Two new independent reports released today confirm Project Marinus will put downward pressure on wholesale electricity prices and that its benefits to consumers in the National Energy Market (NEM) will outweigh its costs.

The Project Assessment Conclusions Report (PACR) is the final step in the RIT-T process, required under the National Electricity Rules, and shows that Project Marinus satisfies the regulatory investment test for transmission (RIT-T).

The Wholesale Pricing Report, supported by independent analysis undertaken by international experts FTI Consulting, demonstrates that customers will benefit from lower wholesale energy prices in a future grid with Marinus Link, compared to a future grid without it.

The $3.5bn ($2021) Project Marinus interconnector is a proposed 1500 megawatt undersea and underground electricity and telecommunications connection between Victoria and Tasmania called Marinus Link, plus supporting transmission network developments in Tasmania’s North West.

The cost-benefit analysis undertaken for the PACR indicates that Project Marinus delivers significant positive net economic benefits to the National Electricity Market from its earliest commissioning timeline of 2027 for the first 750 MW stage, and 2029 for the second 750 MW stage.

Along with price savings and increased reliability, Project Marinus will also cut emissions, deliver 2800 direct and indirect jobs in both Tasmania and Victoria, attract billions of dollars in regional investment to both states and unlock a pipeline of future renewable energy development.

The independent modelling conducted for the PACR, completed by Ernst & Young, also supports the establishment of regulated revenue streams for Marinus Link and North West Transmission Developments, with the project providing greater benefits to the NEM than its cost.

The independent Wholesale Pricing Report shows Marinus Link is able to exert downward pressure on wholesale electricity prices because it enhances the NEM’s access to Tasmania’s low cost, high volume dispatchable energy resources including latent hydro capacity, high quality wind resources, and deep energy storage capability.

Bess Clark, General Manager of Project Marinus at TasNetworks welcomed both reports as they confirm Project Marinus’ crucial role in a transforming NEM.

“Australia’s transition to renewables is happening quickly. The National Electricity Market needs access to affordable, ‘on-demand’ energy and long duration deep storage to ensure the lights stay on and power bills stay low,” Ms Clark said.

“Marinus Link is the key to unlocking the deep storage of the Battery of the Nation for mainland Australia – increasing reliability, keeping electricity prices lower and significantly boosting access to renewable energy.  

“It will give Australians access to cheaper, clean, reliable energy and transform Tasmania into a renewable energy powerhouse.

“With Project Marinus, businesses and investors in mainland Australia will have the assurance of a stable power supply when solar and wind generation is not available and batteries have run out.

“Along with other major transmission projects, Project Marinus will become the backbone of a reliable, lower emissions National Electricity Market for the next decade and beyond.

“Without access to vast cost-effective storage options like Battery of the Nation, consumers across the NEM will continue to pay more for their electricity.

“Combined, these reports provide a body of detailed, independent data that demonstrates the Project’s technical and economic feasibility, while also outlining its benefits to the NEM and connected energy users.

“Project Marinus will be a significant contributor to Australia’s emissions reduction ambitions, being a cost-effective means to rapidly cut emissions, leading to savings of up to 70 million tonnes of CO2 equivalent.

“The Wholesale Pricing Report clearly shows that all customers in the NEM are better off if Project Marinus proceeds and the costs are shared fairly and efficiently across all NEM regions,” Ms Clark said.

The independent modelling suggests that under the current pricing framework Tasmania and Victoria would pay 100 per cent of the costs for Project Marinus, however they would only receive 34 per cent of the benefits. Allocating the cost of interconnection fairly to beneficiaries would require a change from the current rules.

“Customers in all NEM regions will be better off with Project Marinus, if interconnector project costs are allocated in line with the benefits customers receive,” Ms Clark said.

“A beneficiary pays model is a fairer outcome to recover the Project Marinus costs over its 40-plus year service life,” Ms Clark said.

Jason Mann, Senior Managing Director of FTI Consulting said: “The NEM is undergoing a period of transition where coal-fired generation is retiring, and variable renewable energy is taking its place.

“Accessing the existing spare and refurbished on-demand hydro capacity, along with cost-competitive pumped hydro potential, provides lower-cost on-demand energy compared with other solutions available to the NEM.

“This, together with the new wind resources that are expected to be delivered in Tasmania, puts downward pressure on future wholesale energy prices for all customers in the NEM.”

“The benefit to consumers arising from Marinus Link and additional Tasmanian renewables capacity, in terms of lower wholesale electricity prices, is widely spread across the NEM, with all jurisdictions being better off.

“Therefore it is necessary to develop an approach that recovers the costs of Marinus proportionately from those who benefit from the link,” Mr Mann said.

Both reports can be downloaded from marinuslink.com.au/economic-analysis    

Media contact: Dan Sinkovits, 0417 767 124 / Dan.sinkovits@tasnetworks.com.au