# TOWARDS A RENEWABLE ENERGY SUPERPOWER

#### Industry opportunities for Australia to embrace the clean energy revolution

Prepared for Climate Action Network Australia and the Australian Manufacturing Workers’ Union


-----

## TABLE OF CONTENTS

Purpose of this report
Opportunities and actions
Australia’s role in clean energy supply chains

Mission-oriented industry policy
Clean energy supply chains
Threshold considerations

Australia’s clean energy opportunities
Clean energy compounding value proposition

Diversified battery supply chain

Wind tower manufacturing and offshore wind port infrastructure

Solar supply chain expansion

High voltage cable manufacturing

Electric heavy vehicle manufacturing

The need for government support
Summary of policy levers
Five priority actions for government


**6-7**

**8-9**
**10-11**
**12-13**

**14-15**
**16-17**

**18-23**

**24-31**

**32-37**

**38-43**

**44-49**

**51**
**52-53**
**54-55**


**© SGS Economics and Planning Pty Ltd & UTS Institute for Sustainable Futures, 2023**

Authors: Jeremy Gill, Chris Briggs, Maartje Feenstra, Scott Dwyer, Elsa Dominish, Tuyu Zhou,
Rowena Phua, Harvey Davies

This report has been prepared for CANA and AMWU. SGS Economics and Planning and ISF has taken all
due care in the preparation of this report. However, SGS and its associated consultants are not liable to any
person or entity for any damage or loss that has occurred, or may occur, in relation to that person or entity
taking or not taking action in respect of any representation, statement, opinion or advice referred to herein.

SGS Economics and Planning Pty Ltd
ACN 007 437 729
www.sgsep.com.au

OFFICES IN CANBERRA, HOBART, MELBOURNE, AND SYDNEY ON THE COUNTRY OF THE
NGAMBRI/NGUNNAWAL/NGARIGO, MUWININA, WURUNDJERI, AND GADIGAL PEOPLES.


-----

## Opportunities

**Our synthesis of existing studies and targeted interviews to map**
**supply chains identified a range of opportunities for Australia’s development**
**as a renewable energy superpower.**


and recycling.


Invest in enabling infrastructure to
increase local manufacturing for both
onshore and offshore wind power.


## Purpose of this report

This report, commissioned by Climate Action Network
Australia (CANA), the Australian Manufacturing
Workers’ Union (AMWU) and Boundless Earth and
undertaken by SGS Economics and Planning and the
UTS Institute for Sustainable Futures, brings to light
major industry opportunities for Australia in the global
clean energy sector.

The work is based on a synthesis of existing studies
and targeted interviews.

The report does several things:

technologies and identifies where opportunities

- Maps the supply chains of major clean energy

for greater investment in Australia lie

-  Outlines decision-making criteria to help
policymakers prioritise industries for Australia
to invest in

-  Identifies five key sub-sectors of focus
for Australia

-  Identifies potential policy levers to accelerate
this transition

-  Identifies five priority actions for government.


Onshore battery cell manufacturing
as well as end-of-life management


These priorities come from a detailed literature review
of publicly available studies and reports and from
targeted stakeholder interviews.


Develop domestic production of Build solar manufacturing based
high voltage cables for renewable on Australian innovation to achieve
energy transmission domestically Australia’s net zero targets, which
and to connect Australia to regional could create up to 60,000 jobs in the
neighbours, unlocking our potential as manufacturing sector.
a net exporter of clean energy.

Support the production of electric
heavy vehicles for domestic market
and explore the feasibility of
developing for export.

## Priority actions

**This report will also recommend five key initiatives that government**
**can take to realise the opportunities identified.**

Develop coherent industry policy Establish a fund to target capital
platforms for each target sector to to Australian companies, innovations
provide a clear roadmap for growth. and technologies that can scale

into exporters.

Implement a nation-wide approach Use government procurement to
to local content requirements to provide market demand through the
maximise impact and enable new establishment phase of business or
production capacity. new production capacity.

Use complementary workforce and
skill development programs to build
the skilled labour required.


-----

## Australia’s role in clean energy supply chains


**Global demand for critical minerals**
**and renewable energy is creating new**
**opportunities for Australia to leverage**
**our inherent comparative advantages as a**
**significant resources region to play a lead**
**role in the clean energy transition.**

But there is a need to learn from our past and
move away from our dig and ship mindset to one
of value-adding if we are to become, in the words
of Ross Garnaut, a renewable energy superpower.
Australia can, or is already, playing a role in a
number of major clean energy technology sectors,
including solar, wind, critical minerals, battery
energy storage and electric vehicles (EV), although
our participation is often thin, with a handful of
companies involved.


Australia’s reputation in the clean energy sector
is complex. We are global leaders in the research
and development (R&D) of certain technologies,
particularly around solar photovoltaic (PV)
technologies, we have some of the best renewable
energy resources in the world and land mass. Yet
much of our contribution to date is bound up in our
reputation as a ‘dig and ship’ economy, where our
mineral resources are mined and then sent offshore
for processing and manufacturing, before returning
as consumer goods.

This is reflected in the significant growth in mining
as a share of Australia’s economic activity, and
a concurrent flatlining of business services and
decline in manufacturing over the past decade,
reflecting Australia’s fall in global economic
complexity rankings.


A number of global and regional forces are
compelling Australia to re-evaluate our role in the
clean energy sector:

-  Geopolitical factors are forcing Australia (and
other developed economies) to re-evaluate
global trade dynamics.


While there are global supply chains that support
these sectors, Australia’s comparative advantages
in resources, solar and wind and R&D provide a
significant opportunity to invest in more downstream
value-adding activities.

In the face of significant global investment in the
clean energy sector, most notably in the United
States’ Inflation Reduction Act (US IRA), Australia
must identify key areas for investment in order to
ensure we do not get left behind in the clean
energy transformation.



-  Global supply chain shocks have reignited
the debate about the importance of domestic
manufacturing capabilities and capacity
and the importance of nearshoring and
friendshoring.

-  Climate change is necessitating the rapid
decarbonisation of global economies.



-  Australia’s declining economic complexity
risks us falling behind.


Agriculture Mining Manufacturing Business services

1901 1912 1923 1934 1945 1956 1967 1978 1989 2000 2011 2022


35

30


Material End of life/
R&D Mining processing Manufacturing Distribution Construction Operation/usage recycling

**Current** **Potential**


**Australia’s role**


25

20


15

10


Illustrative purposes only. Changing macroeconomic structure of the Australian economy since Federation.
Source: Compiled by SGS Economics and Planning from Australian Bureau of Statistics data sets.


-----

## Mission-oriented industry policy


**Political agenda setting**
**and civic engagement**

**Clear targeted**
**missions**

**Portfolio of projects**
**and bottom-up**
**experimentation**


**This study highlights the large number**
**of possible industry and clean energy**
**opportunities available to Australia.**

**The question is: which ones are the most**
**appropriate for Australia to pursue?**

There are many factors that can determine
investment direction and industry policy, and a
series of questions to help frame this decisionmaking are made on page 13.

However, this should be predicated on some
form of highest order imperative. Mariana
Mazzucato’s ‘mission-oriented approach’ to industry
development provides a good frame for this by
first defining the ‘grand challenges’ that a country
(or the world) needs to address and then defining
discrete ‘missions’ that help to address these
grand challenges.


In the example provided, realising the United
Nations Sustainable Development Goals (SDG)
is seen as the grand challenge, but this could
equally be framed as:

-  Addressing climate change

-  Creating an equitable and generative
national economy

-  Securing domestic sovereignty in
critical industries

-  Increasing national economic complexity

-  Becoming a renewable energy superpower.

Each of these would be driven by targeted missions
and supporting projects that would work towards
overcoming the grand challenge.

Identifying the key industries to invest in within the
clean energy suite of opportunities is more easily
determined when the grand challenge that Australia
is seeking to address is clear.


**SUSTAINABLE**
**DEVELOPMENT**
##### GOALS

**GRAND**
**CHALLENGES**

###### MISSION MISSION

**Mission** **Mission**
**projects** **projects**

**Mission**
**projects**


Source: M Mazzucato, Mission Oriented Innovation: Reframing the direction of economic growth, N.D,
[https://www.oecd.org/naec/NAEC_ Mazzucato.pdf, accessed 11 November 2023.](https://www.oecd.org/naec/NAEC_ Mazzucato.pdf)


Becoming a renewable energy superpower could
be considered the grand challenge for Australia.

It could also be considered a mission to address
the higher order grand challenge of global
decarbonisation and climate change mitigation.
Either way, it presents an important arranging
principle for Australia’s clean energy industry
policy ambitions.

**Why is this strategic mission objective**
**important? Because it can send Australia**
**down very distinct paths.**


If rapid acceleration of renewable energy
generation is the primary driver, it may continue
to perpetuate the export of raw materials and the
reliance on global supply chains and the continued
risks associated with being a small buyer in a larger
global market.

