Sun Cable Places Clean Energy Export Plans On Hold

Last year, the renewable energy company Sun Cable announced that had raised $150 million for an ambitious project to build a 12,000 hectare solar park in the Northern Territory of Australia. The plan was to export excess power generated there to Singapore via a 4,200-kilometre submarine cable. That plan, estimated to cost about $20 billion at the time, is on hold for now as Sun Cable has entered into voluntary administration and is currently awaiting restructuring. This is reportedly due to a disagreement between the financial backers as to whether or not the venture is commercially viable.

In principle, the Sun Cable idea has merit. Northern Australia is rich in soil and sunlight and it makes sense to build large-scale solar farms and export the excess power generated there to countries that want cleaner energy but face land or other resource constraints. Singapore is one such country, and the leadership has already laid out a policy roadmap to import around 4 gigawatts of low-carbon power by 2035.

Sun Cable hoped to be one of the providers. In fact, the company envisioned itself as the leading supplier, providing almost half of Singapore’s clean energy imports for decades to come. This would be absolutely crucial to the company’s success, as no one would invest $20 billion in a project of this scale and complexity without a large, guaranteed market for the electricity that is produced and exported.

In a press release announcing voluntary administration Sun Cable stated that the project was “50% oversubscribed for buying interest in Singapore, having received letters of intent for ~2.5GW, compared to the planned supply of ~1.75GW.” The statement does not provide additional details, so it is unclear who signed the letters of intent or what the terms would be. And while it suggests there is interest from Singapore in Australia’s clean energy imports, letters of intent are not the same as contractual agreements.

Even then, it always seemed to me that the real goal was not just to grab a piece of Singapore’s electricity market, but to use the island nation as an entry point to eventually expand into the wider region where demand for electricity is growing rapidly. countries like Thailand, Indonesia and Vietnam is skyrocketing. After all, the project has been dubbed Australia-Asia PowerLink, rather than Australia-Singapore PowerLink. i wrote at the time that this idea faced an uphill battle because countries like Indonesia are not very receptive to imports, especially energy imports.

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As it turns out, Singapore apparently isn’t too keen on importing clean power from Australia either, at least not 2 gigawatts worth. How do we know? Mining magnate Andrew “Twiggy” Forrest, one of two Australian billionaires whose initial backing gave the project credibility, he said it explicitly. CNN spoke to Forrest during the recent World Economic Forum and reported that “after speaking with representatives from Asia, particularly from Singapore, it became clear to [Forrest] that They do not want [the cable].” Mike Cannon-Brookes, the other Australian billionaire who supports Sun Cable, disputed Forrest’s characterization.

The biggest player here, though, is probably the Singapore Power Market Authority, a statutory board of the Ministry of Trade and Investment tasked with securing the country’s energy supply, including approving clean energy import deals. Without EMA approval, Sun Cable has no chance of penetrating the Singapore market. Since 2021, the EMA has issued two Low-Carbon Power Producer Requests for Proposals with the goal of sourcing 4 gigawatts of clean energy imports (estimated at around 30 percent of national electricity supply) by 2035. Sun Cable it is one of about 30 companies that have submitted proposals.

So far, the EMA has made leaps and bounds, passing a handful of trials and pilots from clean energy producers in nearby Indonesia, Malaysia and Laos to provide moderate amounts of electricity (100 MW in each deal). At the moment, it appears that the EMA is testing how the market will respond while adjusting the regulatory architecture. The current call for proposals closes at the end of 2023, after which we should see the pace and scale of approvals pick up.

What we can say now is that the EMA seems to prefer clean power produced closer to home, from a variety of regional generators to spread risk and not become too dependent on a single supplier. Sun Cable’s plan to supply almost half of Singapore’s clean energy imports by 2035, via a hugely ambitious undersea cable with very high construction costs, involves a much higher and unnecessary level of risk. This is not to say that Australia will never be a major provider of clean energy to the region. But it seems unlikely to happen anytime soon over this particular cable.

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