Capturing a greater share of the global energy storage market

Energy storage to deliver Australia’s net zero ambitions

Energy is at the core of everything. And as we move towards net zero, there will be fundamental shifts in how we generate, store and consume energy. Energy storage is literally at the centre of this transition, without it there can be no net zero. 

At Australian Energy Week, the CEO of AEMO, Daniel Westerman, highlighted that investment in ‘firming’ technologies, such as pumped hydro and batteries was urgently needed. AEMO’s modelling forecasts storage needs to expand by a factor of 30 by 2050 to deliver Australia’s net zero ambitions.

Despite the size of the challenge ahead of us, there is cause for optimism. Bloomberg reports that Australia has the largest pipeline of energy storage projects outside of China, and Sunwiz recently reported a 55% year on year increase in behind the meter storage. Australia broadly outstrips the OECD in uptake of battery technologies.

Can Australia use its strengths to develop a battery manufacturing industry?

The fundamental question to be answered is whether Australia can use its mineral, energy and internal demand strengths to develop a battery manufacturing industry. At the Future Battery Industries Cooperative Research Centre (FBICRC), Australia’s largest partnership for the battery industry, we believe that this is both possible and that Australia is uniquely placed to succeed.

In March, the FBICRC released our Charging Ahead report that forecast a $55 billion, 61,400 job opportunity for Australia to capture a greater share of the energy storage market, by refining its minerals, manufacturing advanced materials, battery cells and storage systems. These industries already exist in Australia today, but we can do even more. 

Our report indicated that Australia is cost competitive, but it also highlighted an increasingly difficult global trade environment, multiple subsidies on offer, technical barriers to trade and geopolitical factors which distort investment, and ultimately cost consumers.

The report recommended Australia develop international trade partnerships, attract strategic foreign investment, and develop common user facilities to lower barriers and help Australian tech businesses get to world scale. In these industries, scale matters.

Framework for an onshore battery manufacturing industry

Building an Australian clean-tech manufacturing industry will not be easy, but the investment required is relatively small. Australia is already set to succeed in mining, and success would deliver $25 billion in GDP for around $25 billion public and private investment. With only $10 billion more invested, Australia could realise $55 billion in GDP. 

Investing in an Australian battery industry just makes sense.

Attracting that investment requires a well-considered strategy and the recently released Critical Minerals Strategy provides a coherent and consistent framework.

The strategy recognises the unique challenges for critical minerals projects, and offers a targeted, concerted approach. With the combined strength of Federal, State and International Governments, we can develop projects that meaningfully address supply chain concentration in a way that delivers for all. This partnership approach is proven – the Japanese Government, for example, have supported Australian energy projects that delivered for Japan and Australia for the last forty years.

Competing on the international stage

Directly competing against the Inflation Reduction Act with larger subsidies is, as Mike Henry from BHP says, a losing proposition. A lower-cost approach is to form strategic partnerships to enable IRA benefits to apply in Australia. The landmark US Australia Climate, Critical Minerals and Clean Energy Transformation Compact could offer just that.

The strategy will also leverage international partnerships and foreign investment to attract capital, IP and proven technologies into Australia. Modern battery technology is highly advanced and takes time to develop. Attracting foreign investment into Australia can fast-track our industrial growth. Australia will benefit from the ecosystem that develops around these high-tech projects and the technology diffusion that will occur as a result.

Demand for energy storage systems

The Federal Government is currently working on a National Battery Strategy, which will deliver the framework needed to develop an Australian battery industry. Australia already refines minerals, manufactures advanced materials, manufactures cells, and assembles battery systems, across every state and territory in Australia.

Currently, despite our large demand for energy storage systems, Australian energy storage demand is mostly satisfied by foreign-made batteries, from industry leaders like CATL and Tesla. 

It is not a stretch for Australia to manufacture cells for its own grid storage needs, or manufacture high-temperature cells to support a heavy haulage and mining sector. 

We have a unique opportunity to use Australian demand to build a manufacturing sector here, which will require the support of funds like the National Reconstruction Fund, ARENA and the Clean Energy Finance Corporation to orient our local projects towards locally made products, and also structured procurement – to help factories become bankable, reach minimum scale, and overcome performance risks.

We have an outstanding opportunity in front of us, and there is increasing ambition in Australia to take the next steps. Our battery future is looking bright.