It’s an ambitious project that was destined to be difficult.
The mission: To turn the blistering heat of the Northern Territory into a solar energy powerhouse supplying electricity to Singapore and Darwin.
The method: By building a giant 20-gigawatt solar farm — supported by the world’s biggest battery network — that connects to Darwin, before continuing to Singapore via a 4,200-kilometre-long cable running along the sea floor.
The cost: More than $30 billion.
When Sun Cable launched its enormous Australia-Asia PowerLink project in 2018, the company offered a new vision for Australia as a major exporter of renewable energy instead of fossil fuels.
For years, climate scientists have warned the Australian government will not reach its goal of net zero by 2050 if it keeps opening new coal, oil and gas projects.
Export figures show Australia continues to remain among the world’s largest exporters of fossil fuels, alongside Russia and Saudi Arabia.
Sun Cable’s enormous solar project — backed by billionaires Andrew “Twiggy” Forrest and Mike Cannon-Brookes — promises to supply up to 15 per cent of Singapore’s energy needs from 2028, and almost double Darwin’s current demand.
Its total carbon emissions abatement was estimated at 8.6 million tonnes of CO2 equivalent per year.
But last week, the company went into voluntary administration.
Forrest and Cannon-Brookes had apparent disagreements about investment strategies and the project’s direction.
These included the significant amounts of cash that Sun Cable was spending, and its failure to achieve certain milestones — as required by its venture capital funding agreement.
The chairman of Forrest’s Squadron Energy, John Hartman, says it no longer deemed the project commercially viable.
Some analysts have previously estimated the project’s undersea cable to Singapore would have cost at least $15 billion alone.
Sun Cable is yet to lock in contracts with Singapore.
However, the company says it has received letters of intent from potential customers.
So is it going ahead or not?
Cannon-Brookes, who remains the chair of Sun Cable, says it is.
A spokesperson from his private investment company, Grok Ventures, says the project remains on track.
“This lighthouse project will likely deliver significant outcomes for the company, attract further investor capital and create a new industry in Australia,” the spokesperson says.
Forrest’s company agrees.
However, its vision no longer includes funnelling renewable energy through a cable all the way to Singapore.
Instead, Mr Hartman says the power could stay in Australia, and instead be used to produce green hydrogen and green ammonia.
Global advisory firm FTI Consulting has been appointed as Sun Cable’s administrator.
The next step will likely involve seeking expressions of interest for either a recapitalisation or sale of the business.
Whether the project goes ahead or not now lies in the hands of who successfully bids for financial control of the company.
The bidding process is expected to start within two weeks.
A temporary ‘blow’ to renewables
Energy finance analyst Bruce Robertson says the disruption to Sun Cable is “definitely a setback” for Australia’s growing renewables industry.
“It’s definitely a blow to renewables,” he says.
“And it’s definitely a blow to decarbonisation globally, because obviously Singapore is extremely land-constrained and needs this type of project to decarbonise.”
While Bruce Robertson says Australia must embrace more renewable energy projects, he says the plan for an undersea cable stretching more than 4,000 kilometres is a big challenge.
“You’ve only got to look at the link between Tasmania and Victoria … to see that underwater sea cables are difficult to maintain … and that was just in the Bass Strait, which is relatively shallow,” he says.
“I don’t want to put too much cold water on it because it may be possible, but [the cable to Singapore] will be very expensive and problematic to maintain.”
What does it mean for the economy?
If the project goes ahead as planned, it’s expected to inject $8 billion into the Australian economy, with most of it being spent in the Northern Territory.
Sun Cable has previously said it expected the first phase of construction to generate 1,750 jobs, as well as another 350 ongoing jobs across the project’s 70-year life span.
The NT’s Acting Chief Minister Nicole Manison says the company remains an important project for the territory.
“We understand the company will continue to work on the project while it seeks to address the current funding matter,” she says.
“We are confident new funding sources will be found and this world leading project can be delivered.”