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For years Australia’s landscape has been touted as the perfect place upon which to build a powerhouse solar energy exporting industry. As one of the sunniest places in the world, and with vast tracts of geologically stable land, Australia’s annual sunlight could power the world’s electricity needs 100 times over – if it could be successfully captured, stored and transported to where it is needed.
It is with that dream in mind that Sun Cable was founded in 2018, with the awe-inspiring goal of trying to develop the largest solar farm and battery storage facility in the world. Situated near Tennant Creek in Australia’s Northern Territory and taking up 12,000 hectares, the project has ambitions to first pipe its energy 800 km north to Darwin (where it will supply up to 800MW to the city), before travelling a further 4200 km via an undersea cable to Singapore, where it would supply up to 15% of the nation’s total energy needs.
With construction expected to begin in early 2024, supply beginning to Darwin in 2027 and then capacity being extended to Singapore by 2029, the project looked to spearhead Australia’s future in the renewable energy export business, and help ween both Australia and Singapore (with the latter relying on natural gas for 95% of its energy demands) off of their reliance on harmful fossil fuels.
So why then, on the 11th January 2023, did the company feel that it needed to call in the administrators? Sun Cable itself referred to it as an ‘absence of alignment’ of the objectives of different shareholders, most notably between billionaires Mike Cannon-Brookes (Co-Founder of software firm Atlassian) and Andrew Forrest (Chairman and ex-CEO of mining giant Fortescue Metals). Cannon-Brookes backed a continuation of the project’s original goals of building an undersea cable to Singapore, while Forrest was in favour of using the project’s energy to power the production of green hydrogen and ammonia – two commodities that Forrest has been vocally championing as key to a sustainable future. This disagreement ultimately led to a breakdown in the project as the funding that is continually required to pay its bills stalled, and a need to call in FTI Consulting as voluntary administrators until new buyers could be found.
The pivotal disagreement fundamentally stemmed from the commercial viability of the cable part of the Suncable project. Such a long electricity transporting cable has never been attempted before (the current longest undersea cable of the kind proposed doesn’t even reach 1000 km in length) and the logistics and costs of such an undertaking would be immense. Indeed, $35b in total funding has already been asked for.
The length of the cable also poses a second problem – the further energy has to travel via cable, the more energy gets lost as heat due to friction. With a cable the length of the one proposed by Sun Cable, close to 20% of the power going into the system could be lost by the time it reaches its final destination in Singapore. These issues have led some to worry that other electricity exporting projects closer to Singapore could outcompete the project on costs and efficiency.
So where to now? The appointment of administrators is by no means a death blow for the company, but it is a meaningful setback in what was looking to be an avant-garde project in renewable energy exporting. FTI Consulting has begun the process of bid invitations for the sale of the company to those who would be willing to continue to fund it. Both Cannon-Brookes and Forrest are expected to put in bids against each other for their own vision of Sun Cable’s future, as well as multiple institutional infrastructure players including Singapore’s GIC, Spain’s Iberdrola, Canada’s Brookfield, and Australia’s Quinbrook and Macquarie. Binding bids should be in by the end of April, and a target has been set for a deal to be struck by the end of May at the latest, hopefully enabling the project to recommence by the latter half of the year.
Regardless of the outcome of Sun Cable’s future ownership, the success of the project is sure to be scrutinised by governments, investors and entrepreneurs alike, as the world tries to find the right way forward in the transition to a net-zero world.