If Australia wants to leverage the investment in
renewable energy to build capacity in the domestic
manufacturing sector, then this may have higher
costs and longer delivery times but increases
economic and energy resilience as a long-term
outcome.

It is important, therefore, to not only understand the
_what and the how of Australia’s clean energy_
superpower aspirations but also the why.


-----

Supply chain activity Existing national capability National opportunity

Note: Distribution and construction are not a focus of this report and have been greyed out
to indicate their role in the supply chain but not to draw attention to the opportunities.

**Battery energy storage**

Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling


## Clean energy supply chains

Australia plays a key role in the global supply chains of
many of the clean energy technologies, however, most
of our contribution is in the mining of resources such as
iron ore, aluminium and critical minerals.

While there are existing capabilities across other parts
of these supply chains, they tend to be relatively thin,
sitting with a small handful of companies or in R&D
across universities.

Examples include world-leading photovoltaic cell R&D at
the University of NSW, wind tower and cage manufacturing,
and heavy vehicle manufacturing and assemblage.

When plotted on the supply chains of the various
technologies, what is clear is that Australia has not
sufficiently captured supply chain adjacencies in any
of the technologies.

The following diagrammatic illustrations of these major
technology supply chains relevant to Australia highlight
where gaps in Australia’s capability lie that, if addressed,
could build on existing core advantages to develop more
complex clean energy supply chains.

These supply chain maps, while high level, identify the
broad supply chain steps for each technology where
Australia has some current capability and where there are
opportunities for expansion.


Nickel

Lithium Critical
Rare earths mineral
Copper refinement

Silica

**Solar photovoltaics**


Battery Battery Domestic Commercial/
cell pack industrial


Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling


Silica Polysilicon
Quartz refinement
Alumina


Ingots Solar Solar Framing
cells* modules



-  Capability exists in small number of companies


**Wind**

Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling

Iron ore Iron
Rare earths Steel
Copper
Nickel


Operation/ End of life/
usage recycling

Iron ore Battery
Rare earths materials
Copper recovery
Nickel


Domestic/ Commercial
passenger (heavy vehicle)/
bus/mining

Operation/ End of life/
usage recycling


Iron ore
Rare earths
Copper
Nickel
Silica
Alumina

**Electric vehicles**


Blades Nacelle Tower Foundation


Material
R&D Mining processing Manufacturing Distribution Construction

Iron ore
Rare earths
Copper
Nickel
Silica Batteries Chassis Components Assemblage
Alumina

**High voltage cable manufacturing**

Material
R&D Mining processing Manufacturing Distribution Construction


Nickel

Iron ore Critical Shipping Undersea
Rare earths mineral cable laying
Copper refinement

Silica
Alumina

**Green metal manufacturing**


Rod HV cable Undersea Transmission
production cable line


Material
R&D Mining processing Distribution

Iron ore
Aluminium


Green iron Green steel


Operation/ End of life/
usage recycling

Domestic Commercial/
industrial


Illustrative purposes only.


-----

## Threshold considerations

**If we take the overarching ambition for Australia**
**to become a global renewable energy superpower,**
**there are a wide range of opportunities that exist**
**across Australia’s economy to realise this.**

Some of these are already underway, driven by the
private sector. Others are more speculative. They sit
across all of the technology types associated with the
clean energy sector.

In his keynote address to the Economic and Social Outlook
Conference in November 2023, Treasurer Jim Chalmers
outlined four priority areas for government focus in the
clean energy transition:

-  Refining and processing critical minerals

-  Supporting manufacturing of generation and
storage technologies

-  Producing renewable hydrogen and its derivatives

-  Forging green metals.

These were defined through a series of five productivity
tests that were outlined in his speech.[1]

The second of these – supporting manufacturing of
generation and storage technologies – is the focus of this
summary report: identifying which sectors may be worth
supporting through significant government funding and
policy attention to achieve success.

1 J Chalmers, Energy, the economy, and this defining decade [speech transcript], 2 November 2023.
[https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/keynote-address-economic-](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/keynote-address-economic-and-social-outlook-conference)
[and-social-outlook-conference](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/keynote-address-economic-and-social-outlook-conference)


**To better understand the opportunities that could be prioritised,**
**six threshold questions can be asked:**


### 1. Does the opportunity directly
**align with existing core capabilities of**
**Australian industry?**

Is there an existing industry specialisation or
comparative advantage that Australia has that is
established in the Australian economy?

### 2. Does the opportunity meet a
**significant domestic demand?**

Is there a current or future industry within Australia
that will create a domestic market for the product
being developed?

### 3. Does the opportunity unlock an
**export market for Australia or allow the**
**sector to reach a global minimum scale?**

Is there a current or future export market that
domestic production can tap into?

Does a combination of domestic and export
markets allow Australia to compete through
sufficient production scale?


### 4. Does the opportunity reduce
**supply chain constraints or geo-political**
**risk?**

Are there existing supply chain blockages or is the
supply chain dominated by a small cohort that risks
supply chain delays from high global demand
or geo-political trade tensions that domestic
manufacturing could take advantage of?

### 5. Does the opportunity help the
**Australian economy to deepen its**
**complexity?**

Will the industry increase value-adding and create
opportunities for more diverse and high-skilled jobs
across the economy?

### 6. Does the opportunity require
**government intervention to overcome**
**market barriers?**

Is direct government intervention required to
realise the opportunity due to the need for
underwriting, capital certainty, infrastructure or
trade agreements?

Is there complexity in the government response
through multiple levels of government coordination
or where regulatory systems unduly inhibit speed
to market?


-----

## Australia’s clean energy opportunities

A review of available literature and targeted stakeholder
engagement has identified several key opportunities for
Australian industry to move towards becoming a renewable
energy superpower.

Each of these in some way aligns with or leverages existing
core industry capabilities, fills in a supply chain gap, shores
up domestic demand or unlocks significant export potential
for Australia.

They also represent opportunities that, due to the scale
of transformation, early mover risk or global competition,
require some form of government support, either through
direct funding or in-kind support.

Each of these presents as an opportunity in its own
right, however, the mapping of these technologies and
sectors on the following pages also highlights the possible
inter-dependencies that each has that can create a
compounding value proposition for Australia to realise its
renewable energy superpower ambitions.

Three things stand out from this mapping:

-  Critical mineral refinement and green hydrogen are
‘keystone’ upstream opportunities, as they unlock
several downstream sector opportunities.

-  A concurrent focus on multiple clean energy sectoral
pathways will speed up domestic ability to meet
domestic clean energy demand and hasten speed
to market for key components of the global supply
chain, creating significant export potential.

-  Rapid development of clean energy increases
capacity to create green hydrogen, accelerating
decarbonisation efforts in global manufacturing
supply chains, with Australia playing a lead role.


**Diversified battery**
**supply chain**

Develop domestic production capability
for the manufacturing of battery cells and
pack assembly for both domestic and
export markets and incorporate recycled
materials in a circular supply chain.

**High voltage**
**cable manufacturing**

Develop domestic production of high voltage
cables for renewable energy transmission
domestically and to connect Australia to
regional neighbours and unlock our potential
as a net exporter of clean energy.

**Electric heavy vehicle**
**manufacturing**

Support the production of electric
heavy vehicles for the domestic
market and explore the feasibility
of developing for export.


**Wind tower manufacturing**
**and offshore wind port**
**infrastructure**

Develop wind tower manufacturing
capacity and the local steel supply chain
for the $20 billion-plus domestic on- and
offshore market.[2]

**Solar supply**
**chain expansion**

Building solar manufacturing based
on Australian innovation to achieve
Australia’s net zero targets could
create up to 60,000 jobs in the
manufacturing sector.[3]

**Each of the five priority**
**opportunities are examined in more**
**detail in the following pages.**

2 UTS Institute for Sustainable Futures, 2023.
3 SunDrive, Australian Solar Manufacturing Net Zero Industry Policy, 2023.


-----

## Clean energy compounding value proposition

Each opportunity identified holds signficant potential
on its own. However, when mapped as a system,
the interdependencies between them become clear.

This highlights the scalable opportunity of a
multi-technology investment approach to drive Australia
towards becoming a renewable energy superpower.


**Existing capability**

**Current focus**

**Potential capability**

**Keystone opportunities**

**Global supply shortage**


**End-of-life**


**Critical mineral**
**resources** **resource recovery**

**Critical mineral** **Battery cell** **Pack**
**refinement** **manufacturing** **assembly**

**Domestic**
**market**

**Export market**

**Specialised EV**
**manufacturing** Direct HVDC

connections to SE Asia

**(heavy vehicles,**
**mining)**

**Polysilicon** **Ingot** **PV cell** **PV cell** **Domestic market** **Clean energy**
**manufacturing** **manufacturing** **R&D** **production** **generation**

**Copper/aluminium** **HVDC cable**
**rod production** **manufacturing**

**Green hydrogen**

Production of green hydrogen and/or industrial scale clean energy will
add further value by creating a domestic green manufacturing base

**Wind tower and**

**Green iron**

**cage manufacturing**


-----

## Diversified battery supply chain

**Develop domestic production capability**
**for the manufacturing of battery cells and**
**pack assembly for both domestic and export**
**markets and incorporate recycled materials**
**in a circular supply chain that is currently**


**going offshore.**


-----

production cable line
Alumina

**Diversified battery supply chain**


## Diversified battery supply chain


Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling


## Opportunity overview


###### Does the opportunity directly align with existing core capabilities of Australian industry?

-  Australia mines 9 of the 10 minerals required
for most lithium batteries, including lithium,
cobalt, nickel, copper and manganese, which is
a major source of comparative advantage that can
be leveraged.

