Macquarie and Moelis hired to raise $20bn for world’s longest undersea power line
Australian energy start-up Sun Cable has hired investment banks Macquarie and Moelis to raise more than A$30bn (US$20.6bn) over the next 18 months to fund a giant solar farm and the world’s longest undersea power cable.
It will be the first time an Australian renewables development worth tens of billions of dollars goes to capital markets for full project funding.
The project is expected to test investor faith in the idea that Australia, a leading fossil fuel exporter, can also be a significant clean energy exporter.
Sun Cable plans to build about 20 gigawatts of solar capacity and 40GWh of battery storage in remote northern Australia, along with a 4,200km undersea cable to Singapore.
It is backed by Australian billionaires Andrew Forrest, chair of iron miner Fortescue Metals, and Mike Cannon-Brookes, co-founder of software company Atlassian, who are both outspoken proponents of Australia’s clean energy export potential.
Sun Cable stands alongside the Asian Renewable Energy Hub, a 26GW wind and solar farm planned for Western Australia, as one of the country’s most ambitious clean energy developments. Oil major BP took a leading stake in the AREH last month.
Neither project has begun construction, but Sun Cable, which last month was declared “investment ready” by the Australian government, is at a more advanced stage of development and has targeted completion for 2029.
Unlike the AREH, which plans to use solar and wind to manufacture green hydrogen for export, Sun Cable plans to export only electricity.
Sun Cable chief executive David Griffin said that when the project was completed, the cable would be the longest undersea power line in the world, dwarfing the 720km North Sea Link, which connects the UK and Norway.
The project’s viability relies on being granted a licence by Singapore’s Energy Market Authority, which has called for tenders from clean energy producers to supply 4GW of continuous reliable supply to the city-state by 2035.
Sun Cable wants to supply half of that energy but will probably face competition from south-east Asian power producers. In the first round of bids, in which Sun Cable did not participate, the EMA said it received 20 bids from power producers in Indonesia, Laos, Malaysia and Thailand.
Griffin said the EMA was “100 per cent in control, so they could say anything” but expressed confidence that Singapore’s electricity demand would support the A$30bn project.
“At the moment, they are looking for 4GW of supply, and that’s a big number,” he said. “But electricity demand is not going to stop growing in Singapore.”
Griffin said the company needed to secure contracts with power purchasers and was talking to customers in Singapore.
Singapore’s current electricity generation capacity is 12GW, more than 90 per cent of which comes from gas, according to the EMA.
David Leitch, a Sydney-based energy analyst and principal at ITK Services, said investors and lenders would want both import licence and binding power purchase agreements before putting up funds.
“The bank is not going to give them money on the hope they will be able to sell the power,” he said. But he said Sun Cable was probably in “pole position” in the EMA’s tender process.
Griffin gave no details on the split between equity and debt but expressed interest in BP’s investment in the AREH.
“The BP angle, and companies like them, they are interesting,” he said.
“Multi-gigawatt scale, multibillion-dollar projects of this nature, that’s the norm for these types of companies. So they actually have quite a lot to bring to the table.”
Griffin said Sun Cable was planning other undersea cables linking Australia, with its huge solar and wind resources, to Asia, but gave no further details.
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