The Northern Territory has a comparative advantage in producing and exporting renewable energy, due to low opportunity cost of land, high solar irradiation and proximity to energy-intense markets in the Indo-Pacific region.
There is an opportunity to harness this advantage by developing large-scale, dispatchable renewable energy generation, with associated transmission infrastructure to supply domestic and export markets.
In light of the planned retirement of some Northern Territory gas-powered generators, large-scale solar energy generation and storage could reduce greenhouse gas (GHG) emissions in line with Australia’s Long-Term Emissions Reduction Plan (net zero by 2050) published in October 2021. It could also reduce electricity prices for industrial and domestic consumers in the Darwin region.
The 2019 Australian Infrastructure Audit found that Australia could develop new industries based on affordable and abundant new sources of energy, including large-scale solar and wind.
The Australia-Asia PowerLink is a private proposal that captures northern Australia’s comparative advantage in producing and providing zero emission electricity to the Darwin region and Singapore. This would place downward pressure on electricity prices in the Darwin region for residential and industrial customers, reduce Australia’s GHG emissions and develop a new renewable electricity export industry for northern Australia. Indirect benefits to Australia would include an uplift in economic activity from spin-off industries to support the proposal’s construction and operation, as well potentially catalysing new industry investment to take advantage of lower energy costs.
The proposal is strongly aligned with government priorities around development of northern Australia and the transition to less carbon intensive forms of energy. The project has been granted Major Project Status by the Australian and the Northern Territory Governments.
There are substantial public benefits from reduced electricity prices, reduced GHG emissions and potential economic upside for the Northern Territory from
complementary and spill-over investment in skills and industries. The proposal has a stated benefit-cost ratio of 2.4 at a discount rate of 7%.
The proposal will have economic merit so long as it does not require considerable public subsidy.
The proposal's commercial viability relies on the proponent’s ability to lock in competitive offtake agreements. The strength of these commercials has not been assessed by Infrastructure Australia. While the proposal provides a range of benefits to overseas electricity consumers, only those costs and benefits that accrue to Australia have been factored into Infrastructure Australia’s assessment.
The proposal represents the largest solar farm ever developed globally, largest battery and longest undersea electricity cable. Delivery will undoubtedly be challenging but not insurmountable, utilising existing and continuously improving technology. Risks related to demand, technical, regulatory, environmental and cultural heritage will have to be actively managed. The proponent is continually working with the Northern Territory Government, with a current Project Development Agreement in place to ensure market capacity and supply chains can accommodate the project through construction and delivery phases. Also, specific legislation, the Solar Project (Australia-Asia PowerLink) (Special Provisions) Act 2022, was passed to provide certainty for the proposal, clarify and streamline existing processes, and support Sun Cable to secure project financing.
On 10 January 2023, FTI Consulting were appointed as voluntary administrators of Sun Cable Pty Ltd, the proponent of the Australia-Asia PowerLink proposal. The administrators have announced their intent to recapitalise or sell that company. Sun Cable subsidiaries and the project entities for the Australia-Asia PowerLink are not in administration. Infrastructure Australia considers the proposal remains a worthwhile investment for Australia that responds to a nationally significant opportunity.
Additional planning steps continue to be necessary before final investment, including by securing environmental approvals, commercial agreements to underpin demand and final funding arrangements. The Northern Territory Environment Protection Agency is currently reviewing the proposal's environmental impact. Engagement with community stakeholders (including First Nations communities), on the planned design and outcomes is critical to ensuring the proposal is delivered successfully.
First added as a Stage One proposal 26/2/2021.
Refer to Infrastructure Glossary for terms and definitions.