SINGAPORE - A company working on a A$30 billion (S$28 billion) project to supply solar power from northern Australia to Darwin and Singapore has collapsed, despite backing from billionaire investors.
Singapore-based Sun Cable said on Wednesday that it will enter voluntary administration, and has appointed administrators to oversee the steps forward.
This will likely involve a process to seek expressions of interest for either a recapitalisation or sale of the business, the company said in a statement.
Hinting at disagreement between its key shareholders, Sun Cable said: “While funding proposals were provided, consensus on the future direction and funding structure of the company could not be achieved.”
Australian billionaires Andrew Forrest and Mike Cannon-Brookes were key backers of the project, which had raised A$210 million in capital in 2022.
Mr Cannon-Brookes, Sun Cable’s chairman, voiced support for Sun Cable in the statement, which contained no comment from iron ore magnate Forrest’s privately owned Squadron Energy, Sun Cable’s other big stakeholder, further suggesting disagreement between the billionaires.
Squadron could still put together a funding deal for the administrators, Reuters said, quoting a person familiar with the company’s thinking who sought anonymity because of confidentiality provisions.
Sun Cable in 2019 embarked on the world’s largest solar generation and transmission project involving building a giant solar farm in Australia’s Northern Territory and providing clean energy to Darwin, and to Singapore through a 4,200km subsea cable.
The Australia-Asia Power Link (AAPowerLink) project aimed to meet up to 15 per cent of Singapore’s power needs when it was to be completed by 2029, Sun Cable said recently.
The project has been closely watched in Singapore. The Government has said that large-scale green energy imports are one of the key ways Singapore can reduce its dependence on fossil fuels and cut emissions to meet the nation’s net-zero target by 2050.
A key part of the project’s success was the signing of deals to buy green electricity in Singapore.
In October 2022, Sun Cable said it would supply a total of 1.75 gigawatts (GW) of power in Singapore. The firm said it had received expressions of interest from corporate buyers in Singapore for more than 2.5GW, illustrating strong interest in green energy supplies.
The company had also received strong support from the Australian government in mid-2022 when the project was placed on a government investment high priority list, an important signal for investors, Sun Cable chief executive David Griffin told The Straits Times at the time.
He said he expected the financial close – when all the project and financing agreements have been signed – to be in early 2024, with construction starting shortly after. It would start supplying 800MW of electricity capacity to Darwin in 2027, with full operations to start by 2029.
The fate of the project is now up in the air. Reuters said 2022’s capital raising of A$210 million included milestones that have not been met yet, meaning that not all of that funding has been made available.
Three executives from FTI Consulting have been appointed voluntary administrators, which Sun Cable said would help unlock a path forward for the company to access additional capital for continued development of the AAPowerLink project.
Mr Cannon-Brookes, a software billionaire, said in the statement: “I’m confident it will play a huge role in delivering green energy for the world, right here from Australia. I fully back this ambition and the team, and look forward to supporting the company’s next chapter.”
Mr Griffin also voiced support for the firm and said demand for green energy remained strong.
“This project remains well placed for completion. As we have progressed our work, the demand for delivering reliable, dispatchable 24/7 renewable energy in the Northern Territory and the region has risen materially. Sun Cable looks forward to developing and operating the projects to meet this demand,” he said.
Sun Cable said it has a portfolio of a further 11GW of proposed projects, equivalent to more than three times that of the AAPowerLink project.
Sun Cable and Singapore’s Energy Market Authority (EMA) have held regular consultations as the power link project progressed through the planning stages.
In response to the company’s announcement on Wednesday, an EMA spokesman told ST: “EMA is unable to comment on Sun Cable’s decision to enter into voluntary administration.
“Besides the Sun Cable proposal, EMA has received more than 20 proposals to import electricity from countries including Indonesia, Lao PDR, Malaysia and Thailand.
“We remain on track to meet our imports target of 4GW by 2035. Discussions with the other Request-For-Proposal participants are in progress to support the development of their projects.”