The Australian government recently granted "major project status" to a solar power export project that will supply solar power to Singapore through a subsea cable. With an estimated investment of A$22 billion ($16 billion), the ambitious project is expected to not only create economic and employment opportunities for Australians, but also make it a solar superpower.
Australia's willingness to attach such importance to the solar power project is, of course, commendable, and will help reduce the usage of fossil fuels that contribute to global warming. But it should also be noted that the risks and uncertainties of such a grand project can sometimes outweigh the expected benefits. Therefore, there is no need for the market to be overly optimistic, or to place unrealistic expectations on Australia being a major exporter of new energy.
Despite high-profile support from the Australian government for the so-called Australia-ASEAN Power Link project, it could be derailed by several uncertain factors, just as numerous now-terminated new energy projects of the past have been.
At such a juncture, raising enough funding for the project will clearly be difficult. Besides, the project is scheduled to begin operations in 2027, meaning it will require a continuous flow of funding over an extended period if it is to succeed. It will also need to be able to stave off any unexpected issues that could affect financing.
The 4,500-kilometer submarine power cable could be the longest in the world when completed, and as such, its construction is likely to encounter many difficulties relating to technology, weather, the subsea environment, and maintenance, among other things.
Such a costly project would inevitably boost electricity costs as well, raising the question of whether the potential Asian buyers would be willing to pay such high prices.
If completed, the project has the capability to supply 20 percent of Singapore's power needs, according to media reports.
But Singaporean authorities appear to be relatively cautious of the project, suggesting the need to balance cleaner energy "with potentially high electricity costs and higher energy security risk." It doesn't bode well for the project.
To a certain extent, Australia's recent push for solar energy exports could be seen as part of its efforts to seek trade diversification as a way to reduce its dependence on China. The China-Australia relationship has deteriorated recently due to the Morrison government's repeated political provocations over the past few months on a number of China's bottom-line issues.
But how much of this showcase project has the ability to actually support the Australian economy is anyone's guess. After all, Australia has a long way to go before it becomes a real solar superpower.
Editor:Cherie
