Moving clean energy across borders is one of energy-hungry Southeast Asia’s biggest decarbonisation opportunities – but it is also highly complex, politically sensitive and technically taxing.
In the second episode of a new podcast series that profiles the region’s clean energy pioneers, Eco-Business spoke with an entrepreneur who operates on the edge of this frontier: Frank Phuan, co-founder of Singapore solar pioneer Sunseap and now founder of Equator Renewables Asia, a new company he started last July focused on unlocking the next phase of the region’s energy transition through cross-border green power.
Phuan has spent more than three decades shaping Singapore and Southeast Asia’s solar landscape. His latest venture, backed by a deal with the subsidiary of China’s nuclear company, pushes into relatively unchartered territory: exporting clean electricity from Indonesia’s Riau Islands to Singapore. The 900 megawatt-peak (MWp) photovoltaic and 1.2 gigawatt hours (GWh) battery energy storage system is expected to generate around 830GWh of clean energy per year when completed by 2029.
Cross-border energy sharing could help Southeast Asia reduce its heavy reliance on fossil fuels by linking countries with high renewables potential, such as Indonesia, with major demand centres like Singapore. It also lowers the cost of clean electricity. A study by assurance firm DNV estmates that cross-border could save Southeast Asia US$800 billion in decarbonisation costs by 2050.
What is inspiring to me is what the richest man in the world, Elon Musk, is doing.
Frank Phuan, founder, Equator Renewables Asia
On this podcast, Phuan breaks down why cross-border energy trading remains so difficult – from geopolitics, permitting regimes and domestic content rules, to the financial risks of subsea transmission lines and the challenges of aligning two countries’ policy priorities.
He also lays down the advantages – not only the potential to transform Indonesia into a renewables powerhouse, but the handsome returns projects offer developers and investors. “No one is entering these [cross border] projects with an intention of getting just single-digit returns – most are gunning for double-digit returns,” he said.
Apart from that, the Singaporean entrepreneur explores what drew him to renewable energy, how his Sunseap journey shaped his approach, and the lessons he has learned from building clean energy infrastructure in a region where a brew of politics, economics and logistics require persistance and patience. “Anybody who has a short temper and little patience, perhaps is not cut out for this,” he said.
Frank Phuan talking on the Eco-Business Podcast.
Tune in as we discuss:
- The Sunseap origin story
- The challenges of cross-order renewables projects
- Has the Asean Power Grid been overhyped?
- National versus cross-border projects
- Helping Indonesia to become a renewables powerhouse
- Is the Suncable project linking Australia to Singapore realistic?
- Ambitions for 2026
- Why Phuan’s inspiration is Elon Musk
The edited transcript:
Tell us the Sunseap origin story.
I’ve got to attribute my entrance to the industry to my father. To many, I’m considered second generation in the solar industry – my father started in solar manufacturing as early as 1979, way China became the powerhouse in solar manufacturing.
My father was in the OEM [original equipment manufacturer] manufacturing business – so, circuits for TVs, computers, etc. Some time in the 1980s, there was a request to be an OEM manufacturer for Siemens’ solar business. That was the beginning.
Back in those days, the solar cells were round instead of the squareish solar cells we see today. I think I still have a few of those panels from 30-40 years ago – they still work!
I grew up in a family with an inclination towards solar power generation. But I always wondered why we were not using what we produced in Singapore. I grew up asking where are all these panels going? My father would tell me: “There’s not enough space here in Singapore for solar.” And back in those days, the efficiency wasn’t as high.
But I thought we had a lot of space on rooftops. When I grew up, after my graduation, I started the idea of trying to promote rooftop solar to the Singapore government. I had a good friend back then, my co-founder Lawrence Wu. Together we conceived of the idea of starting a business of making use of solar panels that my family is already producing. But instead of using them outside of Singapore, why don’t we use them on top of HDB [public housing] rooftops?
That is how we started Sunseap… and eventually, we installed one-quarter to one-thirds of the total solar capacity in Singapore.
How do the challenges you experienced back then compared to the challenges you experience now?
When we first started, the notion of project financing for renewable energy projects in Singapore was literally unheard of. Asking the banks to look into project financing non-recourse [lenders can only be repaid from a project’s cash flow and assets, not from the sponsor company’s other assets] for the next 18-20 years the banks were very uncomfortable with those terms.
