Marinus Link construction heads “into full swing” as regulator delivers final verdict on cost

The cost to consumers of building the first stage of Marinus Link, an undersea cable connecting Tasmania to the mainland electricity grid, has been approved at $3.4 billion, $27.8 million less than the most recent amount pitched by the huge project’s developers.

The Australian Energy Regulator (AER) on Friday announced its final decision to approve proposed capital expenditure of $3,470.6 million for Marinus Link’s Stage 1, for the construction of a 750 megawatt cable across the Bass Strait

For the associated on-land transmission upgrades in north west Tasmania, the AER has approved proposed capital expenditure of $921.3 million, a $49.8 million reduction on the amount proposed by TasNetworks.

The cost of the massive project has been a major point of contention – it was first proposed as two cables with a combined capacity of 1500 megawatts (MW), but was cut in half in late 2023, in response to ballooning costs.

Marinus Link Pty Ltd (MLPL) and Tas Networks had, in July, put costs for the pared back project at $3.89 billion for the cable and $1.14 billion for the supporting North West Transmission Developments (NWTD), but later revised this number down by around $40 million.

In early August, Final Investment Decisions (FID) were announced by the Tasmania, Victoria and federal Labor governments, which hold 17.7 per cent, 33.3 per cent and 49 per cent shares in MLPL, respectively.

In early September, Marinus Link reached financial close on Stage 1 of the project off the back of a record commitment from the federal government’s green bank of up to $3.8 billion in concessional finance.

The AER says its final decision on the public spend for Marinus Stage 1 construction costs included a “reduced, efficient risk allowance” and reduced corporate costs.

“This adopts a balanced approach to risk sharing between Marinus Link and consumers, providing incentives for Marinus Link to mitigate risks and contain costs that are ultimately paid for by consumers, while providing it with the opportunity to recover its construction costs,” the decision says.

MLPL said in a statement on Friday that the regulator’s assessment recognises the discipline shown in managing the project’s construction costs on behalf of electricity consumers.

“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,” said MLPL chief Stephanie McGregor.

“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.”

Costs for Marinus Link will be recovered from Tasmanian and Victorian electricity consumers once the interconnector comes into operation, with a target date of around 2030. The allocation of costs will be based on an agreement between governments.

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