Saturday, September 30, 2023

The collapse of the $30 billion Sun Cable project isn’t the end of Australia’s ambitions to export renewable energy

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Shreya Christina
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Sun Cable – considered the world’s largest renewable energy export project – announced this week it was voluntarily run after “lack of alignment” with shareholders.

Sun Cable is expected to cost more than A$30 billion. It suggests build a massive 12,000-hectare solar farm in the Northern Territory, add a massive (40 gigawatt-hour) battery for electricity storage, then connect Australia to Singapore via Darwin via a submarine cable more than 4,000 kilometers long. This would be by far the longest electricity cable in the world if it existed today.

It would give Darwin access to 800 megawatts of additional electricity and Sun Cable could provide “up to” 15% of Singapore’s electricity by 2030. To put this in context, Singapore’s annual electricity consumption is about a quarter of Australia.

While this prominent and well-funded project has been conducted on a voluntary basis, those excited about Australia’s rapid decarbonisation and renewable energy export potential need not despair. These events are part of the usual discovery processes.

What Sun Cable promises

Sun Cable offers an enticing opportunity to use the land of Australia and the sun’s rays that fall on it replace gas for electricity production in a distant country. Singapore would like to buy renewable electricity and has limited possibilities to generate that electricity itself.

The project has received the enthusiastic support of Australia’s two richest men, Mike Cannon-Brookes and Andrew Forrest. Everyone already has it dedicated about $50 million on the project and both are experienced investors in renewable electricity in Australia.

When Cannon-Brookes first invested in the project described it as “batshit insane” but also that the “engineering all adds up”.

Sun Cable is also supported by the Australian governments. The NT government succeeded laws last year to facilitate its development. The federal government gave it status “major project”. And Infrastructure Australia called the project “investment ready” and placed it on its National Infrastructure Priority List.

Media commentary since Sun Cable’s announcement has drawn attention to the disagreements between the two most prominent shareholders, particularly over their differing degrees of support for Sun Cable’s management.

But the exact nature of their disagreement is unclear, and both men have said they remain interested in the project.

Commentators have suggested that the apparent disagreement is a reflection of the commercial and technical viability of the project itself. Matthew Warren, former CEO of the Australian Energy Council, even went as far as to describe Sun Cable as “a silent running joke within the electricity industry” and that it:

reflected the ignorance, egos and quest for notoriety of its proponents rather than the needs of its potential clients.

But Federal Secretary of Energy and Climate Chris Bowen, commenting on talks with Sun Cable management, said he was sure that the project would go ahead. He said the latest developments only reflected a change in company structure and approach.

Similar projects abroad

Sun Cable is of course a very ambitious project. Yet there is far too little information publicly available to make any confident statements about its commercial and technical viability.

While the project will certainly be groundbreaking, it’s not quite in its own league. The similar Xlinks project was presented abroad in 2021 and is now advancing rapidly. This project would connect Morocco and England with comparable renewable generation and storage capacity, and has a cable length similar to that of Sun Cable.

And at the end of last year the European Commission committed financing a high-voltage DC link between Tunisia in North Africa and Sicily, Italy. It would export 600 megawatts of solar energy produced (mainly) in Tunisia.

Although a much less ambitious project than Xlinks or Sun Cable, it is based on the same vision of long-distance intercontinental transmission of renewable electricity. And continuing is almost certain.

Like fossil fuel resources, the world’s renewable resources are unevenly distributed. There are now strong incentives, for economic and sustainability reasons, to find ways to reliably and cost-effectively move renewable electricity from where those resources are abundant to where they are scarce.

Hand wringing is not necessary

Inevitably, the latest Sun Cable developments will focus attention on how to make the most of Australia’s land, the sun and the wind and how we can capitalize on our track record as a trusted supplier with a credible government and trusted Courts.

For example, instead of trying to export electricity, we should focus on exporting sustainably produced electricity hydrogen or ammonia for fuel and fertilizers? Or should we focus on using renewable energy sources to process and refine mineral resources before shipping high-value products (such as steel, alumina, aluminum and silicon metal) to distant shores?

These questions have sparked a great deal of interest from policy makers, investors and researchers, particularly in books by economist Ross Garnaut (Superpower and The transformation of the superpower) and in the forthcoming book by former Australian chief scientist Alan Finkel Startup.

Both authors explore many possibilities and neither categorically rule out direct renewable electricity exports. They also suggest that ore processing using renewable electricity is likely to offer great immediate value.

As far as I can tell, the latest Sun Cable developments provide no new publicly available information that can confidently provide new insights into these issues.

The outpouring of “I-told-you-so” comments following Sun Cable’s voluntary administration is to be expected. But perhaps the main importance of Sun Cable’s developments is to draw attention to Australia’s luck in attracting ambitious and entrepreneurial developers backed by wealthy Australians who have managed to swim against the current.

Rather than putting their hands in the public’s pockets to fund the discovery of the best way to exploit Australia’s renewable resources, these enterprising people are risking their own money and reputation in a discovery process that is likely to benefit us all. will come.

There is no need for a crisis of confidence or hand wringing over the viability of Australia’s renewable energy export prospects.

Disagreements arise between investors all the time. Administrative and legal procedures should provide opportunities for a quick and amicable solution, as we can expect here. Viva the discovery process.The conversation

This article has been republished from The conversation under a Creative Commons license. Read the original article.


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