Sun Cable puts clean energy export plans on hold – The Diplomat

Last year, renewable energy company Sun Cable announced that it had raised $150 million for an ambitious project that includes building a 12,000-hectare solar farm in Australia’s Northern Territory. The plan was to export excess power generated there to Singapore via a 4,200-kilometer undersea cable. That plan, estimated to cost about $20 billion at the time, is on hold for the time being as Sun Cable has entered voluntary administration and is currently awaiting restructuring. Reportedly, this stems from disagreement among financial backers as to whether or not the company is commercially viable.

In principle, the Sun Cable idea has advantages. Northern Australia is rich in land 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 such a country, and the leadership has already drawn up a political roadmap to import about 4 gigawatts of low-carbon energy by 2035.

Sun Cable hopes to be one of the suppliers. In fact, the company has envisioned itself as the leading supplier, providing nearly half of Singapore’s clean energy imports in the coming decades. This will be absolutely critical to the success of the project, as no one would invest $20 billion in a project of this size and complexity without a large guaranteed market for the electricity that is produced and exported.

In a press release announcing the voluntary administration, Sun Cable claimed that the project was “subscribed by 50% for the purchase interest in Singapore, having received Letters of Intent for ~2.5 GW, against a planned supply of approximately 1.75 GW.” The release provides no additional details, so it’s not clear who signed the LOIs or what the terms were. And while it indicates there is interest on the part of Singapore in clean energy imports from Australia, 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 capture a share of the electricity market in Singapore, but to use the island nation as an entry point to eventually branch out into the broader region where electricity demand was growing rapidly. Countries like Thailand, Indonesia, and Vietnam are swell. After all, the project was called Australia-Asia PowerLink, rather than Australia-Singapore PowerLink. This idea faced an uphill battle, I wrote at the time, because countries like Indonesia are not very receptive to imports, especially energy imports.

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As it turns out, Singapore is clearly not very enthusiastic about importing clean energy from Australia, at least to a minimum value of 2 gigawatts. How do we know that? Said so bluntly, mining tycoon Andrew “Twiggy” Forrest, one of the two Australian billionaires whose early support provided the project’s credibility. CNN spoke to Forrest during the recent World Economic Forum and reported that “after speaking with representatives from Asia, particularly Singapore, it became clear [Forrest] They do not want [the cable]. Mike Cannon-Brooks, another Australian billionaire backing Suncable, questioned Forrest’s characterization.

Perhaps the most important player here, however, is the Energy Market Authority of Singapore, a legislative body under the Ministry of Trade and Investment charged with securing the country’s energy supply, including approving clean energy import deals. Without EMA approval, Sun Cable has no chance of penetrating the Singaporean market. Since 2021, the European Energy Agency has issued two requests for proposals from low-carbon energy producers with the goal of 4 gigawatts of clean energy imports (estimated to be about 30 percent of the national electricity supply) by 2035. Sun Cable is one of about 30 companies I made offers.

So far, EMA has moved forward in measured steps, approving a handful of trials and pilots from clean energy producers in nearby Indonesia, Malaysia and Laos to supply moderate amounts of electricity (100 megawatts in each deal). Right now, the exponential moving average appears to be testing how the market responds while adjusting the organizational structure. The current call for proposals ends at the end of 2023, after which we will see the pace and scale of approvals accelerate.

What we can say for now is that EMA seems to favor clean energy produced close to home, leveraging a variety of regional generators to spread risk and not being overly dependent on a single provider. Sun Cable’s plan to supply nearly half of Singapore’s clean energy imports by 2035, via a highly ambitious submarine cable with very high construction costs, entails a much higher and unnecessary level of risk. This is not to say that Australia will never be a major supplier of clean energy to the region. But it seems unlikely that that will happen soon over this particular cable.

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