Why a billion-dollar bet on solar makes sense

Over the past 20 years, Australians have fallen in love with solar – it’s the cheapest form of electricity generation in history and the keystone to this country’s future energy supply.

And yet, while we’re leading the world in the deployment of rooftop solar – thanks to well-targeted support and our endless supply of sunshine – we’re producing only about 1 per cent of the modules here.

The question everyone is asking is can and should Australia be delving into manufacturing in the solar space?

The answer is yes.

Other countries have tried, many haven’t succeeded. China is already doing it well and has succeeded in dominating the market globally and massively reducing the cost of solar over the past decade.

So why try to compete?

The short answer is we’re not. Not immediately anyway.

Australia shouldn’t aim to be the world’s top PV manufacturer, but we can drive a greater role in PV production to make our supply chain less vulnerable to external shocks.

The scale at which solar needs to be deployed to meet our climate targets and deliver on the renewable energy superpower vision means that we cannot rely solely on importing cheap solar panels from overseas.

We need to find new sources of income in a net zero world.

Today we’re deploying around five gigawatts of solar on our roofs and on our land each year. It’s not far-fetched to think we could be deploying 10 times this much on an annual basis to deliver on our superpower ambitions.

Developing a local solar manufacturing industry can mean facilitating closer trading relationships with both China and the US.

If we are smart, we can be a bridge between these two superpowers, adding value to Chinese know-how, and producing valuable products for ourselves and our trading partners.

Australia’s renewable energy and high ESG standards can help meet the demand from trade partners that are increasingly looking for more sustainable products.

Combining the benefits of strong and diverse international supply with a strong and sustainable local manufacturing sector helps build resilience to supply chain disruptions and keep up Australia’s momentum in deploying huge amounts of solar.

There is a credible pathway for building this industry in Australia and it’s going to take a collaborative and committed approach from government and the private sector.

The scale of the challenge is great and the opportunity and need are even greater.

As the world transitions to clean energy, our traditional fossil fuel exports are under threat, and we need to find new sources of income in a net zero world.

This will mean playing to our relative advantages and finding Australia’s solar manufacturing sweet spot.

Australia is a hub for solar technology innovation with strong solar R&D capabilities, world-leading solar experts, and a long history of collaboration with the PV industry in China.

This country has built its success on the mining industry. We dig up raw materials, ship them offshore, and then import the value-added final product from our trading partners.

Instead, we have the opportunity to add value to these raw materials ourselves. We can and should do this.

With a global urgency to accelerate the transition to renewable energy, now is the time to step into a smarter renewable energy future. We have all the materials and skill to make this a reality. All we need is the vision and the determination to deliver on our potential.

This editorial by ARENA CEO Darren Miller was first published by the Australian Financial Review on Tuesday 9 April 2024.