Extract from ABC News
Australians are increasingly installing battery storage in their homes and businesses and with this has come a surge of interest in producing more of this technology onshore.
Proponents are urging industry not to repeat the mistakes of the mining boom and to seize a potential $7.4 billion local battery manufacturing industry.
But is this goal realistic or just nationalistic?
Key points:
- Industry proponents believe Australia's battery industry could be worth $7.4b a year
- There are barriers to growth such as wages and price competition
- Some in the industry don't think local manufacturing is worth it
On the industrial fringe of Melbourne, a company that started out as a start-up in a storage shed just four years ago now has 50 local workers making home battery storage systems in its factory.
PowerPlus Energy's larger lithium systems are mostly installed in off-grid homes with solar energy, as well as the mining industry.
Founder Bradley Paton is passionate about local jobs.
Among the 50 people working in the company's 3000 square metre factory in Melbourne today are the Paton's grownup children, their family friends, school leavers, and people embarking on a second career.
The work that many do is unskilled and is learned on the job, such as assembling electronics, putting together cabinets and soldering electrical parts.
Faye Brittain is one of them.
Ms Brittain assembles the battery packs in a wing of the factory affectionately called "the birthing suite".
"I was a stay at home mum," Ms Brittain said.
But hiring local comes at an obvious cost.
It would be a lot cheaper if PowerPlus Energy outsourced some of this manufacturing to larger economies with cheaper workforces already specialising in battery technology.
"We'd be looking at a 30 to 40 per cent saving just to have the cabinets alone made in China," Mr Paton said.
Mr Paton's company is experiencing growth in the small Australian market currently, which he believes is due to the company's locally-made credentials and value-adding on products.
However, he hopes to export one day. This is where the true growth for his company would lie.
It's
also where the costs of doing business in Australia could start to
become a problem if PowerPlus Energy tried to compete globally on price.
As well as wages, overheads, and competition, he'd also have the Australian dollar to consider.
It's a lot lower now than during the mining boom, where it was so high that Australian-made products were deemed too expensive on the global stage.
"As a manufacturing business, we have to be able to be competitive to export and play on the world stage," Mr Paton said.
It is a familiar story.
We've heard it about car manufacturing through to fashion production, which have been pushed offshore in recent decades.
Where are the gaps in the local battery industry?
A new report for the Future Battery Industries Cooperative Research Centre (FBICRC) found Australia's battery industry currently contributes $1.3 billion to Australia's GDP annually and around 6,000 jobs.
Much of that does not come from manufacturing companies like PowerPlus but from mining the raw materials that go into battery cells, predominately lithium.
"Currently, Australia is the dominant player in the mining of battery materials — with around half the global lithium market and a leading role in other key metals," the FBICRC report found.
If that sounds familiar, it is because it is what we saw during Australia's last mining boom, with much of the nation's iron ore being flogged offshore as a raw product and coming back as steel.
It is a similar story with batteries. The core elements are largely leaving Australia, being processed offshore, being made into the cells that store power and then coming back as this refined product.
Even PowerPlus Energy, for all its focus on Australian-made batteries, is using core lithium cells imported from China. It does not know the provenance of this lithium as that is difficult to trace.
FBICRC's chief executive Stedman Ellis is not aware of any cells being made in Australia for the household and commercial battery space, apart from in specialist defence applications.
"We are seeing significant engineering assembly going into the battery management systems and standalone power systems, which are going into our homes and into our electricity grids," he said.
"But at the moment, the battery cells themselves are being imported."
Industry proponents optimistic more can be done onshore
Mr Ellis said Australia is on the cusp of making more of the core components of battery systems locally.
He says this could be a huge value add.
"We are seeing investment moving downstream into the production of purified battery chemicals," he said.
"For example, in Western Australia, more than $2 billion is currently being invested in purified battery chemical plants, lithium hydroxide and nickel sulphide. So we can see momentum moving downstream from mining."
A recent report from the Federal Government's Department of Industry, Science, Energy and Resources noted this too.
It canvassed a range of emerging refineries across the nation that could start producing from late 2021.
"These lithium refinery developments and their increasing Australian equity set Australia up well for both refining and further possible downstream processing as experience builds across nickel and cobalt as well," it said.
There are also battery manufacturers launching in the Australian market that are pledging to use locally refined materials — if they become available.
Energy Renaissance is building a factory in regional NSW that will start off with a manufacturing model similar to PowerPlus Energy.
It hopes to supply the more commercial end of the energy storage market, such as schools and shopping centres.
"We will start with battery manufacturing," Energy Renaissance's Brian Craighead said.
"And then as the mineral processing kicks into higher gear in Australia, we will start manufacturing with the cells.
"The processing of minerals to battery grade, the volume we need just isn't here yet.
"What the country has missed is a reliable buyer of battery-grade minerals.
"We hope that we will be able to start placing orders with these guys and be (an) anchor customer that gives them enough to start processing at the level we need.
Mr
Craighead couldn't put a definitive date on when it could start making
cells locally, as this relies on other industries, but hopes it could be
within a few years.
The FBICRC report found that if the industry capitalises on all of this potential, the Australian battery industry could be seven times its current size.
That would make it worth $7.4 billion dollars annually to Australia's GDP and create 34,700 jobs by 2030.
The FBICRC report found barriers to a booming battery market include a lack of capital to build facilities, higher Australian wages and a lack of specialists.
However, it noted that wage costs were not always that much higher than other markets also making batteries, such as Japan, South Korea and Germany.
It also noted that the potential opportunity for Australia was not just in home storage but also battery systems for electric cars.
Not everybody is convinced that local is worth it
Patrick Matweew heads up another Australian battery company that is a big player in the home battery storage space.
Redback's manufacturing is done with third-party factories in China. All the hardware such as the storage units, inverters and casings arrive pre-boxed in Australian ports, where they're shipped directly to home installers.
Mr Matweew said the company did look at local manufacturing when it launched in 2015 but found it wasn't feasible.
That was because they did not have the capital to start their own factory and they couldn't find local partners to do their work.
"The other reason, which is even more important, is we aim to make a product that is affordable for all Australian households," Mr Matweew said.
Australian players in the home battery storage space are already competing with recognisable global brand names like Tesla, which go for just over $10,000 plus installation.
Mr Matweew believes making Redback systems in Australia entirely here would quadruple their price up to $40,000.
"It's just not commercially viable," he said.
Mr Matweew is also wary of the ideological implications of pulling manufacturing back onshore.
"When we go back to where everybody does everything themselves on their national shores, the world will be a lot poorer," he said.
"I think there are certain things that certain countries do better."
In Redback's example, they have decided that what they do better is designing the software that goes into the battery's systems. That employs 35 people directly here at Redback's office in Brisbane.
"Manufacturing in Australia can be competitive if it's a high value add, if it's high quality, if it's really cutting edge," Mr Matweew said.
"Trying to create low-skilled jobs in manufacturing in Australia is not winning."
So why does Bradley Paton do it?
PowerPlus Energy also designs software for their batteries. But for Bradley Paton, the excitement is on the manufacturing floor.
For now, he is content with the growth his company is seeing in the Australian market. He hopes consumers will learn not to be price-sensitive as the market grows.
"We've gotten comfortable over the years paying the prices for imported products. And I think as consumers we need to become more aware of what's involved.
"We're experiencing triple-digit growth every year. It's been really exciting to see the acceptance in trust of an Australian manufacturer."
No comments:
Post a Comment