Interstate transmission projects like the proposed Tasmania-Victoria Marinus Link could help Australia slash carbon dioxide emissions from its energy system, the Grattan Institute think tank believes.
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The $3 billion-plus project to install two extra 750 megawatt cables between the states was one of a range of transmission network upgrade options Tony Wood and James Ha mentioned in their Go for Net Zero report released by the institute this week.
Their analysis did not consider the merits of individual projects
They suggested Australia's electricity system could get to net zero emissions by the 2040s as it moved away from coal without compromising affordability or the reliability of supply.
They also addressed the issue of who should pay for National Electricity Market (NEM) interconnector upgrades.
The federal government has suggested customers (primarily Victoria) would pay much of the Marinus cost, and the state government has insisted Tasmania would only pay its fair share.
State Labor has repeatedly asked questions about the funding and payment models.
"Some governments are also dissatisfied with the current allocation of costs for interconnector upgrades," the report said.
"Historically, the costs have been split between the states which are linked by the interconnector.
"But there is evidence that the benefits of interconnection spread beyond the two jurisdictions that are linked.
"The ESB (Energy Security Board) has been asked to consider whether the present method of paying for interconnectors should be replaced with a beneficiary pays model.
"Governments should resolve this issue quickly, recognising the value to the entire NEM of interconnector upgrades that pass a rigorous cost-benefit analysis.
Greater connection between NEM members would also increase competition, to the benefit of consumers."
Marinus Link proponent TasNetworks welcomed the recommendation governments agree on cost allocation "so interconnector upgrades that pass a rigorous cost-benefit test can proceed as needed and support underwriting of early development work on high-priority interstate transmission projects".
The state-owned company welcomed the report's findings, saying they supported the role new interstate transmission projects like Marinus could play in "securing Australia's low emissions energy future".
TasNetworks acting chief executive Ross Burridge said: "The Go for Net Zero report shows that under a scenario where 70 per cent or even 90 per cent of the NEM is renewables, an upgraded transmission network reduces the cost of electricity overall, even taking into account the cost of upgrading the network".
"As the Grattan Institute says, less wind and solar energy would be wasted under these scenarios, meaning excess supply of wind and solar from each NEM member state and territory can be exported to displace costlier forms of generation elsewhere.
"That excess energy, otherwise spilt, can also be stored in places like Tasmania, using long-duration, deep hydro reserves and additional storage capability."