Cost blowout threatens massive underwater Marinus Link power cable project

Tasmania's premier says the cost of the multi-billion-dollar Marinus Link undersea power cable project has blown out — and has warned it does not make sense for his state at "any price".

Jeremy Rockliff has written to the Commonwealth, which last year signed a joint funding agreement with Tasmania and Victoria for the project, to seek a more favourable deal.

The proposed undersea electricity interconnector, which would build a greater capacity for Tasmania to bring power from its hydro and other renewable energy projects to the mainland, was originally estimated to cost between $3.1 billion and $3.8 billion.

Victoria has agreed to pitch in and help Tasmania and the Commonwealth fund the Marinus Link undersea power cable link between the states — but one expert says the project still does not "make sense".

Eighty per cent of that would be financed through a loan scheme, with the remaining 20 per cent split evenly between the Tasmania, Victoria and the Commonwealth.

Speaking at a press conference today, Premier Jeremy Rockliff said the Tasmanian government had now been advised of a "material and a significant increase for Marinus Link".

The government would not release a specific figure, saying the ongoing tender process prevented that.

"For the right price, Marinus Link is an important project for Tasmania, it'll help boost renewable energy development and support growth in business and industry," Mr Rockliff said.

"The right price, does not mean any price.

"There is a line in the sand that Tasmania cannot afford to cross and I will not be crossing it."

Mr Rockliff said he wrote to Prime Minister Anthony Albanese and Energy Minister Chris Bowen with his concerns in July.

He said he had since spoken to the Prime Minister directly and discussions about alternative funding were continuing.

The long-awaited Marinus Link is part of Tasmania's "battery of the nation" strategy and is also listed among the Australian Energy Market Operator's top five priority projects.

Tasmania has enough green hydro energy capacity to power the entire state and also has five wind farms, with several other wind projects under consideration.

Marinus Link would benefit investment in those projects, which would then export their electricity to the mainland power network.

The project would create two 750-megawatt undersea cables between Tasmania's north-west and Victoria's Latrobe Valley.

The first stage could be built by 2028-29, and the second by 2030-31, involving extensive undersea works.

However, some analysts have argued that as Victoria invested more in its own wind farms and battery storage, it made less business sense to fund an expensive multi-billion-dollar cable to Tasmania.

Tasmania has long argued that the largest benefits of the project go to the mainland and Tasmanians should not pay a disproportionate amount.

Today, Tasmania's Energy Minister, Guy Barnett, hinted the cost might need to be spread to more states than just Victoria.

"If other states want this, they should pay for it, or the federal government should step up," he said.

"We will always put Tasmania and Tasmanians first."

Marinus Link chief executive Bess Clark last year said estimates showed the project would increase network charges for the average Tasmanian customer by $40 a year, but lower energy prices by $100.

At the time the funding agreement was signed, Prime Minister Anthony Albanese gave a guarantee that Tasmanian power prices would be cheaper with Marinus.

The Labor opposition said the government's handling of the project was an embarrassment.

"Jeremy Rockliff and Guy Barnett signed this deal less than nine months ago," Shadow Minister for Energy and Renewables Dean Winter said.

"Today they've admitting it was a stinker for Tasmania. They are a national joke."

Independent MP John Tucker, who quit the party earlier this year amid concerns about the Marinus Link, welcomed Mr Rockliff's statement.

"We've be extremely worried about the cost of this project and where it's going and that's what the premier has recognised today," he said.

"There comes a point where Tasmania won't pay and I'm pleased about that because that's protecting the Tasmanian people."

He said the Commonwealth should be responsible for the costs of the project.

"I don't have a problem with it if they're going to pay the bill. It's Tasmanians have to pay the bill, that's when I have the problem."

Mr Tucker said he accepted the government's rationale for not disclosing the size of the cost blowout due to commercial-in-confidence.

He also said the Marinus Link should follow the same approval process as the AFL stadium proposed for Hobart.

The process, known as Project of State Significance, would give the Tasmanian parliament the final say on whether the project can proceed.

"We can then look at it and examine all their financials on this and see whether it does stack up the Tasmanians," he said.

In a statement, a spokesperson for Minister for Climate Change and Energy Chris Bowen said the Marinus Link "is an important project for Tasmania and Australia".

"Marinus is facing similar pressures to other major energy and infrastructure projects around the world," he said.

"The Albanese government will continue working with the Tasmanian government to ensure its benefits are realised."

Victoria's Minister for Energy and Resources Lily D'Ambrosio said in a statement: "New transmission interconnectors will play a critical role in powering Victorian homes and businesses with renewable energy as our ageing coal-fired generators close."

"Infrastructure costs are increasing globally — we will continue to engage with the Commonwealth and the Tasmanian government to make sure Marinus Link stacks up for Victorians," she said.