Following an extensive consultation process, the Australian Energy Regulator (AER) made final decisions on construction costs for the first stage of Project Marinus, approving funding for the Marinus Link interconnector and associated transmission upgrades in Tasmania.
The combined Marinus Link and North West Transmission Developments (NWTD) form Project Marinus. Stage one will deliver a 750-megawatt cable connecting Victoria and Tasmania (Marinus Link), and associated transmission upgrades to the existing on-land transmission network in North West Tasmania (NWTD). Stage two will deliver a second 750-megawatt cable connecting Tasmania and Victoria.
Clare Savage, Chair at AER, confirmed the regulator closely scrutinised proposed construction costs, with particular attention paid to risk-sharing arrangements between project proponents and electricity consumers.
“There has been strong stakeholder interest reflecting the scale and complexity of this project,” Ms Savage said.
“We have carefully assessed all costs and market testing outcomes to ensure consumers pay no more than necessary for infrastructure of this significance.”
Under the final decision, the AER approved capital expenditure of $3.47 billion for Marinus Link Stage one construction. After reducing risk allowances and corporate costs, the approved capital expenditure is $27.8 million less than originally proposed by Marinus Link Pty Ltd.
The AER said this approach provides incentives for the project to manage risks and contain costs, while still allowing recovery of efficient construction expenditure.
Marinus Link costs will be recovered from Tasmanian and Victorian electricity consumers once services commence, currently expected in 2030. The allocation of costs between jurisdictions will be determined through intergovernmental agreement.
Marinus Link is also in discussions with the Clean Energy Finance Corporation on the details of a concessional finance agreement, with the benefits of any agreement to be passed on to consumers through lower transmission charges.
For the NWTD stage one construction costs, the AER has also applied a reduced risk allowance, approving proposed capital expenditure of $921.3 million, which is $49.8 million less than proposed by TasNetworks.
These stage one construction costs for the NWTD will result in an annual bill increase of around $15.50 for a typical Tasmanian residential electricity customer over the remaining three years of the 2024-29 regulatory period. This is an upper limit because it does not account for the impact of any Commonwealth grant funding and the concessional financing agreement for NWTD, which is expected to be finalised shortly.
“We thank everyone who has participated in these processes and encourage them to continue to engage with the AER on future revenue determinations for Marinus Link and TasNetworks, in anticipation of Marinus Link’s transmission services starting in 2030,” Ms Savage said.
For more information, visit the Clean Energy Regulator website.