Clean Energy Finance Corporation backs Tasmania grid link

The Clean Energy Finance Corporation has committed AUD $1.2 billion to TasNetworks for stage one of the North West Transmission Developments project in Tasmania, with the funding intended to cut network charges for consumers linked to the project.

The finance, from the Rewiring the Nation Fund, is expected to reduce consumer network charges by about 55 per cent over the life of the project compared with standard regulatory settings. The projected benefit to Tasmanian electricity consumers is AUD $315 million in the first five years of operation.

North West Transmission Developments is part of Project Marinus, a broader plan to increase electricity transfer capacity between Tasmania and the mainland. The latest commitment follows an earlier Clean Energy Finance Corporation investment in Marinus Link and completes the funding required for Project Marinus.

TasNetworks will use the funding to upgrade more than 130 kilometres of transmission infrastructure linking the Marinus Link landing point at Heybridge to Tasmania's transmission network. The works also include new and upgraded substations and related grid infrastructure to manage power flows and maintain system stability.

The project is central to efforts to strengthen the electricity link between Tasmania and the National Electricity Market. This would give Tasmania greater access to mainland solar generation while allowing the mainland to draw on Tasmanian hydro generation.

Consumer savings

The funding structure is central to the projected savings. The combination of long-term, low-cost finance from the Clean Energy Finance Corporation and lower-return equity from TasNetworks reduces the overall cost of capital for the project, lowering the costs passed on to consumers.

Ian Learmonth, Chief Executive of the Clean Energy Finance Corporation, said the financing would directly help lower customer bills.

"Our ability to provide long-term finance, alongside the Tasmanian Government, lowers the overall cost of capital and delivers an estimated $315 million in benefits to Tasmanian electricity consumers in the first five years."

"Linking Tasmania's hydro resources with mainland demand helps move renewable energy where it's needed most, boosting grid reliability, supporting the clean energy transition, strengthening system resilience and supporting reliable supply across the national market," Learmonth said.

Project role

Project Marinus is designed to expand the interconnection between Tasmania and the mainland electricity system. Supporters say stronger transmission links would improve electricity security and reliability by allowing energy to move more easily between regions as supply and demand shift.

For Tasmania, this could mean access to lower-cost solar electricity produced on the mainland. For the mainland market, it could mean greater use of Tasmanian renewable and dispatchable generation, particularly hydro resources, when needed.

TasNetworks Chair Roger Gill said the financing package changes the economics of building the infrastructure.

"The CEFC finance is fundamental to delivering this infrastructure in a way that would not have been possible through commercial financing alone. The investment provides a prudent funding structure that supports long-term network investment in the state while protecting customers from increased cost pressures," Gill said.

Wider grid push

The commitment adds to a growing list of transmission projects backed through the Rewiring the Nation Fund. The Clean Energy Finance Corporation has already supported major grid developments, including HumeLink and the Central-West Orana Renewable Energy Zone, and financed early works for VNI West, which is intended to strengthen the connection between Victoria and New South Wales.

Beyond transmission, it has financed more than 5 GW of renewable energy generation and four large-scale battery projects, including the Victorian Big Battery, the Hornsdale Power Reserve expansion, Capital Battery, and the Waratah Super Battery.

The latest Tasmanian investment highlights the scale of public financing being directed to the grid as Australia seeks to connect new sources of renewable generation to demand centres. In Tasmania, the focus is on building the network assets needed to connect the Marinus Link landing point to the state system and make the broader interconnector project workable.

For consumers, the immediate test will be whether the projected reduction in network charges materialises once the project begins operating. The estimate for the first five years is AUD $315 million.