Pulling the plug on a big dream

There is a bigger lesson in the corporate demise of the $30bn Sun Cable solar project that was put into voluntary administration this week than a clash of oversized egos involving two of Australia’s richest businessmen. The lesson is that even the people who most profess to want to drive the rollout of large-scale renewable energy projects to make their mark – in this case billionaires Mike Cannon Brookes and Andrew Forrest – are having difficulty turning their big dreams into reality.

Anthony Albanese and Chris Bowen should take note. Both men have wagered the fortunes of the new government, and the nation, on being able to deliver a transformation to a lower-emissions economy on a speedy timetable that has been put into legislation. With cost overruns and delays abundant in major projects – including Snowy Hydro 2.0, the Kidston pumped hydro project in Queensland and major wind farm developments in Victoria – the omens are not good. Planning has not even seriously begun for the massive offshore wind developments that have been promised or the high-voltage power corridors and interconnectors needed to make it all work.

There are concerns around the world that the economics of offshore wind are not as good as has been suggested. And this is before the problem has been solved on what will be done to store electricity for dispatch at times the wind does not blow for extended periods, as has happened repeatedly everywhere a transition to wind energy has been tried. The size of the challenge has been clearly articulated by Mr Bowen, who has said it will require $20bn for new interconnections to feed power between states as well as installing 60 million solar panels between now and 2030 and 40 industrial-scale wind turbines each month, more than one wind turbine every day.

The time bomb that is ticking is the planned closure and increasing vulnerability of the nation’s ageing fleet of coal-fired generators that continue to supply the bulk of the nation’s power needs. The federal government’s intervention in the gas market to ease short-term domestic price pressures could have long-term consequences for future investment and reliability of supply. The politics is sharpened by the fact the Greens have made clear they will exercise their balance-of-power position in the Senate to work against the interests of the fossil fuel industry.

The proposed safeguards mechanism reforms detailed this week by the government will add to the costs of the transition as the nation’s largest industrial companies are forced to cut greenhouse gas emissions by 5 per cent each year or buy tradeable permits to cover their shortfall. The Sun Cable project was due to supply some solar power to the Northern Territory but was primarily conceived to send its production to Singapore via Indonesia using a 4200km high-voltage electricity cable. The venture was given Major Project status by the federal and Northern Territory governments.

Sun Cable was placed into voluntary administration after Mr Cannon-Brookes and Dr Forrest clashed over different views on funding and a conflict over whether Sun Cable was delivering on its promises to shareholders. Both men claim the project has a future but current events should concentrate the minds of government agencies and superannuation funds who have been targeted to help fund it. Most concerning are claims by Dr Forrest’s Squadron Energy that existing managers lacked the technical skills needed to deliver. Shareholders in AGL, now effectively controlled by Mr Cannon-Brookes, will no doubt hope his ambitions and vision for Australia’s largest energy company are more robust. Dr Forrest has problems of his own with a high turnover of executive staff who were hired to transform Fortescue, a hugely profitable iron ore miner with a very large CO2 footprint, into a global renewable energy powerhouse. The lesson from Sun Cable is that ambition will get you only so far. This applies equally to governments and publicity-hungry corporate billionaires, no matter how good their intentions and how deep their pockets.