From pv magazine print edition 4/24

Australian universities and research institutes have been a major influence on China’s PV boom, educating numerous Chinese solar engineers and senior executives.

China hosts 80% of global solar silicon, wafer, cell, and module manufacturing capacity and last year invested almost $200 billion (USD 130 billion) in the sector, according to analyst Wood Mackenzie. Its solar panels cost around $0.23/W, compared to nearest competitor India, at $0.34/W.

When Australian Minister for Climate Change and Energy, Chris Bowen, announced the Australian Renewable Energy Agency’s (ARENA) $357,000 contribution to the $1.12 million Silicon to Solar (S2S) report in July 2023, he noted that “over 80% of today’s global solar PV manufacturing uses technology developed in Australian laboratories.” He added that Australia relies “too heavily on overseas supply for our solar panels, which poses major risks due to production concentration and vulnerabilities in the supply chain.”

The Australian Photovoltaic Institute (APVI), the initiator of the S2S report – along with the Australian Centre for Advanced Photovoltaics, management consultancy Bright Dimension, ITP Renewables, and Deloitte – analyzed the potential for Australian PV manufacturing and the policy settings needed.

The main finding was that an industry producing 10 GW per year of polysilicon and 5 GW of ingots, wafers, cells, and PV modules would be “credible and feasible, under provision of the right government policy support.”

Quartz and all

S2S estimated every step of the solar supply chain that comes before module production would be double the cost of production in China, to start with. However, Australian module production costs would add up to $0.17/W compared with China’s $0.12/W, because heavy components, including aluminum and glass, could be made in Australia.

The minimum viable plant size for refining Australia’s abundant quartz reserves into solar-grade polysilicon is around 25,0000 tons, or 10 GW per annum. Just one facility would exceed Australia’s requirement and constitute an export-focused industry.

“This presents an opportunity to complement the IRA [the United States’ renewables-focused Inflation Reduction Act], which is currently anticipated not to stimulate sufficient poly-Si [polysilicon] capacity in the US,” said S2S.

Ingots and wafers

Ingot and wafer manufacturing is “highly specialised,” stated the report, and the latest intellectual property (IP) is owned by a handful of big Chinese companies. “If set up in Australia, an ingot/wafer facility would likely require a partnership with an international technology provider and could be scaled up by one, or a few, companies to service both a domestic and export market over time,” it said.

Government backing would be crucial, with the S2S report estimating $7.8 billion for production credits to fill that module cost gap, plus concessional infrastructure finance.

The hard cell

Cell manufacturing would be the toughest nut to crack, the S2S authors found. Cell production requires high-grade chemicals and overseas, IP-protected silver-paste technology. Despite healthy long-term prospects based on Australia’s track record in cell efficiency and manufacturing process improvements, S2S said that “large production capacity in China, the US, the EU, and India present a challenge to setting up … viable cell production domestically.”

Brett Hallam is an associate professor and Scientia Fellow at the University of New South Wales’ School of Photovoltaic and Renewable Energy Engineering and a senior consultant with ITP Renewables. The S2S co-author told pv magazine there is an opportunity to close the loop.

“Twenty years ago, China drew on the expertise of Australia to establish manufacturing for PV,” he said. “Now we’ve got the opportunity to learn from the best in the world about mass manufacturing of the lowest-cost and best solar panels on the market.”

S2S doesn’t shy away from challenges – including enlisting international technology partners, mitigating cell production chemical waste, and a lack of module certification capability to support rapid product development. Rather, says S2S co-author and ITP Renewables Principal Consultant Muriel Watt, “we wanted to do the detail and really spell it out so that people aren’t overwhelmed. We now know exactly the issues in each sector that we need to address. We have some idea of what kinds of policy are relevant for each sector and what are the most useful things we could do to push that along.”

High stakes

Australia expects to rely on solar for 70% of its future low-carbon energy. Rather than hydro or offshore wind, solar is where Australia shines – but not without panels. Supply chain disruptions such as those experienced during the pandemic, as well as ongoing conflicts in Ukraine and the Middle East, have highlighted Australia’s vulnerability.

One ARENA objective is to develop ultra-low-cost solar to power Australian green hydrogen and boost the manufacturing of green steel, aluminum, and other value-added industries.

“If you’re banking on your economic success over coming decades to be powered by solar technology, you need to think about how comfortable you are that the supply chains are so concentrated,” said ARENA Chief Executive Officer Darren Miller. “And that’s where the manufacturing opportunity starts – around security and reliability of supply.”

