$1bn solar manufacturing package in upcoming budget

Brandon How

The federal government will set aside $1 billion in subsidies and grants to support solar panel manufacturing across the entire value chain as part of a new Australian Renewable Energy package.

Prime Minister Anthony Albanese announced the package from the Hunter Valley on Thursday alongside several federal and New South Wales state government ministers.

The package is part the government’s response to generous manufacturing support programs overseas, such as the United State’s US$369 billion (A$564 billion) Inflation Reduction Act.

Production credits and grants will be awarded to photovoltaic manufacturing and associated infrastructure projects through the Solar SunShot program, although it is unclear how much money will be earmarked for each part of the value chain.

The Australian Renewable Energy Agency (ARENA) will be responsible for delivering the initiative and will work with industry on its design. Consultation will commence in mid-April.

The agency is expected to consider the entire value chain, “from ingots and wafers to cells, module assembly, and related components, including solar glass, inverters, advanced deployment technology and solar innovation”, the government said.

Prime Minister Anthony Albanese in 2022 alongside Climate Change and Energy minister Chris Bowen, before the 2022 federal election.

The program is a part of the Prime Minister’s broader ambition to turn Australia into a “renewable energy superpower” and a “clean manufacturing powerhouse”.

Following the announcement, energy giant AGL and solar panel startup SunDrive revealed they would undertake a feasibility study to build a manufacturing facility in the Hunter.

At the start of February, an ARENA-funded ‘silicon to solar’ roadmap, prepared by the industry representative group the Australian PV Institute, outlined the foundations needed for solar photovoltaic manufacturing.

The report recommended the introduction of decade-long production subsidies – similar to the design of the Hydrogen Headstart program – rather than a tax credit which is delivered under the IRA.

The work was completed as a part of a year-long project to identify “manufacturing opportunities across the solar PV supply chain in Australia from polysilicon, through wafers, cells and modules”, according to ARENA.

The federal government has been developing a response to the IRA through a taskforce made up of officials from the departments of Climate Change, Treasury and Industry since July 2023.

Further announcements will be finalised in the coming week for inclusion in the upcoming federal Budget in May. The Prime Minister said last month that “we don’t have to go dollar-for-dollar in our spending. But we can go toe-to-toe on the quality and impact of our policies”.

The value chain for photovoltaics is dominated by Chinese manufacturing, which accounts for 80 per cent of all production, according to the International Energy Agency.

Almost all of Australia’s newly installed solar panels are manufactured overseas. In 2022, less than 30MW worth of panels were assembled at Australia’s only commercial scale facility in 2022, operated by Adelaide-based Tindo Solar, using imported solar cells.

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

“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,” he said.

He said that Australia has deposits of “every metal and critical mineral necessary to be a central player in the net zero transformation”, making it well placed to 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,” Mr Albanese said.

At the launch of the funding package, Climate Change and Energy minister Chris Bowen said “this sort of announcement is impossible without whole of government efforts and the Industry minister and the Energy minister working hand in glove under the leadership of the Prime Minister”.

Alongside the federal government’s announcement, NSW minister for domestic manufacturing and government procurement Courtney Houssos announced that the first round of its $275 million Net Zero Manufacturing Initiative had opened to applications.

Do you know more? Contact James Riley via Email.

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