Solar firm Sun Cable up for sale to power cross-border grid integration project

Developing a solar energy network comes with its set of challenges, particularly when the goal is to create the world’s largest. In January 2023, Singapore energy firm Sun Cable made the difficult decision to enter voluntary administration to secure additional capital and progress the development of its Australia-Asia PowerLink project (AAPowerLink Project). As a result, an independent third party, FTI Consulting, was appointed to oversee the solar company’s financial affairs and make crucial decisions.

This decision follows the “absence of alignment with the objectives of all shareholders.” According to Sun Cable, they could not arrive at a consensus on the future direction and funding structure of the company despite having funding proposals at hand.

“The administrators intention is to continue to pursue the company’s development portfolio, with a view to achieving either recapitalisation via Deed of Company Arrangement or a going concern sale in the short term,” FTI Consulting, the voluntary administrators of Sun Cable, said in a statement.

“Indicative timing for the sale process is approximately three months,” it added.

John Park, Leader Australia, Corporate Finance & Restructuring for FTI Consulting, said the administrators aim to “preserve” the value of the company and look into all the options for the project’s development.

“We will seek to crystalise the interest expressed in the future of Sun Cable into a firm offer for the benefit of creditors and other stakeholders via the sale process. Ultimately, the successful bidder will have the opportunity to take the business forward in line with their vision,” Park said.

Sun Cable’s portfolio consists of a further 11 GW of proposed projects.

AAPowerLink project progress

The around US$24.8b (A$35b) project aims to supply 15% of Singapore’s electricity supply through the world’s largest solar farm, battery, and 4,200 kilometres of undersea cable, traversing Indonesia.

Once completed, Sun Cable CEO and Founder David Griffin said in an email interview in December 2022 that the solar generation site, which spans 12,000 hectares of the solar array, will have a capacity between 17 gigawatts (GW) to 20GW, and a battery energy storage system capacity between 36GW-hours (GWh) to 42GWh, located in Darwin, Australia.

“This will support regional neighbours as they undertake the energy transition and simultaneously bolster green industrial economic development. Further, it will open significant renewable energy supply chain opportunities in many parts of Asia,” he told Asian Power.

“Ultimately, our vision is to connect the grids of the Asia Pacific and export Australian renewable electricity, as demand in Southeast Asia continues to grow. Through the Australia-Asia PowerLink and future projects, Australia’s abundant solar resource can supply low-cost and reliable solar power to Asia, with the opportunity to become a major renewable energy exporter to meet Asia’s electricity needs,” Griffin added.

The project’s construction is expected to commence after reaching a financial close in 2024 and will start operations starting late this decade.

AAPowerLink has also been 50% oversubscribed for offtake interest in Singapore with Letters of Intent for around 2.5GW, compared to the planned supply of around 1.75GW, as of October 2022.

Griffin said projects of such scale have “certain complexities,” one of which is design optimisation and ensuring that the end-to-end system will deliver resilient supply at a competitive price.

As the project has one of the largest logistical undertakings, Sun Cable is focusing on prefabrication and efficient logistics, as well as improving the delivery of solar and storage projects in Asia.

Sun Cable in October 2022 also launched the Asia Green Grid Network along with nine corporate and research institutes to push for innovation that will support a connected grid in Asia. Aside from this, the network also aims to provide education on key areas of the green grid through briefings and seminars, and foster collaboration for research and new connections.

Priority listing

The AAPowerLink project was also identified as “investment ready” by Infrastructure Australia, which meant that AAPowerLink has met the requirements to be included in the priority list, and affirmed its economic benefits.

“Securing Stage 3 ‘Investment ready’ status sends a strong signal to investors and Australian government funding agencies that the AAPowerLink has an appropriate net cost benefit, which means it is a project that is good for the nation and one that the Commonwealth Government would see merit in supporting,” Griffin said.

Sun Cable said in a statement that the benefits of AAPowerLink to Australia include 800 megawatts of zero-carbon electricity for Northern Australia, A$8b in expected investments, A$2b in expected annual export revenue from 2028, creation of around 14,000 direct and indirect jobs, and the abatement of around 2.6 million tonnes of estimate carbon emissions.

AAPowerLink last November was also included amongst the 26 projects in the energy sector in the G20 Action for Strong and Inclusive Recovery list. The list includes “concrete” actions, projects, and initiatives that will provide an opportunity for international collaboration.

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