The Economics of Tasmanian Wind

 

Why new projects face a wall

Tasmania’s energy debate still assumes that wind farms are profitable and Marinus will unlock a wave of new renewable investment. But the only audited window we have into the real economics of Tasmanian wind — the accounts of Woolnorth Wind Farms (WWF) — tells a very different story.

WWF supplies around 10% of Tasmania’s electricity, with 308 MW of generation across Bluff Point, Studland Bay and Musselroe Bay. It is also the only operator that files full financials with ASIC. Those accounts reveal the structural truth that now defines the future of Tasmanian renewables: Tasmania’s oldest wind farms are only profitable because Hydro Tasmania subsidises them — especially via Large Scale Generation Certificate (LGC) guarantees. Strip out those supports and WWF is loss‑making every year, even with its current low level of debt.

This is the starting point for understanding why new wind projects — the very projects Marinus depends on — face a wall.

1. WWF’s Underlying Profitability — What the Accounts Really Show

WWF Underlying  Profits ($m)
	2025	2024	2023
Revenue
Electricity at market prices	65.6	67.2	40.0
Realised gains/(losses) electricity PPAs	-6.3	-11.6	9.2
LGCs	50.7	49.8	49.2
Other	1.4	1.0	7.0
Total	111.4	106.4	105.4
Expenses
Depreciation & impairment	33.7	32.7	30.4
Finance costs	6.2	7.0	9.2
Opex	40.8	40.0	42.0
Total expenses	80.6	79.7	81.6
Underlying profit	30.8	26.7	23.8
EBITDA
Underlying EBITDA $m	70.6	66.4	63.4
Underlying EBITDA per 100 MW $m	22.9	21.6	20.6
EBITDA before PPAs/LGCs
Underlying EBITDA   $m	26.3	28.2	5.0
Underlying EBITDA per 100 MW $m	8.5	9.2	1.6
Other info
Electricity sales GWh	1,052	962	1,033
Capacity factor %	39	36	38
Electricity sold $ per MWh	$62	$70	$39

This reconstructed P&L uses the same “underlying profit” measure Hydro uses for its own reporting and for calculating tax‑equivalent payments and dividends. It excludes the non‑cash revaluation of LGCs and focuses on the real economics of the business.

To understand the sustainability of wind generation — and the viability of new projects — we need to look at two things:

1.     Underlying profit (after opex, depreciation and finance costs)

2.     EBITDA, especially EBITDA before PPAs and LGCs, which is the metric investors use to assess whether a project can service debt and fund capex.

WWF’s accounts allow us to calculate both.

2. What WWF’s Numbers Tell Us — The Unvarnished Economics of Wind

A. Electricity‑only revenue is too low to cover costs

WWF’s electricity revenue at market prices (no PPA adjustments, no LGCs) is:

• $62/MWh in 2025
• $70/MWh in 2024
• $39/MWh in 2023

These are the actual market prices earned in Tasmania.

B. Costs exceed revenue every year

WWF’s annual expenses (opex + depreciation) are $72–74m. Electricity‑only revenue is $40–67m.

So before PPAs and before finance costs, WWF’s losses are:

• –$7.4m in 2025
• –$4.4m in 2024
• –$25.4m in 2023

This is the core structural truth:

Tasmania’s flagship wind farms lose money on electricity alone.

NB These figures are profit figures which include depreciation. The earnings before interest and depreciation EBITDA will reveal what’s available to service borrowings.

C. EBITDA per 100 MW is far below what new projects require

 Wind earns less per MWh, faces more curtailment, and becomes less bankable. Curtailment occurs when a wind farm is forced to reduce output because the grid cannot accept electricity the turbines are capable of producing. The real threat is not solar on its own, but the solar‑battery pairing, which reshapes the price curve and pushes wind into lower‑value hours.

WWF’s EBITDA before PPAs/LGCs:

• In 2025 without LGCs $26m    → Or $8.5m per 100 MW
• In 2024 without LGCs $28.2m → Or $9.2m per 100 MW
• In 2023 without LGCs $5.0m   → Or $1.6m per 100 MW

Investors building new wind farms look at this number — not the subsidised EBITDA.

3. Why WWF Is Profitable — Hydro’s PPA Subsidies

Two PPA mechanisms keep WWF afloat:

(1) Electricity price floor

When market prices fall below the PPA floor (around $50/MWh), Hydro pays the difference. In 2023, Hydro effectively topped up WWF by $11/MWh.The reverse happens when prices are above $50 as happened in 2024 and 2025.

(2) LGC price guarantee — the big subsidy

WWF receives $50 per LGC under the PPA. Market price in 2025 averaged around $10. During 25/26 the price has been below $5 with the current price as at June 26 being $3.50.

WWF produces around 1 million LGCs per year. Hydro therefore subsidised WWF by  around $40m in 24/25 on LGCs alone.

It’ll be even more in 25/26 because the price has dropped and it’s been windier with production up circa 5 per cent.