So in the beginning, we used an equipment lease approach. As you can imagine, with equipment lease you don’t add 18-20 years, and certainly there’s no concept of non-recourse project financing. So it was done on the back of your personal guarantees – literally trying to fit a square into a round hole. So we tried to use whatever products the bank had at the time.
The challenge we faced was long-term PPAs [power purchase agreements]. Bear in mind, those projects we developed for the Singapore government – a lot of the energy was exported to the grid. And Singapore being a open energy market, our energy price fluctuates every 30 minutes. Therefore it is a challenge to lock down a fixed price.
So in that regard, we closed our first VPPA [virtual power purchase agreements with [computing firm] Apple in 2015. The structure we created with Apple pretty much led the rest of the VPPA examples in Singapore.
Fast forward a decade later, with globalisation being replaced by polarisation… Banks are very careful about how they finance. So the challenge is still there, but in a different shape and form.
How has the anti-renewables rhetoric that has emerged after the election of Donald Trump affected the environment in which you operate?
It has been felt directly. When I was still with EDP, we had more than 10 gigawatts (GW) of wind power in the United States. When Donald Trump and his administration took power, our share price took a big hit. Renewables acceleration has slowed down. But the good news is that we still see a lot of companies and governments continue to commit to renewables. Not because it is green and saves our carbon footprint – but become of the sheer economies. Today, renewables in some places gets you power as low as 1-2 cents per kilowatt hour.
Also because of the simplicity of deployment of solar, and more recently battery systems. The combination of that now allows developers like us to offer almost 24/7 very high load factor type of deployment – and that creates momentum.
You recently started your own venture, Equator Renewables Asia, which plays in the cross-border energy space in Southeast Asia. What are the biggest challenges you face, for example in Singapore with the low grid price, or Uniform Singapore Energy Price.
In many parts of Asia, places where we use power are not places where we generate the power. Usually we generate renewables in more rural areas where there are hardly any grid connections. So the challenge is really how to bring power from one location to another.
The typical grid connection projects are the basic solar without batteries projects. These are no longer rocket science. It is really down to one company and another company, and who has the lower cost of funds.
In terms of projects, there are two categories. One is where you have your standard grid connector system and it is really price sensitive. The other, the road less traveled, are more complex projects – for instance, solar coupled with wind or solar coupled with batteries.
When I started Equator Renewables Asia, many people asked me: “Is this Sunseap 2.0?” It is not. Sunseap was more focused on the first category – rooftop solar, utility scale solar; these are grid connector systems.
Now coming to your question of cross border. I see cross border as a segment under the second category. Of course, cross border means from one location where you generate power in one country, and crossing that country via subsea cable.
An additional challenge is transmission. The project we are working on crosses from the Riau islands in Indonesia to Singapore. There is the complexity of the subsea cable and everything to do with the marine industry; subsea cable routing, for example, to identify that route between the two countries alone is a lot of work. You need to seek all sorts of approvals and permits including working with Indonesian Navy to do marine surveys and identify a suitable route.
That’s just our company. Imagine there are multiple companies and different routes involved. Can you imagine a spider web of cables going between Indonesia and Singapore. I find that difficult and challenging. And hence the coordination between the ministries and the various developers to find a clearly identified corridor – that took a lot of time. We took almost three years to do that work.
The grid price is another challenge. I recall on the day where we formally sold Sunseap to EDP, it was the day that Russia invaded Ukraine. Energy prices spiked all around the world. If you remember those days in Singapore, there were multiple pure retailers that did not have “genco” [generative] capability. A lot of those retailers are no longer around because of that fiasco. I believe USEP [Uniform Singapore Energy Price, the half-hourly energy price in the Singapore wholesale electricity market] for the first time went to its highest point. On average, it was probably clocking near 30 cents, 40 cents on a monthly basis per kilowatt hour. That was unprecedented.
Of course, in those days, if you compare the offtake price that we were imagining for the cross border [energy trading], we are trying to work towards a price whereby the domestically generated green energy will be no different compared to whatever we deliver from cross border.
It has challenges obviously because you need approval and permits on the transmission and the export license., and you need to overcome land issues and work with the right local partner to get the generation part of the project ready.
Doing all that and keeping it to the same price as a domestic project was a tall order in the beginning. But I think as time passes, we see the USEP price dropping from where it was to today – I believe it is hovering around 12 to 14 cents per kilowatt hour. So it was almost half of what it was a couple of years ago.
