Australia eyes transition from global solar R&D leader to global solar manufacturer

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Australia has an impressive track record in solar photovoltaic energy, including adoption of the technology by households and businesses and a continued, world-renowned contribution to research and development. But can we get it right?

It’s a question that’s come up a lot lately, as a newly elected Labor government talks about reviving Australian industry, as fossil fuel costs drive up grid prices and a war at the top of a pandemic disrupts supply chains just as the shift to renewables needs to go through multiple gears.

In announcing the extension of the Albanian government’s $45 million funding to the Australia Center for Advanced Photovoltaics last month, Federal Energy Minister Chris Bowen assessed the solar challenge.

“The world’s solar panels, the technology they contain, were largely invented here [at the University of New South Wales] and at other Australian universities. It’s something we can be proud of. But now we need to take the next step.

“We have installed 60 million rooftop solar panels in Australia over the past 10 years. One percent of them were made in Australia. This must change. This is Australian technology; we want to see more made in Australia,” Bowen said.

Sure, it would be good for jobs and good for the economy, but one of the main reasons Australia will benefit from building a local solar manufacturing muscle is simply to meet its own needs.

According to the Australian Energy Market Operator’s Integrated System Plan 2022 Step Change Scenario, Australia will see a fivefold increase in rooftop solar PV, which will deliver more than twice as much generation as a coal-fired fleet. significantly reduced by 2030.

And then there’s all the solar that will be needed to build the growing number of renewable hydrogen-focused megaprojects being proposed across the country.

The $30 billion Sun Cable project backed by Andrew Forrest and Mike Cannon-Brookes, for example, offers a massive 20 GW solar park.

Solar power will also feature prominently in the massive 26GW Asia Renewable Hub in WA currently being run by BP, and the 50GW Western Green Hub proposed by its partners. Where all that solar will come from is still a work in progress, but the developers agree that not everything can be shipped from China.

Last week, the head of the International Energy Agency, Fatih Birol, warned that while China had been instrumental in reducing solar costs and supplying the global market, its dominance of the supply chain Global sourcing was becoming a major handicap for the global move to net zero.

“Accelerating clean energy transitions around the world will put additional pressure on these supply chains to meet growing demand, but it also provides opportunities for other countries and regions to help diversify production and make it more resilient,” Birol said.

So can Australia seize the opportunity?

It’s a question the Australian PV Institute is currently examining in detail, including through its PV Manufacturing project, which is working on a three-step process to assess opportunities for scale-up or new local manufacturing upstream and down the solar supply chain.

Professor Renate Egan, who is Secretary of APVI, while leading UNSW activity at the Australian Center for Advanced Photovoltaics – and with 20 years of experience in solar cell manufacturing – is in as good a position than anyone to judge.

Egan says one of the key first steps will be establishing the size of the local market before other players in the supply chain can be brought on board – such as aluminium, glass and steel.

“If you look at China, the reason China got to where it is today is because they have confidence in the downstream market; the supplier then does not have to take as much risk in supplying the product.

“The Chinese government basically said we can support a 100GW market, so let’s manufacture at that level and if we can sell some overseas, great!”

“That’s the kind of confidence we need,” Egan told RenewEconomy on Friday. “Let’s go back to ourselves.”

Egan says APVI’s early estimates in the Australian market suggest it could support around 1GW per year of local module manufacturing.

“We currently have a market of 4 GW per year, so it is not unrealistic that we have a locally manufactured gigawatt.” The big question, she adds, is local manufacturing of what?

“It doesn’t make sense for everyone to do everything. There will be parts of the supply chain where we can do more, and we will be good at it, while there will be other parts that don’t add up economically.

Economically, another key ingredient to establishing solar manufacturing in Australia will be capital – and lots of it.

As his colleague, Professor Martin Green of UNSW, pointed out at a recent conference, China’s dominance of the global solar supply chain has not been entirely due to strong government support and unshakeable.

Rather, in the early 2000s, when the government was a bit more focused on wind power, Green says it was funding from American investors that developed the Chinese industry.

“Between 2005 and 2010, 10 China-based companies were listed on the New York Stock Exchange, and six of them were among the top 10 manufacturers in 2022,” Green noted.

Fortunately, Egan says there’s been “a lot of excitement” for Australian solar manufacturing in the big city.

“When you look at the Fortescues of the world, their success was based on the fact that they had the complete supply chain. They set up their own railways and ports to export. They supported each other and controlled all the costs that way.

“Someone like that might have the ability to do it on solar power,” Egan says. “It may or may not make economic sense right now, but they will own the quality, the processes and eliminate the supply risk.”

In the end, it will largely depend on the cost. As Green pointed out, China produces very high quality products at very low prices. It is therefore very difficult for a manufacturing activity in another country to be competitive on either of these two terms.

Egan says that while economics may rule Australia out of cell processing, for example – due to the cost of manufacturing and maintaining the equipment, which she describes as “expertise in itself” – there are other parts of the chain that can be sued.

“I have the intuition that it will be in the refining of silicon that we will be strong. … We could then ship it off to turn into platelets and cells and then send them back. The [module making] including glass and aluminum could then be done here.

“The more we automate, the more we can lower prices, and the more we lower our electricity prices, the more competitive we become.”

Egan finally adds that it will be equally important to establish what people – politicians, investors – don’t know, and what information we need to bring into the equation.

“The process [of making solar] is quite complex and people looking at the industry from the outside tend to think “there must be an easier way to do this”. People are thinking about revisiting the thin film…

“We’ve seen big projects before that have switched to solar power and a few of them have been burned along the way.

“We have a lot of hard-earned expertise in Australia and we want to make the right decision. We don’t want to ruin the confidence of investors wanting to support a local solar supply chain.”

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