This is why WWF is profitable. This is why it can repay debt. This is why the Chinese investors bought in.

And this is why the post‑2030 world is terrifying for new projects.

4. The Post‑2030 World — No LGCs, No PPAs, No Safety Net

The Clean Energy Regulator (CER)’s latest Quarterly Carbon Market Report is blunt:

• LGC supply exceeds demand
• Oversupply persists to 2030
• LGC prices are structurally low
• The RET is saturated
• New projects cannot rely on LGC revenue

So the $40m/year subsidy that keeps WWF afloat disappears.

WWF’s electricity‑only economics — already negative — become the baseline for new projects.

5. The 100 MW Example — The Numbers That Kill the Narrative

A new 100 MW wind farm costs around $300m based on Granville Harbour and Cattle Hill.  The former, a 112MW wind farm, cost $280m and Cattle Hill a 148MW facility cost $400m. Both are about 6 years old so a current estimate of $300m per 100MW is likely to be low if anything. The figures from CSIRO latest GenCost Report confirms this.

100 MW of new wind will require:

• Debt repayment (15 years): Around $32m/year
• Opex: $13m/year
• Total required cashflow:  $45m/year

But WWF’s real EBITDA per 100 MW is:

• $8 - 10m in a good year
• $1–2m in a bad year

The shortfall is $37–44m per 100 MW per year

A 300–600 MW buildout (the scale implied for Marinus) implies $110m–$260m per year in subsidies

No investor will proceed without:

• A long‑term fixed‑price PPA well above market
• Or a state underwriting scheme
• Or a capacity payment
• Or a Contract for Difference
• Or a direct subsidy

None of these exist in Tasmania.

6. The Market Has Shifted — Batteries Are Reshaping the Economics

The Clean Energy Regulator has recently reported a battery boom of historic scale:

• 193,000 home batteries installed in 2025
• 4.6 GWh added in one year
• 8–12 GWh expected in 2026

This is more storage than the 12 largest grid‑scale batteries in the NEM combined.

Batteries:

• Flatten the price curve
• Cap peak prices
• Crowd out wind in the evening

WWF’s electricity‑only revenue of $39–70/MWh already reflects this new reality.

7. Why New Certificate Schemes Won’t Save Wind

Australian Carbon Credit Units ACCUs

Wind farms cannot generate ACCUs. They do not provide revenue to wind projects.

Renewable Energy Guarantee of Origin REGOs

Voluntary, unregulated, and expected to be worth $1–$5, not $50. They cannot replace LGCs.

Capacity Investment Scheme (CIS)

Helps on the mainland — but not in Tasmania:

1.     Oversubscribed in NSW, Vic, Qld, SA

2.     Supports capacity, not export‑dependent projects

3.     Does not underwrite Marinus or Tasmanian wind

Even if Tasmania secured CIS support for one project, it will fall well short of what the Marinus business case assumed.

8. The Policy Consequences — The Circularity at the Heart of Marinus

Hydro Tasmania cannot repeat the WWF PPA model:

• It cannot pay $50/LGC when LGCs are under $5
• It cannot absorb $45m/year subsidies per project
• It cannot underwrite hundreds of millions in new wind
• Its balance sheet is too weak

The State cannot underwrite 300–600 MW of new wind. The required subsidies are too large.

This creates a circularity:

1.     Marinus only works if new wind is built

2.     New wind only works if someone subsidises it

3.     No one has identified who that “someone” is

4.     Therefore the Marinus business case is incomplete

Tasmania risks building a $4 billion interconnector with no generation to support it.

9. The Unavoidable Conclusion

Tasmania’s renewable future is not constrained by engineering or geography. It is constrained by economics.

• Batteries are reshaping the market
• LGCs are gone
• REGOs are weak
• ACCUs do not fund wind
• CIS does not guarantee Tasmanian projects
• WWF’s accounts show wind is unviable without subsidies
• Hydro cannot underwrite new wind
• Marinus depends on new wind that won't be built without assistance in some form. In Tasmania that means the Government/Hydro.

Until Tasmania develops a new strategy grounded in post‑LGC economics, new wind faces a wall — and Marinus faces a void. Those who understand this best are the ones closest to the system. They are yet to say it out loud.

Perhaps everyone is trying to disseminate the implications of the sudden emergence of 440 MW‑scale data centre proposals which has thrown an entirely new variable into the equation — one that further undermines the already‑fragile business case for Marinus. It is now unclear how the new renewable generation required for these data centres, plus the new renewable generation assumed in the Marinus modelling, will be funded, built, and integrated into a system that is already stretched. And it is even less clear how Hydro can deliver the massive profit uplift the Government’s Budget strategy depends upon when the very energy the business case had pencilled in for export may instead be consumed on‑island and will require subsidies given the unassailable evidence from years of financial information from WWF.

Tasmania is now facing a future where demand growth, new industrial loads, and unfunded renewable commitments collide directly with the assumptions underpinning Marinus and the Budget — and none of it has been modelled.