Last year, renewable energy company Sun Cable announced it had raised $150 million for an ambitious project involving the construction of a 12,000-acre solar farm in Australia’s Northern Territory. The surplus electricity generated there was to be exported to Singapore via a 4,200-kilometer submarine cable. That plan, estimated at the time to cost about $20 billion, is on hold for now as Sun Cable entered voluntary administration and is currently awaiting a restructuring. This is reportedly due to a disagreement between financiers over whether or not the company is commercially viable.
In principle, the Sun Cable idea is justified. Northern Australia is rich in land and sunshine, and it makes sense to build large solar farms and export the excess electricity 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 set out a policy roadmap to import around 4 gigawatts of low-carbon energy by 2035.
Sun Cable hoped to be one of the suppliers. In fact, the company saw itself as a key supplier that would supply nearly half of Singapore’s clean energy imports for decades to come. This would be absolutely critical to the company’s success, as no one would invest $20 billion in a project of this scale and complexity without having a large guaranteed market for the electricity produced and exported.
In a press release announcing voluntary administration, Sun Cable claimed the project was “50% oversubscribed for offtake interests in Singapore, having received letters of intent for ~2.5 GW versus planned delivery of ~1.75 GW.” . The press release does not provide additional details, so it is not clear who signed the letters of intent or what the terms would be. And while it suggests there is interest on Singapore’s part in clean energy imports from Australia, memoranda of understanding are not the same as contractual agreements.
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Even back then, it always seemed to me that the ultimate goal was not just to grab a share of Singapore’s electricity market, but to use the island nation as an entry point to eventually penetrate the wider region where electricity demand is growing rapidly in countries like Thailand, Indonesia and Vietnam rise. After all, the project was called the Australia-Asia PowerLink and not the Australia-Singapore PowerLink. I wrote at the time that this idea was hard fought because countries like Indonesia are not very open to imports, especially energy imports.
As it turns out, Singapore doesn’t seem too keen on importing clean power from Australia, at least not by 2 gigawatts’ worth, either. How do we know? Mining magnate Andrew “Twiggy” Forrest, one of two Australian billionaires whose early support lent credibility to the project, said so specifically. CNN spoke to Forrest during the recent World Economic Forum and reported that “after discussions with officials from Asia, particularly Singapore, it has become clear [Forrest] that they don’t want [the cable].” Mike Cannon-Brookes, the other Australian billionaire backer of Sun Cable, disputed Forrest’s characterization.
However, the key player here is probably Singapore’s Energy Markets Authority, a statutory body under the Department of Trade and Investment tasked with securing the country’s energy supplies, including approving clean energy import deals. Without EMA approval, Sun Cable has no chance of gaining a foothold in the Singapore market. Since 2021, EMA has issued two calls for proposals from low-carbon energy producers with the goal of sourcing 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 that submitted proposals.
So far, EMA has progressed in measured increments, approving a handful of trials and pilots by clean energy producers in nearby Indonesia, Malaysia and Laos to provide modest amounts of electricity (100MW in each store). At the moment it appears that the EMA is testing how the market will react while refining the regulatory architecture. The current call for proposals ends in late 2023, after which the pace and scope of approvals should accelerate.
What we can say now is that the EMA appears to favor clean energy produced closer to home, using a variety of regional generators to spread risk and not over-rely on a single supplier. Sun Cable’s plan to deliver almost half of Singapore’s clean energy imports by 2035 via a highly ambitious undersea cable with very high construction costs introduces a much higher and unnecessary risk. That’s not to say Australia will never be a major clean energy supplier to the region. But it seems unlikely that this will happen anytime soon over this particular cable.