-  Increasing focus on domestic critical mineral
refinement and processing as well as some
manufacturing capacity.

-  Low-cost renewable energy can also be leveraged.

-  Current recycling capabilities only allow for the
creation of low-quality battery products or chemicals
for cathode manufacturing, and most material
streams go overseas for recovery, but they could be
extended to convert lithium-ion (Li-ion) batteries to
link into emerging material processing.

###### Does the opportunity meet a significant domestic demand?

-  While Australia is not likely to become a mass
producer of passenger EVs, there is a strong
sub-market in heavy vehicle manufacturing,
assemblage and maintenance.

-  Growing demand for large scale battery
storage solutions.

-  There is a large domestic demand for a wide
range of battery products, with Australia’s very
high penetration of solar making it a prime market
for battery installations.

-  Batteries for recycling are currently exported to
Korea, but this could be done locally.


Lithium Critical
Rare earths mineral
Copper refinement
Nickel

Battery Battery Domestic Commercial/

Silica

cell pack industrial


Supply chain activity Existing national capability National opportunity


**Expanded solar supply chain**


Material Note: Distribution and construction are not a focus of this report and have been greyed out to indicate their role in the supply chain but not to draw attention to the opportunities.Operation/ End of life/
R&D Mining processing Manufacturing Distribution Construction usage recycling

###### Does the opportunity unlock an Silica Polysilica Does the opportunity help the export market for Australia orQuartzAlumina refinement Battery energy storageAustralian economy to deepen

Material Op
R&D Mining processing Manufacturing Distribution Construction usa

###### allow the sector to reach a Ingots Solar Solar Framingits complexity? global minimum scale? cells* modules

Rare earths mineral

-  A report commissioned by the Future Battery Copper beyond our current resource exports. There are refinement
Industries Cooperative Research Centre Nickel Silica also synergies between battery manufacturing and the development of mining and new Battery cell Battery pack Domestic

- There would be significant value-adding
beyond our current resource exports. There are

(FBICRC) and authored by Accenture identifies

processing capacity.

opportunities to export to trading partners

**Solar photovoltaics**

seeking to diversify their supply chains.[4]

-  Upstream value-adding will drive demand for Material Op

R&D Mining processing Manufacturing Distribution Construction usa

high-skilled jobs.

-  Australia could develop niches such as batteries
for high-temperature environments.

Silica -  Manufacturing will drive demand for a range   Polysilicon
Quartz refinement
Alumina of jobs from semi-skilled to highly skilled.

###### Does the opportunity reduce Ingots Solar Solar Framing

-  Spillover impacts can flow into other associated cells* modules -  Capability exists in

###### supply chain constraints or

sectors such as EV and other electronics.

###### geo-political risk? Wind

-  Opportunity to develop capabilities in emerging Material Op

-  Global battery demand is increasing R&D Mining battery technology R&D and manufacturing. processing Manufacturing Distribution Construction usa
exponentially, creating the risk of global supply
chain shortages. Iron oreRare earthsDoes the opportunity require IronSteel

Copper
Nickel

-  Battery manufacturing is highly geographically Silica **government intervention toBlades** Nacelle Tower Foundation

###### government intervention to

concentrated, creating risks of supply shocks Aluminaovercome market barriers?
resulting from geopolitical factors.

**Electric vehicles**

-  Significant investment is required to develop

-  The development of local battery supply chain industry capability, creating demand and Material Op

R&D Mining processing Manufacturing Distribution Construction us

capacity is increasingly viewed as a national support in establishing facilities.
security priority given the central role battery

Iron ore

storage is going to play. Rare earths• Shared infrastructure requirements in key

CopperNickel manufacturing precincts (co-located with

-  Reuse and recycling of battery products Silica resource extraction) cannot be done by   Batteries Chassis Components Assemblage Domestic/
can reduce the pressure on importing newly Alumina private enterprise. passenge
produced batteries.

**High voltage cable manufacturing**

-  Investment in advanced battery chemical
refining industries, battery collection  Material Op

R&D Mining processing Manufacturing Distribution Construction us

frameworks and formulation of best practice
guidelines is required.

4 Accenture & Future Battery Industries Cooperative Research Centre, Iron ore Critical Shipping Undersea
_Charging Ahead: Australia’s battery-powered future, FBICRC, 2023._ Rare earths mineral cable laying

Copper refinement


-----

## Diversified battery supply chain


###### Competitive advantage drivers

-  Australia’s key source of competitive advantage
is battery mineral wealth and mining capacity.
Over half the cost is in material processing,
and there is a competitive advantage in
co-location because the costs of transporting
materials are significant.

-  Manufacturing and labour costs are a relatively
minor component (10%) and comparable to
competitors. The factors that often count against
Australia are reversed in this case, and domestic
mineral reserves are a key source of competitive
advantage.

-  There are other sources of competitive
advantage in Australia’s low-cost renewables,
high reliability and security as a trade partner,
strategic trading alliances, and strong ESG
standards compared with other resource
rich countries.

-  Global supply chain shortages and a desire
by many countries to diversify global supply
pathways to minimise geo-political risk
associated with concentrated producers.

-  Together, these factors create an opportunity
to export to trade partners seeking to
decarbonise and ensure the ethical certainty of
supply chains.

-  Domestic demand, from niche markets such
as heavy vehicles (mining, trucks and buses)
through to advanced development of battery
storage systems could also provide a foundation
for local industry development.

-  Established export infrastructure connecting to
countries further along the battery supply chain
(e.g. car producing nations of South-East Asia).

-  Growth of domestic passenger and commercial
vehicle fleets will create a longer term pipeline
of old batteries for resource recovery and supply
chain reintegration, coupled with forecast global
lithium supply shortages by 2030.[7]

-  Environmental advantages in redirecting Li-ion
battery products from landfill to recycling.


###### Investment and policy levers

The Accenture/FBICRC report notes that the
US IRA creates significant challenges for cell and
pack manufacturing. However, it recommends a
focus in government policy on developing active
mineral processing and cell manufacturing to
build a diversified supply chain. A number of key
policies and interventions are identified to develop
Australia’s battery manufacturing capability.

In summary, these include:

-  Supporting international alliances to overcome
trade protection e.g. direct subsidies and/or tax
incentives for domestic producers

-  Supporting industry attraction and coordination

-  Strategic targeting of global firms as
‘lighthouse tenants’

-  Provide access to capital

-  Direct investment in hub development

-  Supporting export partnerships

-  Develop strategic relationships with
regional supply chain partners

-  Negotiate or revisit bilateral
trade agreements

-  Support Australian businesses
entering export markets

-  Increasing domestic demand

-  Use progressive procurement policies for
Australian-made batteries

-  Incentivise or require businesses to use
Australian-made batteries through local
content requirements

-  Provide offtake guarantees to give
supply certainty

-  There is a need for policies, right-to-repair,
product stewardship and other initiatives to
stimulate battery recycling.

5 Ibid.

6 A Best and C Vernon, State of Play: Australia’s Battery Industries, CSIRO,
Australia, 2020.

7 Accenture & FBICRC, Charging Ahead: Australia’s battery-powered future,
FBICRC, 2023.


## Opportunity detail


###### Rationale

**Cell manufacturing opportunity**

Accenture and the FBICRC suggest that building a
national diversified battery supply chain that includes
processing, manufacturing, services and recycling in
Australia could contribute $55.2 billion in additional
GDP and $16.9 billion in GVA.

Accenture identifies three strategic benefits for Australia
to develop a cell manufacturing industry:

-  Facilitates value chain development upstream

-  Provides supply chain sovereignty for
Australia to meet domestic energy security
and defence needs.

-  Drives technology improvements and sets
upstream standards.

Excepting US IRA subsidies, Accenture also concludes
that Australia would be globally cost-competitive
in cell manufacturing. Australia’s reliability, strong
environmental, social and governance (ESG)
performance and costs could enable the development
of an export sector into countries diversifying supply
chains, especially in Asia.[5]

**Onshoring battery recycling**

Most Li-ion batteries are disposed in landfill. Australian
battery recycling is currently limited to disassembly and
rendering into a suitable feedstock stream for metal
recovery overseas.[6] A local battery recycling industry
could be developed if barriers such as collection and
processing are overcome.


