Australia is set to pump $1 billion into its solar power manufacturing industry as the Australian Government pursues its ambition for the nation to become a renewable energy superpower.

Prime Minister Anthony Albanese has announced that the Commonwealth Government will invest $1 billion into a new Solar Sunshot program.

The program will offer production subsidies and grants to support innovative manufacturing facilities and to enable efforts of Australian manufacturers to capture a greater share of the global supply chain.

Eligible activities will include solar module assembly, polysilicon production and production of ingots, wafers and solar PV cells.

The program may also support complementary aspects of the supply chain.

This could include solar glass, module frames, deployment technology and other innovation or manufacturing elements that are required for solar deployment.

It will be delivered by the Australian Renewable Energy Agency (ARENA), with development and design to be done in collaboration with the Department of Climate Change, Energy, the Environment and Water (DCCEEW).

Both ARENA and DCCEEW will publish a paper to commence consultation with regard to the program’s design later this month.

The paper will outline the proposed specifications for the program that will include program objectives, funding mechanisms and timing along with draft eligibility and merit criteria.

The latest announcement comes amid increasing concern across Australia and other countries about growing reliance upon China as a manufacturer of solar PV modules along with other products that are critical for the transition to clean energy.

Worldwide, the International Energy Agency expects that solar power will account for around 25 percent of electricity production by 2050, according to its 2022 World Energy Outlook report.

Recent modelling by leading academics suggest that this could be an underestimate and that in fact, solar power could provide more than half of the world’s electricity by 2050.

In Australia, solar power (utility scale and rooftop combined) accounted for 18 .4 percent of the nation’s electricity generation last year, according to the Clean Energy Australia report published by the Clean Energy Council.

More than one in three of the nation’s households have rooftop solar panels installed on their homes – the highest penetration of rooftop solar panels anywhere in the world.

Going forward, reliance upon solar power is expected to grow as the Australian Government aims to more than double renewable energy penetration from 39.4 percent of total electricity generation in 2023 to 82 percent of electricity generation by 2030.

As of 2022, however, Statista reports that China accounted for more than three quarters (78 percent) of solar PV module production worldwide.

In Australia specifically, a study by the Australian PV Institute puts Chinese penetration of the nation’s solar PV market at greater than 90 percent.

Only one percent of solar PV panels which are used around the country are locally manufactured.

Furthermore, the nation has only one company (Tindo) which is currently manufactures solar panels in commercial production.

As a result, the solar portion of the nation’s energy system remains exposed to overseas supply chain shocks.

Moreover, potential benefits associated with boosting domestic solar PV manufacturing capacity are significant.

According to the aforementioned Australian PV Institute study, even adding 5GW of solar PV manufacturing capacity could create up to 4,000 direct skilled and well-paid jobs, attract around $2.9 billion in upfront investment, create opportunities for adjacent industries (solar glass, module recycling, low carbon aluminium etc.) and unlock a manufacturing ecosystem for Australian technologies to scale up.

To be sure, there is scepticism about the ability of any local industry in Australia compete with low-cost product from China. This is especially the case given generous incentives provided by the Chinese Government to manufacturers in that country.

Writing in The Conversation, however, University of NSW Associate Professor Brett Hallam and Senior Lecturer Fiarce Rougieux argue that the program may help to create the market of suppliers which is needed in order to make solar panel manufacturing a reality.

Hallam and Rougieux say that an incremental approach using relatedly small, modest steps could yield significant results.

In parallel with Solar Sunshot, the NSW Government has announced that the first round of grants are now open  for the state’s NSW Net Zero Manufacturing Initiative.

Under that program, funding is available to accelerate research, development and commercialisation of emerging clean technologies; expand and increase local manufacturing of low carbon products and materials; and expand and increase the local manufacturing capacity of components for renewable energy.

The Solar Sunshot program was announced at the site of the former coal-fired Liddell Power Station.

(Australia has currently only one manufacturer of solar panels – Tindo Solar – whose product is in commercial production.)

In a statement, Australian Prime Minister Anthony Albanese said that the nation needs to capture greater value from our abundant supply of raw materials.

“Australia should not be the last link in a global supply chain built on an Australian invention,” Albanese said.

“I want a future made in Australia. And I want a future made in our regions.  Places like the Hunter that have powered our nation for more than a century will power our future.

“We have every metal and critical mineral necessary to be a central player in the net zero transformation, and a proven track record as a reliable energy producer and exporter.

“We can also invest in strategic manufacturing capability, particularly in components critical to the energy and economic transition, like solar panels.

“Historically, Australia has been good at going from the mining pit to port, and long may this continue. But the Australian Government will also invest in the path from pit to panels and capture more value for our economy and workforce.”

Clean energy industry bodies welcomed the announcement.

Kane Thorton, CEO of the Clean Energy Council, said that the project will deliver welcome support for solar panel manufacturing.

“Today’s announcement by the Albanese Government of the $1 billion Solar Sunshot program to support the manufacturing of solar panels in Australia through production subsidies and grants is a major shot in the arm that will underpin our future as a renewable energy superpower,” Thornton said.

“Australia has led the rest of the world in the research, development and uptake of rooftop solar systems, but we have thus far missed the opportunity to manufacture more of these components here at home. This is about to change.

“We are a country rich in renewable energy resources, such as land, coastline and sunshine that have yet to be harnessed to their full potential.

“More than 3.7 million Australian homes have installed rooftop solar, with almost half a million new systems being installed every year. This commitment will mean that more of these systems will contain products made right here in Australia.

“The missing piece of the puzzle here is establishing a strong sovereign manufacturing capability that captures this innovation and expertise to meet more of the extraordinary demand, both here and overseas, for solar products.

“We look forward to working with the Government on establishing a detailed design and timely implementation of this policy.”

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