One of the most anticipated projects in the Australian energy network and one of Tasmania’s largest has gained the next step of approvals.
The Australian Energy Regulator (AER) has approved the costs of construction and upgrades for Stages 1 of Marinus Link and the North West Transmission Developments (NWTD).
The upgrade will see the development of lines between Palmerston and Burnie, where the undersea cable, Marinus Link will connect to the Victorian grid with works set to begin in 2026.
The AER’s final Decision approved an alternative estimate of $3,470.6 million ($2023) and not MLPL’s proposed capex of $3,498.4 million ($2023) ‘to ensure consumers pay no more than necessary for the delivery of Marinus Link”.
The costs of Marinus Link will be recovered through transmission charges levied on Victorian and Tasmanian electricity customers once it begins to operate in 2030 with the allocation of the costs based on an agreement.
The AER noted the importance of the project in the energy transition but it also came at a difficult time for consumers.
“As Marinus Link is a large complex greenfield project, it is more difficult to accurately forecast costs than most other transmission projects. The resulting risk of over (or under) spending is correspondingly higher than normal. Our Final Decision adopts a balanced approach to risk sharing between MLPL and consumers,” it noted
Ina statement Marinus Link said the regulator’s assessment confirmed cost analysis that Tasmanians and Victorians will be better off with investment in these national infrastructure projects
Marinus Link Pty Ltd CEO Stephanie McGregor welcomed the AER’s decision as bookending the project’s assessment and planning phase, paving the way for full construction.
“We thank the AER for recognising our discipline in managing the project’s construction costs on behalf of electricity consumers,” Ms McGregor said.
“Our role now, as a regulated company and the custodians of national energy infrastructure, is to deliver efficiently, responsibly, and ensure the benefits are enduring for all Tasmanians and Victorians.
“Preparatory works are already underway across our project footprint. This final decision gives us the confidence to take construction into full swing later this year.”
“The AER is responsible for ensuring energy consumers have access to a reliable and secure market and that they pay no more than necessary for energy to their homes and businesses. This is done by setting the maximum amount of revenue that monopoly electricity networks and natural gas pipelines can earn from consumers.”
TasNetworks CEO Seán Mc Goldrick said the decision was reflective of the state-owned company’s work in ensuring the NWTD costs are prudent and efficient.
“This outcome underscores TasNetworks’ efforts to keep NWTD construction costs well-managed at a time when cost-of-living pressures have never been higher for Tasmanian communities and industry,” Dr Mc Goldrick said.
“The AER’s approval provides revenue certainty and is an important step in reaching financial close and commencing construction in the coming months.
“We continue to finalise concessional finance arrangements with the Clean Energy Finance Corporation, which will significantly reduce the pricing impacts of the project on Tasmanian electricity consumers.”