-----

## Wind tower manufacturing and offshore wind port infrastructure

**Develop wind tower manufacturing capacity**
**and the local steel supply chain for the**
**$20 billion-plus Australian market. Port**
**infrastructure for offshore wind could unlock**
**increased local manufacturing.**


-----

Ingots Solar Solar Framing
cells* modules -  Capability exists in small number of companies

**Wind tower manufacturing and offshore wind port infrastructure supply chain**


## Wind tower manufacturing and offshore wind port infrastructure


Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling


Iron ore Iron
Rare earths Steel
Copper
Nickel

Silica
Alumina


## Opportunity overview


###### Does the opportunity directly align with existing core capabilities of Australian industry?

-  There are two established wind tower manufacturers
in Victoria and Tasmania.

-  There is steel manufacturing and a supply chain
with the capacity to make the rolled plate for
onshore wind towers, but investment would be
required in new capacity for tower manufacturing
production lines.

###### Does the opportunity meet a significant domestic demand?

-  There will be a large domestic demand for wind
towers over the coming years and decades. Based
on Australian Energy Market Operator (AEMO)
scenarios, the market could range from $20 billion
(Step Change scenario) to $80 billion (Hydrogen
Superpower scenario).

-  Offshore wind could also be a source of alternative
employment for coal and oil and gas workers as our
energy system transitions.


Blades Nacelle Tower Foundation


**Electric heavy vehicle manufacturing supply chainSupply chain activity** Existing national capability National opportunity

Material Note: Distribution and construction are not a focus of this report and have been greyed out Operation/ End of life/
R&D Mining processing Manufacturingto indicate their role in the supply chain but not to draw attention to the opportunities.Distribution Construction usage recycling


Iron ore Battery

###### Does the opportunity unlock an Rare earths Battery energy storageDoes the opportunity help the materials

Copper recovery

###### export market for Australia orNickel Australian economy to deepen Material Op

Silica BatteriesR&DChassis ComponentsMiningAssemblage processing ManufacturingDomestic/ DistributionCommercial Construction usa

###### allow the sector to reach a Alumina its complexity? passenger (heavy vehicle)/ global minimum scale? Lithium Critical

(heavy vehicle)/
bus/mining

**High voltage cable manufacturing supply chainRare earths Copper** -  Modest impact – it would expand the steel manufacturing supply chain.mineral refinement

-  No – the opportunity is to supply Nickel

passenger

- Modest impact – it would expand the steel

R&Ddomestic demand. Mining Material processing ManufacturingSilica Distribution ConstructionBattery cell Battery pack Operation/usage End of life/recycling Domestic

**Solar photovoltaics**

###### Does the opportunity reduce Iron oreRare earths Critical mineral Does the opportunity require ShippingMaterial Underseacable laying Op

Nickel

###### geo-political risk?SilicaAlumina production Silica overcome market barriers?Polysilicon cable line

|sR& Dor Mining goveprrocnesmsingentM iannutfaecturrivngentDiisot Rod HV cable Undersea Tra|rinbu|
|---|---|
||nsm|


Quartz refinement

-  Wind tower manufacturing is concentrated     Alumina• The key enabler is an offtake agreement or

**Diversified battery supply chainin China.** local content rules to create market certainty for Ingots Solar cells* Solar modulesFraming -  Capability exists in

investment in new manufacturing facilities.

R&D• Onshore wind experienced the largest cost Mining Material processing **WindManufacturing** Distribution Construction Operation/usage End of life/recycling

increase of all renewable energy technologies -  Capital grants may be required for investment  Material Op
due to global supply chain issues arising R&D Mining in new manufacturing facilities.processing Manufacturing Distribution Construction usa

in new manufacturing facilities.

Lithium Critical

from Covid – estimated by the CSIRO to be Rare earths mineral

Nickel Rare earths Steel

- Port infrastructure for offshore wind.

R&D Mining

The CSIRO notes  Iron ore

that higher costs will continue until 2027, Silica Battery Battery Copper Domestic Commercial/

cell pack industrial

but could be longer if higher demand arises NickelSilica Blades Nacelle Tower Foundation
internationally that continues the extension of Alumina
tighter supply-demand balance.

**Electric vehicles**

**Expanded solar supply chain**

Material Op

Material R&D Mining processing Manufacturing Operation/Distribution End of life/Construction us

R&D Mining processing Manufacturing Distribution Construction usage recycling

Iron ore


Silica Polysilica Rare earths
Quartz refinement Copper

Nickel

Alumina Silica Batteries Chassis Components Assemblage Domestic/

Ingots Solar Solar AluminaFraming passenge
cells* modules

**High voltage cable manufacturing**

Material Op
R&D Mining processing Manufacturing Distribution Construction us


Iron ore Critical Shipping Undersea
Rare earths mineral cable laying
Copper 8 P Graham, J Hayward, J Foster, L Havas, refinement _GenCost 2022-23: Final report, CSIRO,_
Nickel [Newcastle, 2023. https://doi.org/10.25919/zmvj-tj87](https://doi.org/10.25919/zmvj-tj87)

Rod HV cable Undersea

Silica production cable


-----

## Wind tower manufacturing and offshore wind port infrastructure


## Opportunity detail


###### Rationale

There is a large forward market in Australia for wind
towers as part of the energy transition, both to replace
the coal fleet but also potentially to underpin the growth
of manufacturing and export of hydrogen.

Based on the AEMO’s 2022 Integrated System Plan
and current wind tower prices, the value of wind towers
required is estimated to be approximately:

-  $6 billion (Step Change scenario) to $12 billion
(Hydrogen Superpower scenario) to 2030

-  $12 billion (Step Change scenario) to $32 billion
(Hydrogen Superpower scenario)

-  $19 billion (Step Change scenario) to $82 billion
(Hydrogen Superpower scenario) by 2050.[9]

Australia has a small existing wind tower manufacturing
capacity but strengths in steel manufacturing.

There are key strategic benefits to Australia developing
a wind tower manufacturing industry:

-  Producing a portion of the wind towers required
for Australia’s build-out can reduce supply
chain risk and exposure to geo-political and
market disruptions. The wind supply chain
was the most impacted by Covid, with the
highest price increase of an estimated 35%.
This will be especially important if Australia
requires scaling up to power hydrogen and
manufacturing exports.

-  Development of the local steel supply chain
could have flow-on benefits for offshore wind
towers and pumped hydro pipes.


###### Competitive advantage drivers

-  The development of wind tower manufacturing
would be to supply the domestic market.

-  There are cost savings from reduced transport
costs, but overall estimates of the cost premium
for local wind towers are generally 15-20%,
though some developers claim it is 30-35%.

-  Wind towers account for around 10% of the cost
of wind farms. Consequently, if, for example, half
of the wind towers were made locally, it would
add around 1-2% to the cost based on pre-Covid
prices – less if there are global supply chain
price increases.

-  The benefits of local production are speed
to market and reduced exposure to supply
chain risk.

-  Whilst Australia has low existing capacity in
wind tower manufacturing, there are major steel
manufacturers, such as Bluescope, that have
expressed interest in wind tower manufacturing
and allocated space for a facility.

-  There is also a supply chain that can be scaled
up to support wind tower manufacturing. A
manufacturer interviewed for a study for the
NSW Renewable Energy Sector Board quoted
a manufacturer stating: ‘We know at least
four fabricators that have said if they have the
funding or investment, they would be able to
start production on wind towers as soon as
possible.’


###### Investment and policy levers

There are a number of investment and policy levers
to be considered:

-  Production subsidies for the establishment of
new production facilities.

-  Offtake agreements or local content
requirements – the major element that is
required is the market certainty to enable
investment in new production facilities.

-  Engagement and coordination between local
manufacturers and developers and EPCs
who currently prefer to source inputs from
established global supply chains.

It’s important to note the workforce and skill
shortages that are impacting many sectors are
relatively weak for wind tower manufacturing.
Most of the jobs are semi-skilled – the workforce
can be trained through a mix of TAFE and
accredited on-the-job training.

9 Analysis by report authors and P Toner. Estimate is based on current tower prices,
as estimated by Australian Welding Institute, of $1.6m per tower and an average of
5 megawatts per tower.


-----

## Offshore ports and manufacturing


## Opportunity detail


###### Rationale

Fit-for-purpose port infrastructure is a key enabler
for offshore wind developments and local industry
development. Offshore wind is proving the catalyst
for major port refurbishments in the USA, Scotland
and Denmark, and wider modernisations of ports.

Turbine assembly and staging occurs port-side for
floating wind and associated upgrades are required
for storage, fabrication and assembly of the massive
turbines. Manufacturing and fabrication in areas such
as towers, secondary steel and substructure fabrication
and on-going maintenance develops at and nearby
revamped ports.

There are a number of strategic benefits:

-  Reduced supply-chain risk and exposure to
geo-political and market disruptions – there is
a high risk of supply chain constraints as larger
Asia-Pacific markets scale up offshore wind.

-  Development of the local steel supply chain
building upon and transitioning heavy industrial
economies.

-  Developing offshore wind infrastructure could
interlink with the development of green hydrogen
production for port-based export facilities and
local heavy industry (e.g. green steel) and as a
transport fuel.


