Jarni Blakkarly
Jarni Blakkarly is a journalist based in Melbourne. He is the winner of a Young Walkley Award and he tweets @jarniblakkarly.
The highly ambitious Sun Cable project is gaining momentum and passing key hurdles and milestones on the path to becoming one of the world’s largest international exporting-renewable-energy projects.
The Sun Cable project, or Australia-Asia Power Link, is an Australian initiative with the financial backing of big names such as Andrew ‘Twiggy’ Forrest and Mike Cannon-Brookes.
While these notables have helped get the project off the ground, the Sun Cable company is hitting its stride and meeting key goals and milestones on the long journey to successful completion of the massive, decade-long project.
On any measure, Australia-Asia Power Link is baffling in size and scale. It includes a solar farm on a 12,000-hectare site at Powell Creek Station in the Northern Territory – near the town of Elliot, about 600 kilometres southeast of Darwin – which will have the capacity to produce up to 20 gigawatts of electricity, and include 36–42 GWh of attached battery storage.
But the attention-grabbing part of the plan is the 4,200-km undersea cable that will connect the renewable energy source to its main market, the Southeast Asian city-state of Singapore.
From Powell Creek, electricity transmission towers will follow the Adelaide–Darwin railway easement to Livingstone, south of Darwin, then deviate to Gunn Point, about 20km northeast of the NT’s capital, where a converter station and battery will be built on a 55-hectare site.
But the attention-grabbing part of the plan is the 4,200-km undersea cable that will connect the renewable energy source to its main market, the Southeast Asian city-state of Singapore.
The project is due to begin construction in 2024. It’s set to create around 1,500 construction jobs and 350 ongoing operational jobs, while pumping around $8 billion in investment into northern Australia.
The Sun Cable team was recently given the front-row treatment at the COP26 Summit, featuring at the Australia pavilion in Glasgow. Sun Cable CEO David Griffin told the Australian Financial Review he’d spent the week meeting with potential investors, customers and also industry players working on similar projects in Europe.
Professor John Mathews from the Macquarie University Business School says the Sun Cable project is truly “revolutionary” in that it has the ability to transform the way we see energy exports.
“We take it for granted that oil is traded internationally on international markets,” Mathews says. “But we don’t see the same as yet for renewable electric power. But with projects like Sun Cable, that day is not too far distant, where we will be accepting and see as standard that renewable electric power be traded on international markets.”
Mathews says while the idea of running long High Voltage Direct Current (HVDC) cables connecting renewable energy projects to major cities may seem new, they have actually been pioneered in China, where they link inland parts of mainland China to the major industrial cities on the country’s east coast.
But the international nature of the Sun Cable project makes it unique for the region. It also throws up hurdles which Sun Cable has so far been able to overcome.
Indonesia, whose waters the cable will have to run through in order to reach Singapore, announced in September their support for the project after Sun Cable said they would invest $2.5 billion into knowledge sharing and strategic investment into Jakarta.
Sun Cable said they would invest $2.5 billion into knowledge sharing and strategic investment into Jakarta.
With Indonesia onboard, the other challenge will be securing buyers for the renewable energy in Singapore.
Mathews says one of the main benefits for the company in dealing with Singapore is a highly competent government when it comes to economic management and development. While there isn’t an exact commitment from Singapore to buy electricity from Sun Cable yet, the government there has pledged to import an impressive proportion of its low-carbon electricity needs.
Caroline Chua, a Southeast Asia analyst with Bloomberg New Energy Finance, says Singapore’s commitment bodes well for Sun Cable.
“Due to the scarcity of land and lack of renewable energy resources domestically, Singapore looks to tap on the import of clean power as one pillar in its decarbonisation strategy,” she says. “The momentum on power import has picked up quite rapidly over the last year and the country recently announced plans to import up to 4GW [30% of total supply] of low-carbon power by 2035.”
“It is expected that the focus for power import will increasingly prioritize renewable energy which bodes well for projects such as Sun Cable.”
It’s estimated that, in total, Sun Cable could provide up to 15% of Singapore’s total electricity needs.
Chua adds that the island-city state is severely limited in its options when it comes to domestic production of renewable energy.
“Singapore does have a 5MW offshore solar plant,” she explains. “But there are still challenges in finding suitable parcels of water surfaces for project development given Singapore’s position as a shipping hub and the need to avoid shipping routes.”
One of Singapore’s major energy retailers, iSwitch – which had previously expressed interest in buying imported renewable energy – folded earlier in the year. Its demise raises questions about the buyers’ market for Sun Cable’s product.
The biggest challenge immediately facing the Sun Cable project appears to be passing the environmental approvals process in Australia.
A Sun Cable spokesperson says the company had no contract arrangement with iSwitch, but that there is interest from others in the country: “There is significant interest from potential customers in Singapore who are looking for reduced costs, reduced security risk and reduced emissions.”
Chau says Singapore’s liberalised energy market provided opportunities, but also competition from other projects hoping to export renewable energy.
“Singapore has a fully liberalised electricity retail market and hence projects looking to export power to Singapore can tap on the growing corporate demand for renewable energy,” she says.
“But there is competition from other utilities that are currently active in the Singapore electricity retail market with a ready base of customers, and who are also planning to develop gigawatt-scale renewable energy projects in neighbouring countries – such as Indonesia – for export opportunities to Singapore.”
The biggest challenge immediately facing the Sun Cable project appears to be passing the environmental approvals process in Australia.
Other major Australian renewable energy export projects have hit hurdles at the environmental approval stage – with the major Asian Renewable Energy Hub plan for Western Australia’s Pilbara region being blocked by the federal environment minister Sussan Ley in June this year.
There is no indication that the Sun Cable project will run into problems similar to those faced by the Asian Renewable Energy Hub, which Ley said would create unacceptable impacts on wetlands and their resident threatened bird species.
The financial close for the Sun Cable project is at the end of 2023, with onshore construction due to start in the first quarter of 2024. It’s not known how far along in the capital-raising process the company is, but the project’s total value is $30 billion.
Australia could be exporting renewable energy to Singapore by 2027, according to Sun Cable’s plans.