Marinus Link project likened to Snowy 2.0 in damning new report warning of ‘dead-weight loss’
A proposed undersea power cable and electricity storage project in Tasmania would not be able to compete with cheaper battery storage in Victoria, a report has found.
Victoria University’s Victoria Energy Policy Centre has updated a report it published last year on the economic prospects of the Project Marinus and Battery of the Nation projects.
The revised report, by Dr Bruce Mountain, found it would be cheaper to build battery storage in Victoria than to store energy in Tasmania and then send it to Victoria using the Marinus Link cables.
It found the cost of battery storage is decreasing and Victoria has already made significant investments in large-scale battery storage projects, with more likely in the future.
“We now feel able to conclude that not only does Marinus Link have no chance of competing with battery alternatives but that if Hydro Tasmania develops pumped hydro capacity in Tasmania it is very likely that, like Snowy 2.0, it will be stranded from the outset,” the report concluded.
TasNetworks is behind the Project Marinus proposal to build two new 750-megawatt undersea power cables between Tasmania and Victoria, dubbed Marinus Link, at a cost of about $3.5 billion.
Battery of the Nation is a proposal by Hydro Tasmania — the state government-owned energy business — to store power in Tasmanian dams by releasing water to generate electricity for export to Victoria when prices are high and pumping the water back into dams when power prices are low.
Dr Mountain said if Marinus Link was funded by the Tasmanian or Commonwealth governments, taxpayers would be left paying for an asset that would cost more to build than it can earn.
“If it’s borne by the Commonwealth in some way, it’ll be placing a burden on all taxpayers and energy consumers depending on how the bid ends up, when you build an asset that can’t compete.”
Dr Mountain was sceptical of the long-term benefits of construction jobs associated with the projects.
“It would be much better for the community if the government simply gave that money out — frankly, it would be less of a loss for the community,” he said.
“Building a white elephant, a dead-weight loss, entrenches disadvantage.”
The Bob Brown Foundation commissioned both the original and updated reports.
Foundation spokeswoman and former Australian Greens Leader Christine Milne warned it would be unwise for either the Tasmanian or Commonwealth governments to fund Marinus Link.
TasNetworks’ general manager for Marinus Link Bess Clark said both batteries and pumped Hydro storage would be needed as Australia’s energy market transitioned away from fossil fuels.
“Marinus Link presents a once in a generation opportunity to double Tasmania’s clean energy, helps combat climate change, puts downward pressure on power prices and creates thousands of local jobs,” she said.
She said the Australian Energy Market Operator’s modelling showed Marinus Link was a key part of the future of Australia’s Energy Grid.
A spokesman for Hydro Tasmania said batteries wouldn’t be able to fulfil all of the Australian energy systems’ storage requirements and that deep storage like pumped hydro would be needed.
Tasmanian Energy Minister Guy Barnett said the state government fully supported the Marinus Link and Battery of the Nation projects.
“[The Australian Energy Market Operator] supported the business case for Project Marinus and recommended its immediate progression as a national priority,” he said.
Earlier this week the Tasmanian Chamber of Commerce and Industry (TCCI) threw its “wholehearted support” behind Marinus Link.
“We know that this project will be fantastic not just for employment across the state over the next 50 years but also for the growth of business within Tasmania,” TCCI CEO Michael Bailey said.