Short-term returns

S2S calculates that the $7.8 billion needed for a 10-year package of government support for solar manufacturing could attract upfront investment of $2.9 billion into cutting-edge manufacturing facilities, and could stimulate ongoing operational expenditure. That level of policy support should create 4,000 skilled jobs, stimulate growth in adjacent industries such as module recycling, and help retain Australian IP and solar talent, according to the report.

Long-term rewards

An Australian solar industry, contends S2S, would become the springboard for a manufacturing ecosystem to enable innovative Australian technology to scale up. That would unlock skills and knowledge spillover into other industries, with the nation making better use of its educated workforce.

The S2S report noted that Australia’s ranking on the international, 133-nation Economic Complexity Index (ECI) has fallen from 55th, when Harvard University launched the tool, to 93rd in 2023. Australia’s high standard of living is predominantly supported by selling raw materials such as iron ore plus fossil fuels coal and gas.

“If we’re going to turn around our economy in Australia before 2030, the sooner we start, the better,” said ITP’s Watt. “And solar makes absolute sense as a starting point because it’s the cornerstone of all the other discussions about green steel, green hydrogen, and becoming a renewable energy superpower – none of that happens without solar.”

Story to date

Australia is not starting from scratch. Adelaide-based module manufacturer Tindo Solar has carved out a market for high-quality modules with its impressive environmental, social, and corporate governance (ESG) credentials. Its products are largely manufactured from vetted overseas components and boast a 25-year Australian warranty.

At the turn of the 21st century, BP Solar was the southern hemisphere’s biggest solar panel manufacturer. Competition from cheap imports reduced its viability, and Silex Systems – which bought BP’s plant – tried to restructure the business before closing for good in 2012. It cited the impossibility of competing with China, a lack of government support, and a strong Australian dollar. The cost of labor would also become a reason for the country shedding other manufacturing industries, such as auto production. The slippery slope toward economic simplicity continued.

“Back in 2010, our founders were watching what had happened with China’s ramping up of PV production,” said Tindo Solar CEO Richard Petterson. “A lot of what was coming into the country was probably less than good and not designed for Australian conditions.”

The company saw an opportunity to produce panels that were high quality and suitable for Australia’s climate.

Today, said Petterson, Tindo Solar’s main customers are householders who want to buy high-performing panels and bask in the renewable energy bounty for at least a couple of decades. It is also pursuing a growing market among commercial and industrial (C&I) customers looking for long-term reliability and low maintenance paired with environmental, social, and corporate governance credentials that further boost their own ESG ratings.

“Our product uses about 125 kg of CO₂ for every megawatt made, compared to more than 550 kg/MW in China,” said Pet­­terson. That is mostly because Tindo has its own renewable energy supply, “but also we’re in South Australia, so that any energy we draw from the grid is predominantly renewable,” added the chief executive.

In many ways, Tindo Solar is a case study in what’s possible for a broader Australian PV manufacturing industry. It recently more than tripled its annual manufacturing capacity to 150 MW and started exporting to residential and C&I customers in Vietnam in 2023. It has plans to expand to 1 GW of capacity with a new plant on Australia’s east coast. But Petterson said the $100 million venture will need government support to be viable. Until now, over its 23-year lifespan, Tindo Solar has only received a very small government grant during the pandemic. Now, said Petterson, it is not only competing with cheaper imports but “with governments putting a lot of money into renewables” – a good thing for the planet.

“There has to be a determination on a production credit in Australia, to be able to make a very good product at scale,” he said. He added that he is also looking to mitigate the cost of commercial-scale land, which could constitute up to 70% of the cost of the company’s expansion. As such, Petterson is “in discussions with local and state governments” in Queensland and New South Wales. Both states recently announced multi-million Australian-dollar initiatives to stimulate manufacturing of renewable energy components, including those contributing to solar generation, energy storage, and green hydrogen production.

Australia’s $15 billion National Reconstruction Fund, established in October 2022, is a potential source of support for a homegrown solar industry. Its remit is to “diversify and transform Australia’s industry and economy.”

Petterson said that since the Tindo factory expansion, “we‘ve had all sorts of people coming in wanting to test ideas. That’s all innovation that otherwise has nowhere to go. When you’ve got a big production capacity, you’ve also got a big capacity for testing the next product range, and that’s why I’ve put substantial area aside in the proposed gigawatt-scale facility for us to be ready for that.”