Feds step up funding for Tas power link to the mainland

Tasmania's Premier Jeremy Rockliff had faced pressure to reveal the growing costs of the project, said to be more than $3 billion for the first stage alone, after losing two MPs over the issue and now governing in minority.

On Sunday, federal energy minister Chris Bowen said the federal government had reached a new funding agreement with Tasmania under which the Commonwealth would increase its share in the joint venture entity to 49 per cent.

Mr Bowen said the agreement was a "game-changer" that would get the project off the ground.

 "This updated agreement will not only deliver the benefits of Marinus Link, it will be cheaper to Tasmanians," he said.

Tasmania's equity share will now be about 17.7 per cent and Victoria's will remain at 33.3 per cent.

Mr Rockliff said the new deal would bring jobs, economic growth, energy security and lower power prices, with the state now investing its fair share and no more.

"I'm very pleased we've been able to land this on the right side of our line in the sand," he said.

The Tasmanian government last month refused to detail the cost blowouts of the proposed undersea link to the mainland, saying contract negotiations were ongoing.

Tasmania's Energy Minister Guy Barnett said the state would no longer fund the project at any cost and had initiated talks with the federal government to find an alternate funding arrangement.

The costs had blown out significantly from the initial $3.1 billion, with that price tag now attached to just the first stage of the project.

The Marinus Link is a proposed electricity and telecommunications interconnector between Tasmania and Victoria to allow excess energy generated on the mainland to be stored in Tasmania's hydro storage, dubbed its Battery of the Nation project.

The project will be focused on one cable in the first instance, with negotiations to continue on a second cable.

The government said modelling found the majority of the benefits from Marinus Link would be realised from the first cable, at close to two-thirds.

Tasmania will have the option to sell its stake to the Commonwealth upon commissioning of the project.

The Tasmanian government estimates its investment is now between $106 million and $117 million.

Hydro Tasmania CEO Ian Brooksbank said the state was set up a century ago by hydro pioneers with a vision for future clean energy.

"Marinus Link will underpin economic growth for another century to come," he said. 

With electricity consumption in the state set to to almost double in the next 30 years, Mr Brooksbank said cost-effective power sources would be essential.

"We need new sources of renewable energy, more efficient hydro infrastructure, more flexible capacity, and more transmission if we are to meet the energy needs of a modern, low-carbon economy," he said.

The Tasmanian Greens slammed what they called secrecy about the announcement, and accused the state government of treating Tasmanians like "'mushrooms" over the deal.

The party warned Sunday's announcement covered only the first stage of the Marinus link, with the costs of future works still in doubt.

The project has a planned completion date of 2028.