Sun Cable setback as power retailer folds
The demise of a Singapore power retailer has created a hurdle for the $30bn Sun Cable project, backed by billionaires Andrew Forrest and Mike Cannon-Brookes.
The $30bn Sun Cable power project backed by billionaires Andrew Forrest and Mike Cannon-Brookes has suffered a setback after a Singapore buyer that lined up for supplies closed its operations amid soaring energy prices.
Singapore’s largest independent electricity retailer, iSwitch, has shut its retail arm, blaming “current electricity market conditions”.
The green retailer had touted itself as the first major foundation customer for Sun Cable, saying its involvement would make the giant project a more bankable and commercially attractive development.
A second retailer, SilverCloud Energy, is also poised to leave the market while three more electricity companies will no longer take on new customers, Reuters reported.
The project received support from Scott Morrison with Indonesia approving the route of the power project through its territorial waters.
During his visit to Singapore in June, Mr Morrison directly raised the Sun Cable project with Prime Minister Lee Hsien Loong, which he said could “see homes powered here … from solar panels in Australia”.
The project is expected to be promoted by Australia to illustrate the importance of ASEAN partnerships in reducing emissions in the Indo-Pacific region.
Spot LNG prices in Asia have soared to a fresh all-time record amid a global scramble to secure supplies, with China rushing to grab volumes to fix its energy crisis and low inventories in Europe spurring competition for the fossil fuel.
That’s hiked wholesale energy prices and retailers reliant on the spot market have been hit with massive volatility that’s roiled profits.
Sun Cable aims to provide up to 15 per cent of Singapore’s needs by 2028 by exporting electricity from the Northern Territory to Singapore via a 4500-km subsea cable, creating a $2bn annual renewable export industry.
The venture aims to send 20 gigawatts of power from the world’s largest solar farm near Tennant Creek to Darwin and would also feature a giant battery as part of the project.
Despite the loss of iSwitch and growing volatility in power markets, Sun Cable chief executive David Griffin said the facility still stacked up and it was confident of finding alternative customers.
“What it actually highlights is that so many markets are going through this issue at the moment around the world and it highlights the need to diversify away from fuel sources that are volatile in their pricing,” Mr Griffin told The Australian.
“From a perspective of trying to have a market with long-term, stable-priced electricity supply, you need to have more supply coming from generation sources that don‘t have wild fluctuations in their inputs. And that’s renewables.”
Sun Cable gained major project status from the Major Projects Facilitation Agency and support with both federal government, state and territory approvals. The NT government also awarded the development major project status on July 20 amid hopes it will give a major boost to the nation’s renewable investment, which has taken a hit in the last year.
Mr Forrest, chairman of major iron ore producer Fortescue Metals Group, invested through his Squadron Energy unit, which is also backing Australia’s first gas import plant in Port Kembla.