So our original intention did not change. We still kept to the target that we want the VPPA price in Singapore for cross-border to be identical to the domestic one. And obviously the acceptance because of the drop in USEP in terms of price point for a long-term, PPA has dropped. You have to match whatever drop in the USEP plus a premium that companies are willing to give for a renewable energy credit.
We still see companies’ willingness to do long-term VPPAs for a couple of reasons. The nature of VPPAs is that they offer a long-term tenure of 20 years, sometimes 25 years, with an option of another five years. So we are trying to add towards a 30 years PPA as much as possible.
Now, this long tenure is the strength of renewables. Renewables being all the CapEx [capital expenditure] is identified upfront. You are able to forecast the energy that you can produce and the price of the energy over the long term period. In that regard, there is that inherent hedging mechanism that is built into renewables. Companies begin to understand this.
Has the Asean Power Grid been overhyped?
I’ve been in the industry for almost 30 years – and I think APG has been talked about for 30 years or more! There’s always optimism that we are going to get there someday. It’s a bit like nuclear fusion – it is always five years away from success.
But being in the thick of cross-border renewables now, I would say this is the right time window to look into it. Especially if you look at it from a politics point of view, Asean countries need to stick together more than ever. I see APG as the second category of renewables where you trade resources. There are some places in Asia that are full of hydropower capacity, some with wind capacity. How do we get those resources distributed to where the load is required?
Looking at the various cross border deals that have been announced last year in Singapore International Energy Week (SIEW), there are quite a few now – in Vietnam, Cambodia, Sarawak, and as far as Australia coming to Singapore. But those projects are thousands of kilometres. Our project is 90 kilometres. So, in sheer distance terms, we have an advantage. Just imagine the amount of copper that must be put into the sea – the shorter the distance, the lower the transmission cost.
We spend a lot of time talking to both governments, trying to justify why the project is good for both countries, importer and exporter. When it comes to physical infrastructure, governments get extremely sensitive. It feels like you’re taking a part of their country away. But if you think of energy in another form, for example as molecules, then it is business as usual. You don’t need an export license. You don’t need an import license. You just do normal trading, be it oil or hydrogen or ammonia. But when it comes to a physical infrastructure, everybody’s so sensitive.
Our project is at the last phase of getting the export license. Over the last three years, in Indonesia, they have a process of identifying the subsea cable routing. We have done that. Then there is the power generation license and eventually that goes into your export license. We are in the midst of achieving that. Of course you have your Singapore side of things in terms of import license, landing point, grid connection to all think about as well.
Cross border is certainly not easy. The way I think about it is three projects mashed up together. You have one on the genco side of things. You have one that is looking at all things transmission related. And then you have one that is the import side, which is all your VPPA and customers and financing, all in that last bucket.
Of course, there’s interdependency, so you have to take care of all three at the same time. But there are rewards [from cross-border renewables projects]. In terms of returns, a standard rudimentary solar systems project in Singapore will deliver single digit returns, maybe 7-8 per cent – 9 per cent if you’re lucky. But with cross border, no one is entering these projects with an intention of getting just single digit returns – most are gunning for double digit returns.
So, we are taking advantage of the credibility of offtakers in Singapore that can pay a higher price. Although there is the USEP drop in price, that window of between 20-25 cents per kilowatt hour is still a much better deal than and a PLN [Indonesia’s state-owned electricity company] offtake price in Indonesia.
But of course you need to add up the various costs. Indonesia is not easy because there is a concept of TKDN [Tingkat Komponen Dalam Negeri, which refers to mandated domestic component levels to boost local industries] for domestic content. So key equipment, like solar panels and batteries, has to be made in Indonesia or has an element of it made in Indonesia to a certain percentage. This is their concept of market protection to allow their local market to grow.
Singapore has also signed an MOU on green electricity trading. The other is a collaboration on the Sustainable Industrial Zone. The Indonesian government sees these two MOUs working together. For Indonesia to issue the export license for green electricity trading, we need to start the whole concept of a sustainable industry zone, whereby we ask our vendors to come into a common area, and we build equipment in that area.
The concept is end to end. On one end, the downstream, you are generating power in Indonesia. On the upstream, you are manufacturing equipment and creating the green ecosystem of renewables in Indonesia.