###### Competitive advantage drivers

-  Australia has internationally competitive
offshore wind speeds, which have attracted a
large number of global firms.

-  The development of offshore wind tower
manufacturing could follow the development
of onshore wind tower manufacturing. Australia’s
existing capability is limited to smaller width
pieces (i.e. around 5 metres). New capability
would need to be developed to roll larger 8-10
metre diameter pieces required for offshore
wind farms.

-  Some types of manufacturing are not likely to be
viable for Australia, such as blades, but Australia
could develop local manufacturing capacity in
secondary steel (e.g. ladders, internal platforms
and ship access platforms) and sub-structure
elements either for fixed-bottom turbines. The
National Renewable Energy Laboratory has
noted most shipyards could be adapted to
produce jacket foundations – or floating wind
turbines (e.g. spar buoys and tension legs).

-  The key enablers for local manufacturing are:

-  Deep water ports with suitable infrastructure

-  Surrounding heavy industry and workforce
to support manufacturing and installation

-  Proximity to existing grid infrastructure.

-  NSW in particular has many of the preconditions, with existing clusters of industries
and workforces with skills in steelmaking, power
generation, engineering and marine logistics.


###### Investment and policy levers

Australia will need a robust and nationally
coordinated approach to industry development if
it is to capture a greater share of the economic
benefits in offshore wind. This will require early and
ongoing collaboration with windfarm developers,
supply chain businesses, international firms,
leading R&D businesses and government.

Supply chain confidence will need to be established
to enable investment through collaboration
between federal and state governments to provide
confidence that Australia has a strong pipeline of
offshore wind farm developments.

To develop local manufacturing capabilities:

-  Develop local content requirements associated
with licencing of offshore wind zones

-  Investigate joint ventures with other wind farm
developers or international manufacturers to
develop local manufacturing facilities

-  Facilitate loans to fund expansion of facilities,
with repayment terms linked to the proponent’s
production

-  Commission detailed feasibility studies for
port infrastructure redevelopments and build
collaboration between governments and port
owners to enable investment

-  Conduct an evaluation of specific technology
opportunities for offshore wind supply chain
development and a detailed gap analysis
of prospective supply chain opportunities to
understand the requirements for developing
the workforce, equipment and facilities for
local manufacturing.


-----

## Solar supply chain expansion

**Building solar manufacturing based on**
**Australian innovation to achieve Australia’s**

**jobs in the manufacturing sector.**


**net zero targets could create up to 60,000**


-----

## Solar supply chain expansion


**Expanded solar supply chain**

Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling


## Opportunity overview


###### Does the opportunity directly align with existing core capabilities of Australian industry?

-  Australia has the raw mineral inputs required for
polysilicon manufacturing and globally leading
R&D capabilities.

-  Rapid acceleration of clean energy production
creates a further competitive advantage by creating
opportunities for developing a decarbonised
domestic manufacturing sector.

-  Building solar manufacturing based on
Australian innovation.

-  The right support – financial and product
stewardship – can unlock a local market in reuse
and recycling. There is a large local resource of
PV panels to be recycled: 30% of decommissioned
solar panels are less than 10 years old with high
remaining efficiency and other useful components.

###### Does the opportunity meet a significant domestic demand?

-  Australia has the highest per-capita rooftop solar
installations in the world, and there continues to
be robust growth in the domestic sector. There
is significant growth potential in large-scale and
commercial and industrial solar PV in AEMO
scenarios up to 2050.

-  Unlocking a local market for reuse and recycling of
PV panels and components could be developed.
A fraction of the materials, for instance scrap metal
from frames, could go to overseas markets.


Silica Polysilica
Quartz refinement
Alumina

Ingots Solar Solar Framing
cells* modules


Supply chain activity Existing national capability National opportunity

Note: Distribution and construction are not a focus of this report and have been greyed out
to indicate their role in the supply chain but not to draw attention to the opportunities.

###### Does the opportunity unlock an Battery energy storageDoes the opportunity help the export market for Australia or Australian economy to deepen Material Op allow the sector to reach a R&D Mining its complexity?processing Manufacturing Distribution Construction usa global minimum scale? Lithium Critical

Rare earths mineral

-  Domestic demand for solar panels will continue Copper Nickel -  Building global manufacturing capabilities on refinement

- Building global manufacturing capabilities on

Battery Battery Domestic

to be significant. However, with access to Silica local innovation will create opportunities for cell pack
capital to enable rapid scaling, domestic jobs from R&D to advanced manufacturing,
manufacturers such as 5b and SunDrive can Solar photovoltaics installation and end-of-life capabilities.
become internationally competitive. There is Material Op

R&D Mining -  There will be significant addition of value to a processing Manufacturing Distribution Construction usa

an opportunity to build global solar businesses

product stream through development of a local

upon local innovation.

Silica circular economy that now ends up in disposal Polysilicon

-  Large-scale solar could also develop as part of Quartz pathways such as landfill.refinement

Alumina

remote export projects, such as Sun Cable.

Ingots Solar Solar Framing
cells* modules -  Capability exists in


###### Does the opportunity reduce Wind Does the opportunity require supply chain constraints or government intervention toMaterial geo-political risk? R&D Mining overcome market barriers?processing Manufacturing Distribution Construction

Iron ore Iron

-  Domestic supply of components or full PV Rare earths• Access to capital is required to enable Steel
panels reduces the risk of global bottlenecks CopperNickel manufacturers to reach global scale where
impacting access to product, especially for Silica they can be cost competitive internationally. Blades Nacelle Tower Foundation

Alumina

large-scale export projects, noting there is Government support, through mechanisms
current excess capacity in the global market. such as a production tax credit, co-investment

**Electric vehicles**

or offtake agreements, are required to enable

Material

-  End-of-life opportunity will create an additional R&D Mining them to scale rapidly.processing Manufacturing Distribution Construction
supply stream of reused and recycled PV panels
and parts, thereby decreasing supply chain Iron ore• Financial and non-financial incentives and
requirements for new panels. Rare earthsregulatory changes are required to encourage

Copper

the participation of solar installers in reuse and

Silica recycling activities and the creation of a local Batteries Chassis Components Assemblage
Alumina

reuse and recycling industry.

**High voltage cable manufacturing**

Material
R&D Mining processing Manufacturing Distribution Construction


Op
usa

Op
us

Domestic/
passenge

Op
us


Iron ore
Rare earths
Copper
Ni k l


Critical
mineral
refinement


Shipping Undersea
cable laying


-----

## Solar supply chain expansion


## Opportunity detail


###### Rationale

Australia already plays a role in stages of the solar
PV supply chain. We are a large driver of demand for
PV panels, with over 3 million households installing
solar. We also have world-leading research, particularly
in solar cell technology. However, we do not have an
established manufacturing sector – from polysilicon
and ingots to cell manufacturing.[10]

China currently manufactures more than 80% of PV
system components and an even higher share of other
parts of the supply chain, including 98% of silicon
wafers. The lack of supply diversity creates a significant
risk of price increases and project delays, which will
only increase as global demand grows.[11]

Given the domestic levels of demand for photovoltaics
and the potential opportunity for Australia to also
become a net exporter of renewable energy,
there is merit in having a higher level of domestic
self-sufficiency in solar panel manufacturing to
safeguard against global supply shortage and
sovereign risk issues.

There is an additional resource recovery opportunity to
create a new local reuse and recycling market for PV
panels and components.


###### Competitive advantage drivers

-  An established domestic aluminium industry
has translation opportunities into solar frame
manufacturing.

-  Strong existing R&D capability in cell efficiency
could expand with a manufacturing sector
to innovative panel designs that are geared
towards Australian conditions that are lighter
and more material efficient. The current
ubiquitous panel design factors in snow loading
in colder climates.[12]

-  Polysilicon manufacturing is highly energy
intensive, so a move towards industrial levels
of domestically produced clean energy opens
a pathway to significantly decarbonised PV
supply chains

-  There is existing steel industry capacity that
can be leveraged for some solar components.
For example, there are firms with tubular
manufacturing capacity, such as AusTube Mills,
Liberty Steel and Orrcon Steel, a subsidiary
of Bluescope, that could manufacture support
structures for solar (and hydrogen).

-  Significant amounts of existing PV panels
will reach their end of life in coming years
and require recycling and materials recovery,
presenting a significant opportunity for
complementary end-of-life sector development.
Currently 30% of decommissioned PV panels
are disposed in landfill or stockpiled.[13]

-  Growing levels of supply chain automation
can enable a global rebalancing of the solar
module manufacturing industry towards
continents such as Australia where modules
are deployed to large-scale solar farms with
robotic module assembly and automated
inspection technologies. This is expected to
shrink worldwide labour costs for solar module
manufacturing by 25% across the entire sector,
thereby reducing the labour cost advantage of
countries like China.[14]


###### Investment and policy levers

A detailed study is being undertaken by the
University of NSW, funded by the Australian
Renewable Energy Agency (ARENA), which
is examining solar manufacturing opportunities
in detail.

