Tasmania's long-awaited Marinus Link project is in financial limbo after a cost blowout.
Premier Jeremy Rockliff on Friday said the undersea electricity interconnector was an important project to boost Tasmania's renewable energy development and support economic growth - but only for the right price.
The Bass Strait project was slated to cost up to $3.8 billion, with 80 per cent of its funding from a loan scheme and the other 20 per cent shared equally between Tasmania, Victoria and the Commonwealth.
But the Tasmanian government had since been advised of a "material and significant cost increase" for the project, Mr Rockliff said.
The government said it would not disclose the extent of the cost blowout because of a live procurement process.
The state opposition labelled the government a "national joke" for its mishandling of the project.
Mr Rockliff wrote to Prime Minister Anthony Albanese and Energy Minister Chris Bowen last month in search of another way to get the project off the ground.
The premier said he had since spoken to Mr Albanese about it directly.
"The right price does not mean any price and from day one we have said that the cost benefits of this project must stack up in favour of Tasmanians," Mr Rockliff said.
“I have asked the prime minister to consider alternative funding options for the increased costs of this project.
"Those discussions are continuing and I am confident that we will reach a good outcome for Tasmania soon."
State Energy Minister Guy Barnett put the onus on other states and the federal government to step up if they wanted Tasmania's "world-class" hydro and wind resources.
He said the government had to draw a line in the sand and was prepared to do whatever was necessary to ensure Tasmania's best interests were protected.
Tasmania has committed more than $100 million to the Marinus Link, the North West Transmission Development and the Battery of the Nation projects.
Opposition energy spokesman Dean Winter said Mr Barnett's career hinged on getting it built.
Mr Winter said he could not recall a more embarrassing day for any minister in any government, with $100 million effectively wasted.
"Jeremy Rockliff and Guy Barnett signed this deal less than nine months ago. Today they’ve admitting it was a stinker for Tasmania," he said.
"They are a national joke."
Tasmanian Greens leader Rosalie Woodruff said the Liberals had spent six years using the Marinus Link for election photo opportunities and it was time the government dumped the project.
She said Mr Rockliff had taken Tasmanians to the edge of a fiscal cliff.
"He proposes to keep going," Dr Woodruff said.
"We're telling him (to) turn back, it's not too late and focus on the renewable future that Tasmania needs."
The Marinus Link is made up of undersea transmission cables connecting Tasmania and Victoria and is expected to improve energy reliability.
