Labor has a broken energy fix. The Libs don’t have one at all – yet

Australia invented the solar power cell in 1983 then waved goodbye to it in 2001 as it left home for China. Embarrassingly for Australia, China turned that very same technology into an $80 billion-a-year export by 2022, dominating world supply, and still growing apace.

Now Australia wants the industry back. That’s why Anthony Albanese this week announced a new $1 billion program of government support for companies to make solar cells in Australia. He’s calling it SunShot.

Illustration: John Shakespeare. Credit:

Australia, said the prime minister, “has seen the breakthroughs that have led the world. But we have not been good at commercialising those opportunities ... We missed the opportunities. We are not going to miss the opportunities of this generation.”

He was speaking on the site of the once-mighty Liddell power station in NSW’s Hunter Valley, a coal-fired chugger that was decommissioned last year by its owner, AGL Energy.

Why there? Because AGL plans to turn the vast site into a clean industrial hub. Starting with Manuka honey and a big battery. The company is hoping that it will one day include a factory making solar cells.

The federal and state Labor governments would love nothing more, encouraging new investment and new jobs in the old coal-mining, Labor-voting heartland. But isn’t this exactly the sort of real estate where Peter Dutton wants to build big nuclear power plants?

Yes it is. The opposition leader has said that a Coalition government would favour large-scale nuclear plants on about half a dozen sites once occupied by coal-fired power stations.

There’s a physical logic and a political logic to this. The physical logic is that these sites are already wired into the electricity grid; no need to build disruptive new transmission lines across farmland or through communities.

The political logic is that the Coalition is busily fomenting some 50 local NIMBY-ist uprisings against proposed renewable energy projects and the power lines needed to connect them to the grid. The Coalition hopes to capitalise on this community unhappiness at the next election.

But there’s a snag. In this particular case, the site owner, AGL, has responded to the Dutton plan by saying “not in my backyard”. The company’s chief, Damien Nicks, two weeks ago said: “As the owner of these sites, nuclear energy is not a part of these plans.”

Nicks went on to dismiss the feasibility of nuclear power altogether: “There is no viable schedule for the regulation or development of nuclear energy in Australia, and the cost, build time and public opinion are all prohibitive.”

Since Mike Cannon-Brookes grabbed AGL by the scruff of its share registry in 2022, the billionaire co-founder of Atlassian has propelled the fusty old coal burner into the renewable energy transition at breakneck speed.

So Liddell starkly embodies the clash of visions for Australia’s energy future. After half a century burning coal, it’s the sort of site that the Coalition wants for its nuclear plants.

But Cannon-Brookes’ AGL and Labor want to make it a showpiece of Australia as a green energy superpower. “A vision for Australia,” said Albanese, “that sees renewable energy powering advanced manufacturing here to produce more in Australia … positioning ourselves to be a renewable energy superpower for the world.”

As political theatre, this is stirring stuff. On the same day, on the same site, a cutting-edge Australian solar cell start-up called SunDrive signed a memorandum of understanding with AGL to examine the feasibility of building a solar cell factory right there. The company’s backers include Cannon-Brookes and Malcolm Turnbull.

SunDrive has a pilot site at Sydney’s Kurnell, where they’re making solar cells with record-breaking levels of efficiency. The firm’s chief executive, Vince Allen, points out that many nations are competing in “a global race for the solar manufacturing supply chain. We want to be a global company with locations around the world but we certainly have a conviction in manufacturing in Australia.” But it’s “very important to have the right policy support” and Albanese’s SunShot program “is one very important first step in bringing the supply chain to Australia”.

Australia has the highest take-up of rooftop solar in the world, installed on one-third of houses. Yet only 1 per cent of the panels installed are made in Australia. SunShot aims to change that. Government support is essential; it’s how China became the global goliath of the industry.

But beyond the theatre of the day lie some big questions. If this is to be something more than Albanese giving subsidies to Cannon-Brookes and Turnbull and other investors, they need to be answered.

Australia has the highest take-up of rooftop solar in the world.Credit: Bloomberg

One obvious one is the intensity of the competition for solar cell manufacturing. China invested $200 billion in its solar industry in 2022 alone, according to energy research firm Wood Mackenzie. That’s enough to guarantee it over 80 per cent of the world market for the next eight years, says the firm.

And that’s only one of the countries competing for the industry. “The government has to respond to the incentives on offer from the Americans’ Inflation Reduction Act, from Asia, from Canada and from Europe,” says Erwin Jackson of the Investor Group on Climate Change, representing members with $35 trillion in assets under management.

China’s aggressive subsidies for priority industries once were the outlier. The developed nations drifted into 40 years of geoeconomics, where economic efficiency was imperative and globalisation drove capital to the cheapest production site – generally China.

Geoeconomics is over; a new era of geopolitics has arrived. The developed nations now compete directly with China for investment in advanced manufacturing, based on national strategy rather than economic efficiency.

SunShot “is an important signal to the investment community that Australia is taking the energy transition seriously,” says Jackson.

But the overall energy transition in Australia is in trouble. After solid progress in renewables’ share of electricity generation, rising from 36 per cent in 2022 to 40 per cent last year, investment in new renewables projects in Australia is grinding to a halt.

After $6.5 billion in new commitments to utility-scale projects in 2022, only $1.5 billion was committed last year, according to the Clean Energy Council. At this rate, Australia will not hit the government target of 82 per cent renewables by 2030.

“There’s been no new financial commitment in Australia for the past year or so [for large-scale renewables],” says Jackson, “and that’s more about bottlenecks in transmission lines and planning approvals” – precisely because of the NIMBY-ist campaigns against new lines. “For our members, that’s very risky,” Jackson says. There’s no point building a solar or wind installation if you can’t send the electricity to customers.

He says government policy “needs to add up, and detailed sector-by-sector plans for decarbonisation are really important to solidify investment”. Investors are impatient to see them.

And while the government has a stated emissions target for 2030, investors need to see the 2035 target, yet to be announced. Jackson again: “We can attract billions of dollars to Australia if we get the policy settings right. The biggest barrier is policy uncertainty.”

The stalling of new investment gives the Coalition an opening. Its energy spokesman, Ted O’Brien, says: “There’s a big black hole coming our way, with 90 per cent of baseload power gone by 2034 [as the old coal-fired fleet shuts down] and absolutely no chance of replacement.”

“Labor is killing off gas [an important interim energy source] and the lights will go out,” says O’Brien. He is not the only one saying so. The Australian Energy Market Operator said last week to expect annual gas shortages from 2028 in NSW, Victoria, South Australia, Tasmania and the ACT.

O’Brien continues: “And investment in renewables has plummeted. Not a single element of Labor’s climate and energy plan is working.”

But the Coalition’s nuclear power proposal is not the solution. There is no realistic chance that a major plant could be built and operated within a decade, even if the legal moratorium were dropped and investors were to step up.

O’Brien agrees: “We’ve never suggested zero-emissions nuclear power will solve the short-term supply shortage. It’s part of the medium- to long-term future – you cannot get to net zero without it being part of the mix.” And AGL’s no-nukes policy doesn’t deter him; there are other companies with other old coal-fired sites.

So what is the Coalition’s solution for the looming energy shortfall? We will have answers, says O’Brien, but not yet. We have to wait for the Coalition policy to be announced.

In the meantime, Australia can bid for solar cell factories. But if we lack the power to run them, the hope is forlorn. Labor’s plan is stalling and the Coalition doesn’t have one at all. Yet.

Peter Hartcher is political editor.

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