There are a number of policy levers that are likely to
support the advancement of the PV supply chain:

-  A US IRA-style fund to support manufacturing
innovators to scale rapidly in order to be
competitive on the global export market.

-  State and federal government support,
planning and infrastructure investment in
strategically located industrial eco parks
that bring together key manufacturing
supply chain partners to leverage shared
infrastructure and, ideally, green energy and
circular economy networks.

-  Skill acquisition programs to entice
Australian-trained photovoltaic engineers
back to Australia from overseas.

-  Government-backed offtake agreements or
price floors to give certainty to investors in
capital intensive, high risk early stages of
polysilicon and ingot manufacturing.

-  Incentives must be created to stimulate
product stewardship and participation in
reuse and recycling activities.

-  Solar PV installers need financial support to
overcome challenges in participating in reuse
and recycling activities.

10 Australian Trade and Investment Commission (Austrade), Why Australia
_– Benchmark Report: A renewable energy superpower, Austrade, Australian_
Government, 2023.

[11 Australian Renewable Energy Agency, The Incredible ULCS: How Ultra Low Cost](https://arena.gov.au/knowledge-bank/the-incredible-ulcs/)
_[Solar can Unlock Australia’s Renewable Energy Superpower, ARENA, Australian](https://arena.gov.au/knowledge-bank/the-incredible-ulcs/)_
Government, 2023.

12 House of Representatives Standing Committee on Industry, Science and Resources,
_[Sovereign, smart, sustainable: Driving advanced manufacturing in Australia, Australian](https://parlinfo.aph.gov.au/parlInfo/download/committees/reportrep/RB000196/toc_pdf/Sovereignsmartsustainable.pdf)_
Government, 2023.

[13 H Salim, N Florin, B Madden, Managing end-of-life solar photovoltaic in Australia:](https://www.uts.edu.au/isf/explore-research/projects/circular-economy-photovoltaic-pv-systems)
_[Key findings from installer surveys, Institute for Sustainable Futures, University of](https://www.uts.edu.au/isf/explore-research/projects/circular-economy-photovoltaic-pv-systems)_
Technology Sydney, 2023.

14 Brinson and Associates, Australian Domestic PV Supply Chain: Giga-scale Green
Fab supply chain White Paper, Brinson and Associates, 2023.


-----

## High voltage cable manufacturing

**Domestic production of high voltage**
**cables for renewable energy transmission**
**domestically and to connect Australia to**


**regional neighbours.**


-----

Silica Batteries Chassis Components Assemblage Domestic/ Commercial
Alumina passenger (heavy vehicle)/
bus/mining

**High voltage cable manufacturing supply chain**


## High voltage cable manufacturing


Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling


Nickel

Iron ore Critical Shipping Undersea
Rare earths mineral cable laying
Copper refinement

Silica
Alumina

**Diversified battery supply chain**


## Opportunity overview


###### Does the opportunity directly align with existing core capabilities of Australian industry?

-  Australia is viewed favourably as a location for
large-scale solar and wind generation and is being
positioned potentially as an exporter of renewable
energy to regional neighbours such as Singapore.

-  Australia does not have current capability in high
voltage cable manufacturing.

###### Does the opportunity meet a significant domestic demand?

-  Renewable energy export projects, such as Sun
Cable, are contingent on having the infrastructure
to enable them. The likelihood of these ambitious
projects is uncertain, however, if they have the right
support, they will generate significant domestic
demand for cables.

-  The proliferation of onshore and offshore wind will
create demand for high voltage cable connections.


Rod HV cable Undersea Transmission
production cable line

Supply chain activity Existing national capability National opportunity

Note: Distribution and construction are not a focus of this report and have been greyed out
to indicate their role in the supply chain but not to draw attention to the opportunities.


Material
R&D Mining processing Manufacturing Distribution Construction


Operation/ End of life/
usage recycling


Lithium Critical

###### export market for Australia orRare earths mineral Australian economy to deepen Material Op allow the sector to reach a Copper Nickel refinementR&D Mining its complexity?processing Manufacturing Distribution Construction usa

Battery Battery Domestic Commercial/

Silica

**Battery energy storage**

Mining

Battery Battery

Distribution

Commercial/

cell pack industrial

###### global minimum scale? Lithium Critical

-  Global delays to supply and continued and Nickel

- The refinement of key metals domestically
and the production of cable elements will add

growing demand suggest strong export Silica value and more complex processes to domestic Battery cell Battery pack Domestic

manufacturing.

**Expanded solar supply chainopportunities for Australia.**

Material **Solar photovoltaics• Developing export capability will enable R&D Operation/** End of life/
R&D Mining processing Manufacturing DistributionMaterial Construction usage recycling Op

###### Does the opportunity reduce R&D Mining and associated industries to grow around the processing Manufacturing Distribution Construction

cable manufacturing sector.

###### supply chain constraints orSilica


Quartz refinement Silica Polysilicon

###### geo-political risk?Alumina Quartz refinement

Alumina

###### Does the opportunity require

Ingots Solar Solar Framing

-  Global supply chain delays are reported to be up cells* modules **government intervention toIngots** Solar cells* Solar modulesFraming -  Capability exists in
to eight years. This creates a risk to the timely **overcome market barriers?**
delivery of cables for domestic projects and Wind
creates an opportunity for Australia to capitalise -  Yes – the establishment of factories of Material Op
on these delays to play an export role.R&D Mining processing Manufacturing Distribution Construction usa

appropriate scale require multi-billion dollar
investments and would likely need a mix of

Iron ore Iron
Rare earths capital expenditure funding and certainty for Steel

Nickel
Silica certainty to investors.Blades Nacelle Tower Foundation
Alumina

-  Connections between countries that would lead

**Electric vehicles**

to demand for trans-national connections require

Material Op
R&D Mining government trade agreements and support by processing Manufacturing Distribution Construction us

transmission systems operators.

Iron ore
Rare earths
Copper
Nickel
Silica Batteries Chassis Components Assemblage Domestic/
Alumina passenge

**High voltage cable manufacturing**

Material Op
R&D Mining processing Manufacturing Distribution Construction us


Iron ore
Rare earths
Copper
Nickel
Silica


Critical
mineral
refinement


Shipping Undersea
cable laying

Rod HV cable Undersea
production cable


-----

## High voltage cable manufacturing


## Opportunity detail


###### Rationale

Australia has aspirations to become a renewable
energy superpower and a potential exporter of
renewable energy. The scaling of renewable energy
generation to realise this aspiration is contingent on
the ability to connect new facilities. High voltage cabling
is a critical part of this.

There are global supply shortages, however, with
stakeholder engagement indicating lead times of
up to eight years for high voltage direct current
undersea cables.

This supply constraint creates a two-fold opportunity
for the establishment of a domestic high voltage cable
manufacturing sector: it can provide greater certainty
to the long-term roll out of domestic renewable energy
projects, and it also creates an opportunity for Australia
to develop as an exporter in a supply constrained
market. Research by the International Renewable
Energy Agency (IRENA) indicates that by 2050, the
global installed capacity of high voltage direct current
(HVDC) lines will increase to 2,500 gigawatts, up from
200 gigawatts in 2018.[15]

Domestic production also provides the opportunity to
support some of the ambitious trans-national renewable
energy connection projects, such as the Sun Cable
project, that have been proposed, which would need
approximately 12,000 km of cabling.


###### Competitive advantage drivers

-  Existing and growing domestic demand across
a range of renewable energy projects.

-  Potential for signficant offtake through the
Sun Cable project.

-  Australia’s existing trade relationships
with regional partners exploring undersea
connections.

-  Australia has high levels of mineral wealth, with
key minerals such as copper and aluminium.

-  Aluminium smelting capability, such as Bell Bay,
Tasmania, creates co-location opportunities with
metal refinement and deepwater port access for
direct export or domestic deployment.


###### Investment and policy levers

-  Capital expenditure funding to help in the
capital-intensive establishment of factory
facilities and to provide confidence to private
capital and debt to co-invest.

-  Upfront investment in enabling infrastructure
such as regional power networks or port
infrastructure upgrades.

-  Planning and support for clean tech precincts
in identified priority locations to co-locate
supply chain activities around catalyst
infrastructure or business.

-  Embed local content requirements into
domestic projects to generate demand for
local manufacturers.

-  Government underwriting of offtake
agreements to ensure demand certainty in
early years of facility establishment.

-  Negotiating trade agreements with trade
partners to remove export barriers for
domestic producers into global supply chain.

-  Investing in supporting clean energy agendas
(such as green hydrogen) to decarbonise the
manufacturing process to provide a product
to trade partners that enables them to meet
their decarbonisation efforts.

