JAKARTA – An ambitious US$35 billion plan to lay a 4,500-kilometer high-voltage direct current (HVDC) electricity cable from a giant solar farm in Australia’s Northern Territory to Singapore through the Indonesian archipelago appears to have collapsed – at least for now.
Sun Cable, a joint venture between mining magnate Andrew Forrest and fellow tech billionaire Mike Cannon-Brookes, announced this week that it had gone into voluntary administration as a result of an “absence of alignment with the objectives of all the shareholders.”
Voluntary administration is similar to a bankruptcy procedure, employing an external administrator – in this case, FTI Consulting – and acting as a rescue mechanism for insolvent entities to ensure they can continue to run their businesses.
“Whilst funding proposals were provided, consensus on the future direction and funding structure of the company could not be achieved,” said the statement, referring to a conflict between the two green energy advocates.
It said the process would aim to either recapitalize or sell the business with Cannon-Brookes, Sun Cable’s chairman, making it clear that the venture still had his full support.
“I’m confident it will play a huge role in delivering green energy for the world, right here from Australia,” Sun Cable quoted him as saying. “I fully back this ambition and the team, and look forward to supporting the company’s next chapter.”
Sun Cable founder and chief executive David Griffin also remained confident the project can be completed, but it is unclear whether construction can still begin in 2024 – or whether the project can be completed as scheduled within the original five-year timeframe.
The collapse of what would have been the world’s largest solar farm and battery storage facility is a major setback to the progress being made towards a new era in which renewables will gradually replace fossil fuel power plants across the region.
Perth-born “Twiggy” Forrest, 61, owner of the Fortescue Metals Group, and Cannon-Brookes, 43, co-founder and co-chief executive of software company Atlassian, have a collective net worth of more than $28.9 billion, according to Forbes.
Although Forrest made his fortune in Western Australia’s booming iron ore industry – and is sitting on yet-unproven reserves of hard-rock lithium, the mineral of the future for the electric car industry – he is also a dedicated philanthropist.
Sun Cable raised $210 million in fresh capital in a Series B funding round last year among existing shareholders, including both Cannon-Brookes and Forrest, that was intended to sustain the venture through to financial closure targeted for late 2023.
But The Australian Financial Review said it has burned through cash more rapidly than anticipated to pay for engineering and design studies and other preparatory work required for such a highly complex, ground-breaking enterprise.
“It seems there was a dispute over the amount of cash that was being spent and the lack of progress in drawing up a plan of development,” says one industry source, seeking to explain the reason behind Forrest pulling the pin on the partnership.
The Review article said it understood Forrest and his private investment arm, Squadron Energy, reached the conclusion that Cannon-Brookes’ expertise lay in developing enterprise software and that he was out of his depth with big infrastructure projects.
Known as the Australia-ASEAN Power Link (ASPL), the planned venture covers a 15,000-hectare cattle ranch near Tennant Creek, 750 kilometers south of Darwin, that gets more exposure to the sun than almost anywhere in the world.
Boasting a 14,000-megawatt (MW) solar photovoltaics array and up to 33,000MW hours of battery energy storage, the farm would have met up to a quarter of Singapore’s energy needs.
The Singapore government has been banking on imports of large-scale green energy to reduce its dependence on fossil fuels and cut emissions to meet the island republic’s net-zero target by 2050.
Last October, Sun Cable said it would supply 1.75 gigawatts (GW) to Singapore, but noting that it had received expressions of interest from prospective corporate customers in the city-state for more than 2.5GW.
It could also potentially have supplied some of its power to Indonesia’s two main tourist islands of Bali and Lombok on either side of the Sunda Strait, although that had been left up in the air.
Under Indonesian cabotage rules, much of the 3,750-kilometer undersea section of the cable would have had to be laid by an Indonesian-flagged ship on its path through the Indian Ocean to its entry into the Lombok Strait and then west across the Java Sea.
Singapore’s Sunseap Group has declined to comment on the progress of its planned $2 billion floating solar farm on a reservoir on Indonesia’s Batam island, south of Singapore. Construction was to have begun late last year, according to an MOU signed with Pengusahaan Batam (BP Batam) in mid-2021.
Sunseap said it expected the solar farm to generate more than 2,600 gigawatt hours (GWh) of electricity a year, potentially offsetting 1.8 million tonnes of carbon or the equivalent of taking 400,000 cars off the road.
The 2,200MW facility and an associated 4,000MWh storage system is designed to supply electricity to the Batam Industrial Development Authority and also through a second undersea cable to Singapore, which now relies on gas for 95% of its power.
Only last year, Sunseap signed a second MOU with the Riau Islands provncial government to develop a 1,380MW solar power plant and associated storage systems on Combol and Citlim islands, southwest of Batam.
Last December, a subsidiary of state-run Perusahaan Listrik Negara (PLN) and Abu Dhabi-based firm Masdar began work on a $145 million solar power plant in West Java, Indonesia’s first venture into the renewable technology.
Indonesia’s national energy plan calls for 5,400MW of large-scale solar, ranging from 1,863MW on the main Java-Bali grid to 1,178MW in Sumatra, 781MW in Sulawesi, 563MW in Kalimantan, 426MW in Maluku, 389MW in Nusa Tenggara and 141MW in Papua.
Despite its tropical climate, solar farms are more difficult to build in Indonesia because of its position astride the equator, where there are only eight hours of sunlight a day and where cloudy periods during the monsoon season inhibit electricity output.