Picture: NewsWire / Martin Ollman (courtesy CEFC)
The Marinus Link project, an electricity interconnector between Tasmania and Victoria in Australia, has received a AU$3.8 billion ($2.5 billion) commitment from the Clean Energy Finance Corporation (CEFC).
The CEFC has substantially increased its support for the modernisation of Australia’s clean energy grid, with a commitment expected to be AU$3.8 billion ($2.5 billion) to support the delivery of Marinus Link.
The CEFC investment, the largest since it began investing, provides critical backing for the 750MW Stage 1 of Marinus Link, which is an undersea and underground electricity and data interconnector between North West Tasmania and the Latrobe Valley in Victoria.
The electricity interconnector, the second between Tasmania and Victoria, will support the two-way exchange of Tasmania’s vast hydropower and wind developments with the excess solar and wind generated from abundant renewable energy assets in Victoria and NSW.
Marinus Link includes high-voltage direct current cables, fibre optic cables, a communications station, and converter stations at each end. The cables span 345 kilometres, including 255 kilometres of undersea cables across Bass Strait and 90 kilometres of underground cables in Gippsland, Victoria.
CEFC’s financing follows the final investment decision for the project, announced in early August. Marinus Link Pty Ltd’s (MLPL’s) shareholders decided to proceed, saying it confirms a sound financial and economic investment case, based on an assessment of forecast costs, revenue, associated benefits, and risks.
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Commenting in a release was Ian Learmonth, CEFC CEO: “Marinus Link is another critical piece in the renewable energy transformation of Australia’s electricity grid.
“As with all our transmission-related investments, we have taken care to structure our finance in a way that maximises the benefits to consumers, by lowering project borrowing costs, which in turn will lower overall project costs.”
The CEFC’s commitment is expected to be AU$3.8 billion, inclusive of capitalised interest during construction. The final amount of concessional finance is subject to the regulator’s final determination on project costs.
The CEFC investment, in the form of long-term concessional debt finance, is part of a broader funding package that includes equity investment from the Australian, Tasmanian and Victorian Governments, as co-owners of Marinus Link.
Said Marinus Link CEO, Stephanie McGregor: “The ability to access the concessional loan through the CEFC enables Marinus Link to deliver this critical infrastructure at the lowest possible cost to consumers.
“The CEFC’s long term concessional finance, along with low-returning equity from the government shareholders, is expected to deliver AU$900 million ($589 million) in benefits to Tasmanian and Victorian electricity consumers during the first five years of the project’s operation…the concessional finance will reduce the impact of transmission-related consumer costs by 45 per cent.”
Rewiring Australia
Marinus Link is the seventh project to be financed through the CEFC Rewiring the Nation (RTN) Fund, with a total value of commitments exceeding AU$7 billion ($4.6 billion) across grid modernisation projects in NSW, Victoria, the ACT and Tasmania.
The projects include the Central-West Orana Renewable Energy Zone, HumeLink and elements of the Victoria-NSW Interconnector.
Said CEFC RTN chief investment officer Paul McCartney commented on the project’s significance in enabling Tasmania to share its hydro and wind energy with the “much larger National Energy Market, helping firm the grid.
“It will also provide Tasmanian consumers with access to abundant low cost solar and wind energy from the mainland, as well as enhanced energy security. This is a win-win for both ends of Marinus Link.
“This significant investment of CEFC concessional finance will mean Marinus Link will cost less to build and operate, lowering the impact on energy bills.”
Added Learmonth: “In investing on behalf of the Australian Government, the CEFC RTN Fund has a particular focus on using our capital to deliver these complex energy projects in a manner that reduces costs while accelerating project timelines.”
Marinus Link is listed as a priority for decarbonisation on the Australian Government’s National Renewable Energy Priority List and is classified as urgent in the Australian Energy Market Operator’s 2024 optimal plan for the national grid.
Construction is expected to commence in 2026, with Stage 1 scheduled for completion by 2030.