15 International Renewable Energy Agency, Innovation landscape brief: Supergrids, IRENA,
Abu Dhabi, 2019.


-----

## Electric heavy vehicle manufacturing

**Support the production of electric heavy**
**vehicles for the domestic market and**
**explore the feasibility of developing for export.**


-----

Nickel
Silica Blades Nacelle Tower Foundation
Alumina

**Electric heavy vehicle manufacturing supply chain**

Material
R&D Mining processing Manufacturing Distribution Construction

Iron ore Battery
Rare earths materials
Copper recovery
Nickel


Silica Batteries Chassis Components Assemblage
Alumina


## Electric heavy vehicle manufacturing


Operation/ End of life/
usage recycling

Battery
materials
recovery

Domestic/ Commercial
passenger (heavy vehicle)/

bus/mining


## Opportunity overview


###### Does the opportunity directly align with existing core capabilities of Australian industry?

-  Australia has extensive domestic reserves of
the minerals needed for EV manufacturing, an
advanced industrial base with links to automotive
manufacturing, a highly skilled workforce and
growing consumer interest.

-  The Australian automotive sector still employed over
30,000 people at the start of the decade.[16]

-  More than than 90% of buses are assembled
in Australia.

###### Does the opportunity meet a significant domestic demand?

-  While Australia is not likely to become a mass
producer of passenger EVs, there is a strong
sub-market in heavy vehicle manufacturing,
assemblage and maintenance (trucks, buses
and mining equipment).

-  There is growing demand for zero emission vehicles
in the shorter-term, for buses and other heavy
vehicles, driven by local, state or corporate targets.

-  There is a lack of choice for EV models/classes in
Australia and in many markets outside the key ones
(Europe, US and China).

###### Does the opportunity unlock an export market for Australia or allow the sector to reach a global minimum scale?

-  Manufacturing and assembling EV batteries,
cells and components, and EV assemblage and
components (chassis build-ups, motors and power
electronics), could be exported to other markets that
require heavy vehicles (buses and conversions in
the short term, trucks in the longer term).

-  Predicting the size and location of the opportunity
is challenging to ascertain without further detailed
research and analysis.


**High voltage cable manufacturing supply chainSupply chain activity** Existing national capability National opportunity

Material Note: Distribution and construction are not a focus of this report and have been greyed out Operation/ End of life/
R&D Mining processing Manufacturingto indicate their role in the supply chain but not to draw attention to the opportunities.Distribution Construction usage recycling

Iron ore Critical Shipping Undersea

###### Does the opportunity reduce Does the opportunity require

Rare earths mineral **Battery energy storage** cable laying

**Battery energy storage**


Rod HV cable Undersea Transmission

###### geo-political risk?SilicaAlumina R&Dproduction Mining overcome market barriers?processing Manufacturingcable lineDistribution Construction


Op
usa



-  The automotive industry has experienced major Lithium -  Coordinated, overarching, strategic policy for Critical

Rare earths mineral

**Diversified battery supply chainsupply chain issues, and growing demand** Copper industry development at the national level.refinement [17]

Nickel

- Coordinated, overarching, strategic policy for
industry development at the national level.

R&Dfor EVs in countries where EV incentives are strongest means Australia lacks the kind of Mining Material processing ManufacturingSilica Distribution• Industrial transformation plan to help remaining ConstructionBattery cell Battery packOperation/usage End of life/recycling Domestic

model choice other nations have. automotive manufacturing assets be redeployed

and new assets to be developed.

Lithium Critical Material Op

-  There is a lack of model choice globally for Rare earths mineral R&D Mining processing Manufacturing Distribution Construction usa

Battery Battery Domestic Commercial/

manufacturers mostly focussing on passenger Silica cell packSilica expand capacities and capabilities.Polysilicon industrial

**Solar photovoltaics**

R&D Mining

Battery Battery


- Help unlock capital for manufacturing firms to

Distribution

Commercial/

vehicles. Quartz refinement

Alumina

-  Enhance access to markets outside Australia,

-  Reducing dependence on imported fossil fuels especially in the Asia region, through tackling Ingots Solar cells* Solar modulesFraming -  Capability exists in

**Expanded solar supply chainfor transport from a small number of producers** tariffs and non-tariff barriers.

reduces geopolitical risk.Material **Wind** Operation/ End of life/

R&D Mining processing Manufacturing Distribution• Encourage customer demand for heavy EVs.Material Construction usage recycling Op

R&D Mining processing Manufacturing Distribution

###### Does the opportunity help the Silica Polysilica • Review and revise public procurement rules.


Quartz refinement Iron ore Iron

###### its complexity? Ingots Solar Solar CopperNickelFraming and analysis for EV manufacturing for domestic

Rare earths

and analysis for EV manufacturing for domestic

cells* modulesSilica Blades Nacelle Tower Foundation

-  Critical minerals such as lithium, nickel and Alumina and export markets.
cobalt are essential for EVs, but Australia

**Electric vehicles**

plays a limited role in the supply chain beyond
extraction and export. Material Op

R&D Mining processing Manufacturing Distribution Construction us

-  Involvement in EV battery cells and components,
EV components and EV assemblage, as well as Iron ore

Rare earths

a variety of niche vehicles and retrofits, would Copper
deepen its complexity. NickelSilica Batteries Chassis Components Assemblage Domestic/

Alumina passenge

**High voltage cable manufacturing**

Material Op
R&D Mining 16 The Australia Institute, processing _[Manufacturing the Energy Revolution: Australia’s Manufacturing](https://futurework.org.au/report/manufacturing-the-energy-revolution/)_ [Distribution](https://futurework.org.au/report/manufacturing-the-energy-revolution/) Construction us

Institute, 2023.

Iron ore [17 M Dean, Critical Rebuilding Vehicle Manufacturing in Australia: Industrial Shipping](https://www.carmichaelcentre.org.au/taking_charge_of_an_electrified_future) Undersea
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Copper Australia Institute, 2022.refinement
Nickel

Rod HV cable Undersea


-----

## Electric heavy vehicle manufacturing


###### Competitive advantage drivers

-  Australia has a highly skilled and educated
workforce already working in the automotive
supply chains.

-  Australia’s mining sector and its mining
equipment/earthmover manufacturing could
be linked for their mutual benefit.

-  While Australia is unlikely to become a mass
producer of passenger EVs in the near future,
there is a strong sub-market in components,
heavy vehicle (trucks, buses and mining
equipment) manufacturing, assemblage
and maintenance.

-  The key enablers for local manufacturing are:

-  Coordinated, overarching, strategic policy
for industry development is needed at the
national level.

-  Industry assistance programs to stimulate
EV component manufacturing.

-  Industrial transformation plan to help
remaining automotive manufacturing
assets be redeployed and new assets to
be developed.

-  Help unlock capital for manufacturing firms
to expand capacities and capabilities.

-  Workforce training to build and service
EVs and their components.

-  Encourage customer demand for electric
heavy vehicles, including for conversions in
the short term and for helping the trucking
industry and others plan for electrification.

-  Fit-for-purpose public procurement rules for
electric vehicles with a certain amount of
domestic manufacturing.

-  Fund comprehensive supply chain
requirements and analysis for EV
manufacturing for domestic and
export markets.

-  Enhance access to markets outside
Australia, especially in the Asia region,
through tackling tariffs and non-tariff barriers.

-  Locations that were home to previous
automotive manufacturing, such as Geelong,
and which retain their links to their supply
chains, would be excellent candidates for local
manufacturing. Other areas previously servicing
power generation industries, such as the
Latrobe Valley and Hunter Valley, could also be
possible locations.


###### Investment and policy levers

A coordinated, overarching and robust strategic
policy for industry development will be needed at
the national level if Australia is to capitalise on its
existing resources and skills base, as well as rapid
electrification of its transport sector.

This will require early and ongoing collaboration
with the EV sector, supply chain partners, end
user groups, industry associations, academia
and government.

Greater clarity is needed on exactly where and
how Australia can play in global EV supply chains,
as well as which vehicle segments and countries
have the best potential for the exported products.
The same applies for what can be done to open up
access to markets outside Australia, especially the
Asia region, to EV-related goods and services.

Action is needed to help unlock capital for
manufacturing firms looking to redeploy existing
automotive manufacturing assets, develop new
ones, and help them expand their capability and
capacity for these newly developing markets.

Domestic demand can be encouraged for electric
heavy vehicles through policy levers for the phase
out of diesel and petrol variants, as well as a review
of how procurement rules could both support the
domestic industry and increase the share of EVs.

Aside from battery cells and other components,
electric buses and electric conversions of internal
combustion engine vehicles (such as utes, rigids,
mining vehicles, commercial vans and refuse
collection trucks) could pose the nearer term
opportunity for the domestic market. Trucks – rigid
and artic – could pose a medium to longer term
opportunity.

