A record dry spell last year that impacted Tasmania’s hydropower capacity led to atypically low renewable generation, a concerning slump given redesign-related delays and substantial cost overruns in major projects such as the Marinus Link and Battery of the Nation.
Tasmania’s water catchments last year experienced their driest year since 1934, forcing state-owned electricity provider Hydro Tasmania to scale back power generation to conserve water.
As a result, Tasmania is projected to fall to a 15-year low in its renewable energy generation, which may deflate the state’s reputation for being 100 per cent powered by renewables, as it increasingly relies again on mainland imports and fossil fuels.
Michael Bailey, Chief Executive Officer at the Chamber of Commerce and Industry, said the low renewable generation figures proved that Tasmania was in an energy crisis.
With the last new wind farm opening at GranvilleHarbour in 2020, he added that projects held up by the“complex” planning system jeopardised Tasmania’s goal of reaching 200 per cent renewables by 2040.Bailey said: “What we hear from those developers inTasmania is the most difficult place in the world to get these projects moving in, and we just simply need to do better than that.”
While solar and wind generation has grown in the last 10 years (with wind power peaking in 2023), the gas-powered Tamar Valley power station was brought online in June to meet energy demand, accounting for at least 5 per cent of the state’s energy needs in 2024, the highest level since 2017.
Jack Penny, Head of Generation Operations at HydroTasmania, said last year’s dry conditions were abnormal, but the generator maintained healthy water storages and reported a dividend of $122 million.Penny said: “Obviously being a weather-dependent generator, dry years can be very challenging – but we’ve got a number of different levels we can pull to manage that and make sure we’re acting for Tasmanians.
“We’re going to have dry years, we’re going to have wet years, and we have a lot of different options for managing those in the portfolio moving forward – we work very closely with experts to understand what that might look like.”
He also noted how Hydro Tasmania was managing the impact of climate change, which Penny expected to result in higher rainfall variability.
Hydro Tasmania is advancing a business case for expanding the Tarraleah power station and was planning a pumped hydro scheme at Lake Cethana, but as of22 April, it was quietly withdrawn from the EPBC Act approvals process.
In a reply to the Tasmania Times, Hydro Tasmanias aid the Cethana project was referred to the AustralianDepartment of Climate Change and Energy in May 2023and was determined to be a controlled action.
Hydro Tasmania continued: “Since the referral submission in 2023, further project design and constructability work has changed the disturbance footprint.“[We] consulted [the department] on the project design changes since the original referral in December2024 and [the department] recommended withdrawing and submitting a new referral.
“[We] withdrew the referral on 22 April 2025 and are currently preparing a new referral, which will be submitted in June 2025 – [we] continue to progress the development of the Cethana [project].”
MARINUS PROGRESSES AT REDUCED SCALE
In March, the Australian Energy Regulator (AER)released estimates showing the full cost of the Marinus Link subsea cable project would be $4.8 billion, inflating far beyond the initial, and more recent, cost estimates.
This estimate includes $3.86 billion for the link cable plus $950 million for the North West TransmissionDevelopments project, which will upgrade and add capacity to Tasmania’s electricity transmission network and infrastructure.
The project involves about 250 kilometres of subsea high voltage direct current cable connecting Tasmania to Victoria, 90 kilometres of underground cable, and the construction of two converter stations and one switching station.
The undersea and underground cables will also contain fibre optic data cabling, creating a fourth network link to the mainland for telecommunications.
The AER said the updated cost estimate representedan increase of 17 per cent compared to pre-tendercompletion estimates and would not impact projecttimelines, with construction expected to begin in 2026and finish by 2030.
The AER said: “The case for Marinus is strong – [it]delivers Tasmania and Victoria’s future electricity needs at a lower cost compared to alternative solutions, saving the National Electricity Market $1.4 billion in avoided costs.“Additionally, updated consumer benefits analysis by FTI Consulting indicates on average, households in both Tasmania and Victoria will be better off after investing in Project Marinus.
“Taking these savings and accounting for network costs, a typical household will save between $25 – $36on average every year.”
In January, Marinus Link Pty Ltd shortlisted two engineering and construction consortia – TasVicGreenlink (a joint venture of DT Infrastructure andSamsung Corporation) and Empower (a joint venture of CPB Contractors and CIMIC-owned engineeringfirm UGL) – to begin a ‘development phase’ for the final major tender of the project’s first stage.
This phase would be a competitive and collaborative process to select a preferred contractor to complete the works package, representing the biggest opportunity yet for local businesses to benefit directly from Marinus Link.
This selection process was the final step before all three major equipment and installation contracts for the project’s first stage were secured. The company completed two major tenders last year for submarine and land cables as well as the highly specialised converter station technology.
The company also lodged its development application for a $167-million converter station at Heybridge, between Burnie and Penguin in the state’s northwest, to support the Marinus cable.
The project’s 2030 completion date was locked in last August after Marinus executed a contract with electrical cable manufacturer Prysmian to supply the project’s high-voltage direct current (HVDC) cables, with the contract ensuring the design, manufacture, supply and installation of the inter connector project’s750-megawatt first-stage HVDC cable system.
Caroline Wykamp, Chief Executive Officer of Marinus Link at the time, said the Italian company was the largest cable manufacturer in the world and had proven and global expertise in delivering projects like Marinus Link.
She said: “We have booked their most advanced cabling vessel – the Leonardo Da Vinci.“Marinus Link will enable Tasmania to import excess supply of solar and wind produced interstate, while reserving its hydro and storing the extra energy.“Clean hydropower can then feed the national grid when needed most, acting as a large battery for the nation.”