Tasmania's energy minister is hopeful a funding arrangement can be reached with the federal government for a proposed undersea power link across Bass Strait.
The long-spruiked Marinus Link project, to run between Victoria and the island state, was originally slated to cost $3.1 billion.
Its future was put under a cloud last week when the Tasmanian government said it would not commit to the project at "any price" because of cost blowouts.
The state government wrote to the federal government seeking an alternate funding arrangement.
Under the current deal, Tasmania, Victoria and the Commonwealth equally share 20 per cent of the cost, with 80 per cent coming from a loan scheme.
State Energy Minister Guy Barnett said discussions with federal Labor had progressed positively.
"But (the funding deal) must be on terms that are relevant and fair to Tasmania," he told ABC radio on Friday.
"We will protect Tasmania’s interests. That has been recognised."
Mr Barnett would not be drawn on new projected costs and said a decision in relation to the project would come well before the end of the year.
Business lobby group Tasmanian Chamber of Commerce and Industry (TCCI) has urged the federal government to ensure the project goes ahead.
TCCI CEO Michael Bailey said without new, renewable generation Tasmania could face an energy crisis.
"We already have a number of businesses saying that investment decisions in Tasmania are being put on hold until either Marinus or new generation gets the green light," he said.
“The federal government needs to step in and do whatever it takes to make sure Tasmania can meet demand now and into the future.
“The Tasmanian government also needs to take all reasonable steps to do what it can to deliver additional generation."
A paper mill near Hobart was reportedly told by power supplier Hydro Tasmania that 50MW required to run new electric boilers could not be provided because there was no spare capacity.
A Hydro Tasmania spokeswoman said it was "managing multiple requests for significant additional power loads from existing industrial customers and potential new customers".
"Hydro Tasmania and the existing wind farms can supply energy for households and their growing needs as they electrify, as well as continue meeting the current level of industrial demand," she said.
Several wind farm proposals in Tasmania are linked to the Marinus project, which would allow the island to export, and import, more power.
Premier Jeremy Rockliff has said the state's energy security is not at risk.
He pointed out dams used by Hydro Tasmania are at 45 per cent capacity, the highest level at this time of the year since 2019.
"We are working hard to ensure Marinus Link becomes a reality," he told state parliament.