[18 Electric Vehicle Council, State of electric vehicles: July 2023, EV Council, 2023.](https://electricvehiclecouncil.com.au/reports/soevs-report-2023/)

[19 Clean Energy Council, Power Playbook: Accelerating Australia’s Clean Energy](https://www.cleanenergycouncil.org.au/news/clean-energy-council-releases-power-playbook)
_[Transformation, Clean Energy Council, Australia, 2023.](https://www.cleanenergycouncil.org.au/news/clean-energy-council-releases-power-playbook)_


## Opportunity detail


###### Rationale

Like many countries, Australia is rapidly seeking to
decarbonise its transport emissions through
electrification. The share of new passenger vehicle
sales that were EVs increased to 8% recently, but more
than 70% of these sales were from three models, either
US or Chinese.[18] One of these – Tesla – derives 80% of
their feedstock for their EV batteries from Australia.[19]

Despite ceasing mass vehicle manufacturing in
Australia in 2017, after 70 years, more than 30,000
people were still employed in automotive manufacturing
supply chains in 2020.

When it comes to heavier vehicles, many states
and cities are rapidly electrifying their bus fleets,
with rolling mandates on diesel/petrol phaseouts.
Mining companies are also seeking ways to electrify
their vehicles, seeking the benefits of zero tail pipe
emissions for both utes and earthmoving equipment.

There are a number of strategic benefits:

-  Reduced supply chain risk and exposure to
geo-political and market disruptions. Automotive
sectors have experienced major supply chain issues
following Covid, while the Russia-Ukraine conflict
added huge upward pressure on fossil fuel prices.

-  Involvement in EV battery cells and components,
EV components and EV assemblage, as well as a
variety of niche vehicles and retrofits, would deepen
its complexity – and help link with the battery
industry for stationary applications.

-  Critical minerals, such as lithium, nickel and cobalt,
are essential for EVs, and Australia could play a
larger role in the supply chain beyond extraction
and export.


-----

## The need for support from government


**This is why an Australian equivalent of**
**the US IRA level of funding is essential if**
**Australia is to realise its renewable energy**
**superpower aspirations to ensure that**
**innovative companies and value-adding**
**opportunities that directly align with existing**
**comparative advantages can be realised.**

While the technologies, capabilities and markets
exist, the upfront capital costs and level of risk
will continue to deter signifcant private sector
co-investment without clear signals from the
Federal Government about their commitment to
these opportunities.

In advanced manufacturing economies, or those
that have sustained a strong manufacturing base,
such as the US, access to funding is more likely to
be effective as a means of government intervention.
This is because businesses’ domestic supply
chains and supporting infrastructure are already
established.

As a consequence, while access to significant
levels of capital is vital in accelerating this
transformation, it must occur within in a broader,
multi-pronged policy and regulatory response.

What emerged from engagement for this report
was that for Australia to be competitive in whatever
sub-sector is targeted, we must have scale, and in
order to have scale, three things are required:

-  Certain and consistent demand for
the product

-  Underlying capability within organisations
and the wider labour market

-  A well functioning business ecosystem.


Transformational industry development carries
with it inherent risk, upfront investment and market
uncertainty. The scale of benefit available to
Australia across these and other opportunites in the
clean energy sector are evident. However, many
need significant upfront investment in order to
overcome barriers to market entry or rapid growth
to achieve sustainable economies of scale.

These barriers include:

-  New or upgraded facilities have high capital
expenditure and risk and require demand
certainty from customers.

-  Opportunities for Australia in the clean
energy sector are often regionally isolated
and lack the enabling infrastructure such
as energy networks, port access and even
housing and community infrastructure for a
growing labour force.

-  The energy system is complex and has
significant regulatory oversight and barriers
to entry for individual businesses.

-  There are established global supply chains
in many technologies that make it difficult for
domestic businesses to engage.

-  Global supply chains are linked with bilateral
trade agreements.

-  Domestic production capacity and higher
manufacturing costs put Australia at a
disadvantage compared with other countries.

-  Government funding, frequently through
grants, is often at levels too small for
substantial capital investment in advanced
manufacturing facilites.


-----

## Summary of policy levers

There are a number of policy levers at government’s disposal, with the broad levers summarised
here. These are adapted from the Accenture/FBICRC report, Charging Ahead: Australia’s battery_powered future, with further policy levers added based on literature review and stakeholder interviews._

, with further policy levers added based on literature review and stakeholder interviews.

here. These are adapted from the Accenture/FBICRC report,


**Access to capital and incentives**

-  Subsidies and/or tax incentives for domestic producers, with local content
conditions, such as investment and/or production tax credits

-  Access to grant funding programs of sufficient scale to support high capital
expenditure investments




-  Identify international producers to attract as lighthouse tenants

Offer targeted firms a globally competitive and low-risk investment pathway


-  Establish syndicated finance facilities with foreign governments in exchange

give industry direction and clarity to states and territories about their role

Develop comprehensive spatial industry policy platforms at a national level to


-  Establish an industry coordination body that connects supply chain stakeholders

-  Develop hubs or precincts to facilitate industry co-location and develop

-  Introduce incentives for producers to trade with domestic supply chain partners

**Industry attraction**



for supply guarantees

**Industry coordination**



shared infrastructure



**Regional export partnerships**

-  Establish strategic relationships with key regional trade partners

-  Renegotiate bilateral trade agreements with regional trade partners

-  Provide support for Australian businesses to enter export markets

-  Facilitate partnerships between Australian and foreign companies for
project development

**Increase domestic demand**

-  Provide government-supported offtake agreements to key suppliers to create
demand certainty in order to provide investment certainty for private capital



-  Incentivise or require domestic businesses and consumers to purchase
Australian-made products via local content regulations

**Specialised infrastructure and institutions**

-  Develop common use R&D and prototyping facilities

-  Develop a training facility to grow specialised workforce capabilities

-  Facilitate industry-academia collaboration

[Source: Accenture & FBICRC, Charging Ahead: Australia’s battery-powered future, FBICRC, 2023.](https://fbicrc.com.au/charging-ahead-report/)


**Aligning policy levers with supply chain**

Different policy levers will be more relevant to different parts of the supply chain process.

The following illustration plots the likely coverage that each of the key policy levers will have from
R&D and early-stage industry or business establishment right through until end of life.

It does not preclude these levers being used at all stages, but rather provides a snapshot of how
different levers could enter and exit the supply chain process.

R&D/early-stage investment Refinement Manufacturing Sales/distribution/operation End of life

**Capital grants**

**Tax credits** **Investment credits** **Production credits**

**Industry policy**

**Local content provisions**

**Workforce development**

**Export/market support**

**Offtake agreements/underwriting**


R&D/early-stage investment Refinement Manufacturing Sales/distribution/operation End of life

**Capital grants**

**Investment credits** **Production credits**


**Industry policy**

**Local content provisions**

**Workforce development**

**Export/market support**

**Offtake agreements/underwriting**


-----

## Five priority actions for government

**Different types of policy measures are required to realise the different**
**opportunities identified. This report recommends five key initiatives.**

**Comprehensive industry policy**

_updates to the Australian Industry Participation Plans._

with industry.

**Finance and incentives**

_Develop coherent industry policy platforms for each target sector to provide a clear_
_roadmap for growth. There should be a spatial dimension to provide states with a clear_

Australia needs to build a more comprehensive strategic industry policy framework with
sectoral roadmaps, including a range of measures such as partnerships and collaborations


_Establish a fund which can provide targeted capital to Australian companies,_

_This should include_

_innovations and technologies that can scale into internationally competitive exporters._
_Design, which could include production tax credits, grants or co-investment, will be_
_important to enable scaling and certainty for the most prospective opportunities whilst_
_managing budget exposure._

Funds should be strategically targeted towards Australian companies, innovations and
technologies where access to capital can enable building to scale to export.

**Local content requirements**

_Work with state and territory governments to implement a nation-wide approach to local_
_content requirements to maximise impact and enable new production capacity, including_
_definition specificity regarding materials and components and registers of business_
_providers and their level of domestic versus foreign ownership._

Current requirements are fragmented across state jurisdictions and often lead to
expansions in existing activities rather than new production capacity. Effective local
content requirements are more likely to drive a wider range of local development
opportunities in areas adjacent to existing capacity or which are less capital intensive
to service domestic demand.

The proposed Capacity Investment Scheme provides an opportunity to coordinate local
content requirements at scale which will enable greater impact and complement other
government initiatives.


**Government procurement**

_Use government procurement to underwrite offtake agreements for producers to provide_
_market demand through the establishment phase of business or new production capacity._

Larger capital investments to service local demand may require greater demand and
investment certainty than can be achieved through local content requirements, which can
be achieved through the use of offtake agreements via government procurement.

**Coordinated workforce development**

_Work with the state VET sector, universities and industry to embed workforce development_
_and training to build the skilled labour required to develop opportunities._

In the context of global skill shortages and competition for labour, Australia needs to
complementary workforce and skill development programs.

[20 J Gill, Sectoral, Systemic and Spatial: Rethinking Australia’s Approach to National Industry Policy, SGS Economics and Planning, 2023.](https://sgsep.com.au/publications/insights/australia-needs-a-new-spatial-industry-strategy)


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**TOWARDS A RENEWABLE ENERGY SUPERPOWER**

**Industry opportunities for Australia to embrace the clean energy revolution**

Prepared for Climate Action Network Australia and the Australian Manufacturing Workers’ Union, 2023.


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