There is the spirit of an exchange. We inject billions of dollars into Indonesia. We create green jobs. We ensure knowledge transfer. Today, indonesia has less than 1GW in total solar capacity. Ironically, Singapore has more than 1GW despite being so small. But Indonesia has ambitions. President Prabowo Subianto has announced a 100GW programme for Indonesia.
So how do you jump from 1-100? I think it’s challenging. If this programme of ours is executed, we are talking about north of 10 to 20 GW collectively in one fell swoop over the next two years.
That will help transform Indonesia into a renewables powerhouse. Not just a 1GW anymore, but 20GW. Now from 20 GW with its end-to-end ecosystem, I think 100GW is within our grasp.
Do you think Suncable’s Australia-Asia Power Link project, which plans to pipe solar energy from Northern Australia to Singapore, is feasible?
If you throw enough money at something, it will eventually be technically feasible – but whether it is economically viable is a different story.
HVDC [high-voltage direct current] is the transmission technology that SunCable is looking into, which will make crossing thousands of kilometres feasible. But again, if you consider the amount of copper needed, the sheer distance is really daunting. I cannot imagine the transmission costs for any offtakers in Singapore for that kind of distance.
If you compare that project with ours, we are not using HVDC. We are planning to use HVAC [high-voltage alternating current, which is better for short-to-medium distances]. That’s why you see that the approved conditional licensees are all within a 100-kilometre range of Singapore. They are all within the Riau area. The reason is because anything above a hundred kilometres, your cable losses for HVAC become exponential.
The second issue is that HVDC requires converter stations on both ends. In Singapore, our grid is AC [alternative current] infrastructure, so you need to convert DC to AC. And that converter station is huge. I suppose in Australia there’s plenty of land that you can put the converter station on. But in Singapore, where are you going to find tens of hectares of area to put your converter station? Even if there is, and you can clear or reclaim land, it will cost a lot of money to do this.
What are your ambitions for the rest of the year and how realistic do you think those ambitions are given the current environment?
We have one big project that we are working on. Our fingers are crossed that we get the export license in 2026 and then we move toward execution phase. Separately, we are looking at green hydrogen projects as well. We are one of those companies that’s trying to crack the code for green hydrogen delivery into Singapore or perhaps the region. We believe we found some interesting technology that can help us do the hydrogen delivery.
Presumably what you are working on is bringing the cost factor down?
Absolutely. We are looking at all segments from the LCOE [levelised cost of energy] of green energy, bringing it down to as low as possible, and then moving into the electrolyser, which can electrolyse hydrogen with intermittent power. Because once you get into batteries, that’s where your high cost of power comes into play. You need to keep the cost low, meaning you only generate hydrogen in the day. Your last segment is transport and storage. We are attempting a very cost-aggressive green hydrogen delivery system into Singapore with a trial sometime this year. Once the trial is done, we want to move into a commercial phase of hydrogen delivery. So, we are moving from electrons to molecules.
Who do you admire for what they’re doing in the clean energy space in Southeast Asia? And do you have any advice for any aspiring clean energy entrepreneurs?
In terms of heroes, I have not seen many. I’ve seen many villains, though!
What is inspiring to me is what the richest man in the world, Elon Musk, is doing. I had the privilege of chatting with the chief financial officer of SpaceX (Elon Musk’s space travel company). You can feel their enthusiasm about the work and their passion. They only have one mission, which is to put humans on Mars. But in working on that mission, you have to achieve many intermediary milestones. It’s like collecting infinity stones along the way. What is impressive is that while they achieve these milestones, they convert each of them into a sustainable, commercial business. Starlink was supposed to be a communication system for Mars. But it became useful on Earth, in rural areas, places that are going through disasters or wars – there is Starlink to deliver internet connectivity.
Similarly for us doing clean energy on Earth, green hydrogen could provide that intermediary step that enables energy to cross borders without the geopolitics or the need for a export license. How can we use technology to really push the limit on the cost efficiency of hydrogen or its various derivatives into Singapore on a long-term sustainable basis?
Along the way as we try to solve problems, those problems can become business models in themselves – just like what SpaceX has done. That is something that I’m trying to inculcate into Equator Renewables.
As for advice [for the next generation], I must have been advising myself all these years – because I think many people say that I’ve been tremendously persistent. That is really one thing you need – especially when you look at large scale infrastructure for renewables in this region, and trying to crack the code between governments, technology, and people. That takes time. So anybody who has a short temper and little patience, perhaps is not cut out for this. Persistence is the key.
