Albanese’s Solar Sunshot program can deliver green future – Opinion

The government’s Solar Sunshot concept can deliver jobs, growth and sustainable emissions reductions for decades to come, while ensuring more of the benefits of the energy transition are enjoyed by Australians 

By Richard Petterson, CEO of Tindo

Last week the Albanese government announced the Solar Sunshot program that will provide $1 billion in production incentives and grants to ensure Australian industry can make solar technology as part of the energy transition.

The announcement sparked some criticism, mostly along the lines that we shouldn’t prop-up industries that China can do cheaper, or that other powers, like the US and EU, will give greater support than Australia. 

In reality, other countries’ governments are supporting domestic renewables manufacturing and exploiting the opportunity to capture more of the economic benefits of the energy transition while strengthening their energy security. Without rapid action, Australia risks missing out, continuing to depend on overseas imports to power our energy transition.  

The United States’ Inflation Reduction Act is pumping around AU $520 billion into sovereign renewables manufacturing, and is backed by a customs and tariff program; India’s Production-Linked-Incentive (PLI) program is specifically aimed at breaking reliance on imported solar panels; and the European Commission’s Green Deal Industrial Plan is designed to include net-zero related manufacturing in Europe’s energy transition. 

These jurisdictions are reacting to China’s solar manufacturing dominance, which has been built thanks to strategic investment from government at multiple levels. 

The International Energy Agency, in its 2022 Special Report on Solar PV Global Supply Chains, warned against concentration of solar PV industries in one country and said that governments “need to turn their attention to ensuring the security of solar PV supplies as an integral part of clean energy transitions,” which includes manufacturing and raw materials.

Along with supply chain resilience and energy-security there is also an economic opportunity in renewables manufacturing. KPMG has estimated that expenditure on the energy transition to 2050 will be in the order of $320 billion, but less than half of this expenditure finds its way into Australian businesses: the Reserve Bank of Australia in its “Renewable Energy Investment in Australia” paper finding that large scale projects see just 25-40% of project budget spent in the Australian economy.

This lost opportunity will only get bigger when you consider that AEMO’s Integrated System Plan 2022 forecasts that in 2050 around half of the served electricity will be from solar PV. 

There is only one solar panel manufacturer in Australia, Tindo Solar. We make up to 150 megawatts of high-quality panels per year, which equals one per cent of the market. Our small scale services the premium segment of the market but we do not have the economies of scale that would bring our prices closer to the imports. 

We have plans to build a 1 gigawatt factory, in regional Australia, that addresses this in three ways: the greater scale reduces our component costs, meaning the panels cost less to make; 1GW of output creates enough demand that Australian component makers – of PV glass, backsheet, frames etc. – have an economic incentive to make the components in Australia; and thirdly, the increased scale of the Australian panel industry incentivises an upstream investment in the main component of a PV panel, the solar cell.

Our econometric research focuses on two regional cities and suggests our Gigafactory will create 250 direct jobs, 900 jobs in the associated supply chains and an ongoing $300 million per annum economic benefit to the national economy. The economic benefit from one factory would outperform the $1 billion Sunshot budget in a little more than three years. Manufacturing has an amazing multiplier effect.

We argue that government has an interest in supporting domestic solar panel manufacturing, via a production credit of the type used in the ARENA-administered Hydrogen Headstart program. This mechanism closes the gap between the price of imported solar panels, and the price that domestic panels can be sold. . A production credit is paid retrospectively, which means the products have to be made and the credit is raised at point-of-sale. This is not ‘free money’ – the manufacturer must have skin in the game.

It’s fortunate that the federal government, and in particular Energy Minister Chris Bowen, sees the need for such an arrangement as evidenced by the Solar SunShot program. It’s a timely program, because while Australia can’t compete dollar-for-dollar with the governments of China, the US and the EU, it can invest strategically to kickstart a domestic industry where there is huge and growing demand for the final product: solar panels (AEMO says five-times the current solar PV installed by 2050). It is also an industry in which Australian innovation and know-how has consistently been world leading. With the PERC cell, invented at UNSW, we had a competitive advantage and gave it away because we didn’t scale the industry. 

We have partnered development projects for a frameless panel (to facilitate solar sunlight roof panels) and an AgriPV panel that lets sunlight through so grass will grow. Manufacturing is the nexus for this sort of innovation and the Sunshot program will foster it up and down the supply chain.

Locally made panels incur less freight carbon miles and locally made goods provide better visibility of labour and environmental practices in the supply chain, a key risk in the renewables industry.  

Finally, Australia-made solar panels are high quality, they come with a 25-year warranty (as opposed to the 10 years of most imported panels), and Tindo panels are cyclone-rated, making them the obvious choice for Northern Australia.

Australian manufacturing can help power the energy transition, create jobs and economic growth, and ensure Australia always has a robust, high-quality panel for our unique climate. Solar Sunshot will make this possible by allowing Australian manufacturers to turn our most abundant resource – sunlight – into a sovereign energy capability.