Morrison’s fast-tracking of Tasmania link only makes sense with rapid coal exit

Scott Morrison should be careful what he prays for. One of the few notable actual commitments made in his new “Climate Solutions” package – the rebadged and near useless Direct Action – is a $56 million payment to fast-track Tasmania’s Battery of the Nation project.

But here’s the catch – fast-tracking the Battery of the Nation project, which proposes new links totalling 1,200MW of capacity between the island state and the mainland, and so unlock its considerable hydro and wind resources, only makes financial sense on two conditions, the latest feasibility study says.

One of these conditions is that the retirement of Australia’s coal fleet on the mainland must be accelerated. The second is that Australia adopts  52 per cent emissions reduction target of 2030, and so accelerate the uptake of renewables, the very target that Morrison and his cabinet ministers have repeatedly derided as “economy wrecking”.

Is Morrison, who lovingly and infamously fondled a lump of lacquered coal in parliament, having a bet each way?

The Battery of The Nation project’s latest feasibility studies which do not exactly knock your socks off with an over-whelming positive view of its economic benefits.

It says that the project, including the Marinus Link that has received the Morrison government funding, is likely to deliver positive economic worth in the mid-2030s only “under some circumstances”, and it also managed to identify “some circumstances” when the Marinus Link can deliver positive economic worth in the mid-2020s.

Both depend on the early departure of coal fired generators.

“The timing is primarily linked to the value that Marinus Link provides to the NEM as coal-fired generation retires,” the study says.

“Different timing of large-scale retirement of coal-fired generators in the NEM therefore affects the optimal timing of Marinus Link. If Australia’s existing coal-fired generators remain in service until the end of their design lives, Marinus Link is likely to deliver a positive economic worth in the mid-2030s.”

This conforms with the view expressed by the Australian Energy Market Operator’s Integrated System Plan modelling, which also recognises that existing coal-fired generators may retire earlier than design life due to higher emissions reduction targets – albeit an unlikely event under a Coalition government.

So, here’s the rub. If 7,000MW of coal fired capacity was retired by 2030, then the Marinus link could deliver a positive benefit of $490 million for a 600MW capacity link commissioned in the mid-2020s; or $480 million for a 1200MW capacity link built and commissioned in two stages from the mid-2020s.