The $35 billion solar power export venture Sun Cable is primed to ramp up efforts to attract government and private backers to meet its target of a final investment decision by early 2024, after it was deemed “investment-ready” by Infrastructure Australia.
The move by the federal government’s infrastructure adviser opens up the ambitious project – involving exporting power from an outback solar farm in the Northern Territory through a 4200-kilometre cable to Singapore – to potential funding by government agencies. Those include the Northern Australia Infrastructure Facility and Clean Energy Finance Corporation, and potentially Export Finance Australia.
“Having passed through that third-party analysis is very helpful and puts us in a good starting position for discussions with NAIF and the CEFC,” said Sun Cable managing director David Griffin.
“Now that we have passed this milestone with IA we’re at the start of a process to ramp up our financing efforts, for equity and debt for the project. We will be needing support from a wide range of lending entities, and we will look to all those opportunities.”
Infrastructure Australia said the project, which is backed by billionaires Mike Cannon-Brookes and Andrew Forrest, “is strongly aligned with government priorities around development of northern Australia and transition to less carbon-intensive forms of energy”.
It pointed to “highly positive” public benefits from the project, including lower cost energy in the Northern Territory, establishing a new renewable energy export sector to South-East Asia, and spurring new economic activity to deliver the project and among industrial users.
It estimated that the project would cut the cost of electricity in Darwin by about 12 per cent, and improve quality of life by reducing greenhouse gas emissions. Those benefits were valued at $184 million and $3.15 billion, respectively.
The venture raised $210 million in a series B funding round earlier this year, but must raise multiples of that to reach financial close in early 2024. Macquarie Capital is advising on funding.
Infrastructure Australia noted the benefits estimate for the project “are premised on the proposal being largely developed on a commercial basis with private funding”, and said those are dependent on Sun Cable securing contracts for its output.
Mr Griffin pointed to “strong industrial demand” in Darwin for power, as well as interest from end users and others in Singapore.
“We are very happy with progress in both markets,” he told AFR Weekend.
The project involves the construction of a huge solar farm in the Barkly region backed up by batteries on site and near Darwin, and a high-voltage cable from the site through Indonesia and to Singapore.
It is estimated the project will deliver $8 billion in investment in Australia and $2 billion in annual export revenues, starting in 2028, roughly the same as the dairy industry today.
Construction is planned to start in 2024, with electricity to be supplied to Darwin in 2027 and full operations by 2029.
Northern Territory Chief Minister Natasha Fyles said the project would position the Territory as “a renewable energy powerhouse” and establish a new energy export industry.
Sun Cable has taken on several heavyweight advisers and partners to help advance the project, including PwC, engineering giant Bechtel, Hatch, risk adviser Marsh, and SMEC, a specialist engineering and design consultancy owned by the Singapore government’s Surbana Jurong Group.
Electricity from the venture is intended to displace imported gas for Singapore, reducing its reliance on a fuel for which prices have surged in recent months and which contributes to global warming when burnt.
Source: Financial Review