Hot on the heels of a pre-election funding boost, the proposed $3.5 billion Marinus Link sub sea interconnector between Tasmania and Victoria has appointed insurance and risk management company Lockton Australia to underpin the massive project.
The 1500MW, 255km cable, which is being co-funded by the federal and Tasmanian governments, is the key to the island state’s “Battery of the Nation” ambitions, where it serves as a source of dispatchable renewables – including from massive new wind farms – for the mainland.
The project, which is in the process of completing underwater engineering surveys, has passed an investment test by the independent Australian Energy Regulator, and is included in the Australian Energy Market Operator’s (AEMO) blueprint for the future, the Integrated System Plan (ISP).
But Marinus Link has also been heavily contested.
Earlier this year, in a submission to the Australian Energy Market Operator’s latest ISP draft, the Bob Brown Foundation said AEMO’s modelling was “fundamentally flawed” in its assessment of the proposed interconnector.
And in March, analysis published by the Victoria Energy Policy Centre suggested that its construction – alongside the existing interconnector Basslink – could be rendered obsolete by the development of new energy storage projects in Victoria.
That report noted that the estimated – and approved – investment cost of Marinus put its value at about 3.5 times the entire regulated asset value of all the transmission lines in the whole of Tasmania.
It also argued that the project had less chance of covering costs than notoriously troubled Basslink, whose owner last year went into administration after the state government sued it for damages over the long outage that hit the island in 2015.
Still, the appointment of global insurers prepared to underwrite Marinus is a major vote of confidence in the new interconnector.
Lockton, which describes itself as the world’s largest privately held insurance brokerage, said on Tuesday that it had signed up to deliver a bankable insurance program to underpin the risk and risk financing needs of Marinus Link, including through to the commercial operations.
“Achieving a successful, bankable-insurance program for such a critical project in delivering Australia’s net-zero commitments is our top priority,” said Ranga Jayaratne, Lockton Australia’s national manager of power and energy.
“Interconnector projects present unique insurable-risk challenges and Lockton’s global team of diverse expertise is delighted to be part of the Marinus Link project team.”
Lockton’s Marinus project lead, Antony Meakin, added that despite numerous under-sea cables planned, underway or recently completed around the world, insurance capital availability was “discerning in a ‘harder’ market and very selective” of which projects to support.
“Lockton’s proven major project approach will maximise the market response to what is an epoch-defining project for Australia and the country’s commitment to unlocking renewable energy,” Meakin said.