$20bn Sun Cable has national security risks, expert warns

EXCLUSIVE by MARK J SMITH There has been much fanfare about the $20bn Australia-Singapore Power Link project managed by Sun Cable now backed by billionaires Andrew “Twiggy” Forrest and Mike Cannon-Brookes of Atlassian. It could put the Northern Territory on the world stage, make Australia an energy superpower and create 1000 jobs – but have the risks to national security been fully considered? Author of the 2008 Climate Change Review for the Commonwealth Government, economist Professor Ross Garnaut, is promoting a vision for Australia to become a superpower if it can take advantage of low carbon opportunities. If the hype is to be believed then the Sun Cable project could be at the centre of that ambition. “The Sun Cable project is a game changer for the Territory and will further our reputation around the world as a place to do business and invest,” Chief Minister Michael Gunner said in a statement in July. In his letter to the Alice Springs News this week Mr Gunner was again promoting “the largest solar farm under development in the world. “We are fast becoming an energy super power and the Sun Cable Project is an absolute game-changer for Territory jobs and the economy: This is how we break out of the boom bust cycle,” Mr Gunner reaffirmed. With 1000 jobs anticipated during the construction phase and 300 ongoing jobs Sun Cable might start to turn around the seemingly irreparable NT economic situation. If successful, the development would include a 10-gigawatt-capacity of solar panel infrastructure spread across 15,000 hectares near Tennant Creek, backed by about 22 gigawatt-hours in battery storage. Some of the electricity generated would be consumed in Darwin, but much of the power would be exported to Singapore via a 4500 km transmission network that Sun Cable claims could provide 20% of the country’s power requirements. At present the island of Singapore is heavily reliant on imported Liquid Natural Gas for 95% of its electricity exposing consumers to the fluctuations of global oil and gas pricing. As a former Ambassador to China, Professor Garnaut would be well aware of the possible impact this project may have on our delicate and recently strained diplomatic relationship with China. Given Australia’s economic reliance on China, implications of this project are worth deeper consideration through that prism. Former diplomat, major energy project and China business expert Dr John Saunders (pictured), who previously served as deputy managing director of the Department of Foreign Affairs and Trade’s inward investment arm AusTrade, explored these challenges in an exclusive interview with me. Dr Saunders says that China is leading the world in large solar projects. “At 10 GW the planned Tennant Creek solar farm will be six to seven times bigger than China’s and the world’s biggest solar farm in China’s Tengger Desert in Inner Mongolia. “China is the world’s most experienced operator of solar farms with potentially the most competitive technology, engineering procurement and construction methods, and is also a possible long-term financing partner for the Australian project developers Sun Cable.” Dr Saunders warns that the complexity of the project poses geopolitical and national security challenges. The electricity supply will be transported by a high voltage direct current transmission network, extending 4,500 km, including a 3,800km submarine cable running through Indonesian waters. This will require delicate international negotiations and presents hurdles. “The proposed 4500 km cable linking electricity generation in the Northern Territory to end users in Singapore crosses deep and difficult undersea terrain. The route will require careful survey and monitoring, and the technologically advanced cable-laying ship requires careful positioning and tracking.” Dr Saunders is concerned that private customer data may be insecure. “Most importantly from the point of national security, the high-tension electricity cable will have parallel telemetry data communications capable of sending and receiving performance and customer data. “This capability will correctly give rise to national security concerns in both Australia and Singapore, which the Australian project developers must foresee and address.” Sun Cable CEO David Griffin has said the project still has “a very long way to go,” and Dr Saunders concurs. “Yes, like all very large projects, the project has a long way to go in its detailed multi-disciplinary planning and engineering, to financial closure and project start-up. The early and leading support that best-in-class, far-sighted innovators like Mike Cannon-Brookes and Andrew Forrest have given to CEO David Griffin is very significant. “This upfront support for the project concept and importantly for the project team of Sun Cable, provides a sound foundation for project development.” At the big picture level Dr Saunders agrees with Professor Garnaut’s assertion that Australia can become a clean energy leader. “Ross Garnaut is farsighted, and absolutely correct, in his vision and ambition for Australia to become a ‘low-carbon superpower’ drawing on the strengths of its R&D, advanced technology industries and workforce skills,” said Dr Saunders. “At the moment China, in spite of legacy commitments, is out performing as the centre of the clean energy transition in the Indo-Pacific region. Australia under recent government policies is playing catch-up.” “With private sector commitment and government policy support for projects such as Sun Cable, Australia can attract talent from around the world and become the centre of gravity in the transition to clean energy in our region.” Sun Cable secured major project status from the NT Government in July this year. At the time Mr Gunner said that his government would negotiate a Project Development Agreement to provide the framework to progress through the required approval processes starting with an Environmental Impact Statement and a Territory Benefit Plan (TBP). Australian and local interests must remain at the forefront. Dr Saunders says the TBP “must recognise that, although the proposed world-scale Sun Cable Project is at a remote NT location, it is linked through to key markets and relationships. “During the Feasibility Study and ongoing in the project development and construction and operational phases, this major private sector investment project will require significant logistic support, skilled trade and operational inputs. “From the beginning the TBP should set out the clear long-term opportunities for local indigenous landowners and the wider community through TAFE skills training in renewable energy and environmental services, advanced materials and engineering fabrication, logistics and the operation of high-tension transmissions and secure telemetry.'” says Dr Saunders. “Like the big NT LNG projects which preceded it, the big 10GW Sun Cable Project can be transformative in moving the NT and Australia into the future.” Sun Cable is aiming to reach financial close by late 2023 and to complete development in 2027, which Dr Saunders says may be achievable if the real national security risks of the project can be anticipated and identified upfront. “In my view, identifiable technology solutions can be engineered into the project upfront at the pre-feasibility study stage and negotiated with the Federal and Singapore governments without unduly impacting the 2027 project timeline.” Balancing this caution against the optimism from the new financial backers, Mr Cannon-Brookes hopes Sun Cable can serve as an example of Australian ingenuity and leadership. “It’s a huge project, on a world scale. This is not big on an Australian scale, this is big on a world scale,” he said speaking at Atlassian’s Sydney office this week. “If we nail this, we can build a new export industry for Australia, create jobs and set our economy up for the future. “In a carbon-constrained world, Australia should be a superpower.” He and Mr Forrest revealed their skin the in game to the tune of tens of millions of dollars through Grok Ventures and Squadron Energy this week, which have taken positions as co-lead investors. “This presents the Australian economy with enormous opportunities, not just for reducing emissions, but also for the economic march of our nation and global competitiveness,” Mr Forrest said in a statement. Securing billionaire backing and endorsement is a critical milestone. Future milestones might just test the limits of their appetite for risk versus reward, but could provide a sound return if these complex, but not insurmountable, challenges can be overcome. [Mark J Smith was formerly a political and policy adviser to the Government of South Australia and led a 2016 Asia-Pacific Economic Cooperation (APEC) working group review.]