tasmania’s neck. Far from delivering transformational economic returns, this interconnector may well saddle our state with higher costs, ballooning debt, and shrinking revenue, all while demanding more equity from a government that has none to spare.
Let’s start with the mirage of revenue.
When the Tasmanian Government talks about the “benefits” of Marinus, it lumps everything together into one shiny package. Revenue for Hydro Tasmania. Economic uplift. Export potential. Local jobs. Environmental credentials. And, to round it off, a modest return on Tasmania’s equity in Marinus Link Pty Ltd.
Except that’s not how the numbers will play out — assuming the redacted business case, pieced together with Treasury estimates and public reporting, can be trusted.
The primary Tasmanian revenue stream is expected to come via Hydro Tasmania, through the sale of power exported to the mainland. But even that revenue is hardly guaranteed — and will be eaten away by transmission charges, market volatility, and fierce competition from mainland renewables. On top of that, Marinus Link’s operating model puts Hydro at the mercy of NEM spot prices, which are increasingly being driven down by oversupply during daylight hours from solar generation, and by batteries at other times. Greater connectivity by its very nature will gradually reduce the arbitrage advantages it is designed to exploit.
The other income stream — a return on Tasmania’s equity stake in Marinus Link — is even more precarious.
Why? Because that equity stake is shrinking. As part of the “great deal” struck with the Federal Government, Tasmania has handed over a portion of its 17.7 percent ownership in Marinus Link in exchange for Canberra taking on a larger share of the project’s capital costs. Sounds good on the surface — until you realise that with every reduction in equity comes a reduction in long-term return.
What’s left unsaid is even more troubling. That the reason we’ve bargained down our equity share is because the State Government has no capacity — and no political will — to meet the spiralling cost of the project.
And spiralling it is.
Despite years of feasibility studies, modelling, and “final” investment frameworks, Marinus Link costs keep rising. The last public estimate for Stage 1 — over $3.8 billion — is already 17 per cent higher than previous forecasts, and few would bet against further blowouts. These are massive infrastructure works involving high-voltage undersea cables, new converter stations, and hundreds of kilometres of transmission upgrades in rugged, remote country.
Which brings us to the kicker: even with a reduced equity share, Tasmania will almost certainly be asked to stump up more money or end up with no seat at the decision making table.
The only way to preserve ownership greater to have a say, and to ensure that the State Government isn’t simply a passive bystander in one of the most consequential energy projects in Tasmanian history, is to avoid reducing our equity share below or contribute more capital when the project inevitably comes knocking for more funds.
That’s the brutal irony of this deal. It seems we will trade away our stake to avoid future equity contributions and receive even less returns as a result.
Worse still, we’ve committed ourselves to a project that may deepen, rather than ease, Tasmania’s long-term energy cost burden.
With Marinus operational, transmission costs for Tasmanian households and businesses will rise. That’s not speculation, it’s the unavoidable consequence of building $1.1 billion worth of supporting transmission infrastructure across the North West, plus our share of the link itself. Electricity users will pay for that infrastructure through higher network charges, even as the economic benefits of Marinus flow largely to the mainland.
Major industrial users, like smelters and processors, have already warned that their power bills could rise by up to 45 per cent once the link is commissioned. Those costs could drive some employers out of the state or force government to step in with costly subsidies and exemptions, paid for by all Tasmanians.
So let’s be clear: this “great deal” there is no clear evidence this is a win for Tasmanians. It’s a political sleight of hand — a reshuffling of risks, responsibilities, and ownership designed to make the project look palatable without ever addressing its core flaws.
The government has refused to release the unredacted business case, citing commercial sensitivities, despite the fact that public money underwrites the entire venture. Public guarantees at the very least are also likely to be needed before private investors build new generation facilities needed to underpin the entire boondoggle. The numbers we can see — buried in Treasury’s latest forecasts — tell a sobering story: rising debt, declining net returns, and an energy future mortgaged to interstate interests and needs.
Project Marinus may still go ahead. It may still be technically viable. It may even serve the broader national interest. But we must stop pretending that it is an unalloyed good for Tasmania.
We need to be honest — about costs, about risks, and about who really benefits.
Because if this is what a “great deal” looks like, Tasmanians should dread what a bad one would bring.