The price tag for a proposed undersea power interconnector between Victoria and Tasmania has blown out by $2 billion from initial estimates.

The federal and Tasmanian governments on Sunday announced a new funding arrangement for the two-cable Marinus Link project, which will allow the island state to export more green energy to the national grid.

It came after the Tasmanian government a few months ago told the Commonwealth it wouldn't have an open-chequebook approach to the infrastructure amid cost increases.

Under the new arrangement, the governments agreed to first focus on constructing one 750-megawatt cable at a revised cost of between $3 billion and $3.3 billion.

The cost for two cables had originally been estimated at $3.1 billion to $3.8 billion.

Tasmanian Energy Minister Guy Barnett on Tuesday told state parliament the projected cost of two cables had risen to $5.5 billion.

He said a decision on whether to proceed with a second cable would be made at the end of 2024.

Mr Barnett said the one-cable project was still subject to passing a whole-of-state business case.

Under the revised funding deal, Tasmania's contribution towards construction almost halved with the federal government share increasing.

The state's investment in one cable is estimated to fall between $106 million and $117 million.

The revised deal has been slammed by John Tucker, one of two MPs who put the state government in minority when they quit the Liberals partly over Marinus Link concerns.

"(It is) nothing more than a marginal improvement on a deal which was so bad the government itself admitted would bust the budget," he told state parliament.

State Labor MP Dean Winter said the true cost of Marinus Link to Tasmania would be closer to $2 billion.

Mr Winter said the state would have to take on a share of Clean Energy Finance Corporation debt and entirely pay for required transmission developments in the northwest.

A concessional loan through the Clean Energy Finance Corporation will fund approximately 80 per cent of the project costs of Marinus Link.

Updated modelling from Marinus Link says one cable would deliver economic stimulus of more than $2 billion to Tasmania and create 2400 jobs.

It is hoped the cable will come online in 2028.

"There are still some final details to be worked through with the Tasmanian government in terms of the final investment decisions," Federal Energy Minister Chris Bowen told ABC Radio.

"Clearly this project is proceeding, both governments want it to proceed."