Clash of green billionaires upends Asia's undersea solar quest
- Asia-spanning grid captures imagination of world's wealthiest
- Plan to export Australian clean power to Singapore at risk
The elusive dream of a subsea power grid sending clean energy across Asia has hit a new setback: feuding billionaires.
The Sun Cable project, which aims to export solar power from Australia to Singapore through a 4,200-kilometer (2,600-mile) submarine cable, entered into voluntary administration Wednesday after a disagreement between two of Australia's richest men, tech tycoon Mike Cannon-Brookes and iron ore magnate Andrew Forrest.
The A$30 billion ($21 billion) project has been among contenders to help Asia's fossil-fuel dominated economies to shift to low-emissions sources as they aim to meet targets to decarbonize over the coming decades. Developers envisioned it as the first and most ambitious piece of a so-called super-grid, a plan to criss-cross the continent with electrical lines spanning from Japan to India.
But Sun Cable's troubles serve as another reality check for governments and utilities pinning clean energy hopes on delivering power from countries with ample wind and sun to distant electricity-hungry population centers. The project joins a growing list of ventures that have struggled to progress beyond the initial stages, despite endorsements from some of the world's most influential executives.
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"Sun Cable was extremely ambitious from the very beginning with its claims," said Georgios Konstantinou, a senior lecturer in energy systems at the University of New South Wales. "The engineering required to successfully deliver would be extremely challenging, and on top of that you have to make the economics work."
At a time when the world is racing to achieve zero-emissions with a raft of experimental technology, a super-grid makes sense on paper. Crowded Japan or Singapore would no longer need to worry about finding space to build renewable plants, and instead could import green energy from neighbors. SoftBank founder Masayoshi Son has already urged Japan's government to promote development of a regional grid.
Translating that vision into reality requires mastering a dizzying array of technical hurdles, overcoming political issues like energy protectionism, and a price tag that puts the endeavor on the same scale as space travel. State Grid Corp. of China's former chairman, Liu Zhenya, has floated a plan for a global network that will cost $50 trillion.
In the case of Sun Cable's export project — known as the Australia-Asia PowerLink — there's also clashing investors to navigate.
Sun Cable's administrators said they were appointed following disagreements between key backers, and public comments since from entities tied to Forrest and Atlassian Corp. co-founder Cannon-Brookes — which both own about 25% of the company — show their differing views on progress.
Forrest's Squadron Energy unit — which holds the Sun Cable stake — believes "the manner in which the project is delivered needs urgent change," chairman John Hartman said in a statement. "Exceptional governance practices and world-class project delivery expertise, as well as pursuing bankable technologies, will be required to make the project a reality."
Squadron has also questioned the merits of the plans to send power generated in Australia to Singapore, according to Cannon-Brookes' Grok family office.
"There has been a difference of opinion between Squadron and all other shareholders over prioritizing the Singapore project," Grok said in a statement. "This lighthouse project will likely deliver significant outcomes for the company, attract further investor capital and create a new industry in Australia."
Squadron, which is reviewing options including a potential offer to take control, declined to comment on Grok's claims.
Even with clarity on its ownership, the scale and ambition of Sun Cable's project mean it'll still pose a risk of spiraling costs. It's difficult to see how such a project with a subsea cable, coupled with large solar and battery storage, would be achieved at the company's current cost estimates, said Dylan McConnell, a senior research associate at the University of New South Wales.
The planned cable itself would be more than five times the world's largest existing subsea power link — a 720 kilometer-long connection between the UK and Norway. There are technical difficulties in laying cable in the Timor Trough between Australia and Indonesia, as well as possible production constraints for the high voltage wires.
Sun Cable Would Be Longest Subsea Power Link
Proposed submarine line would send Australian power to Singapore
The project's solar farm in Australia's Northern Territory is the biggest to be proposed globally, BloombergNEF data show. And an accompanying battery storage plant is also staggeringly large — envisaged as having 42,000 megawatt-hours of capacity compared to the 450 megawatt-hours in place at Australia's current largest operational facility.
Yet some analysts say many of the project's challenges could eventually be conquered, which would unlock Sun Cable's goal of supplying 15% of Singapore's power needs.
While political and regulatory approvals will continue to be tricky — particularly in Southeast Asia, where there is less cooperation between nations — technology breakthroughs are lowering the cost of cables and improving their capacity, said Henning Gloystein, a director for energy, climate and resources at Eurasia Group in London.
"Until very recently, these mega interconnector projects like Sun Cable looked a bit like science fiction — not anymore," Gloystein said.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement
