Honorary senior research fellow at University of Sydney, Professor Phil Toner, spoke to Manufacturers’ Monthly to discuss the benefits of an Australian wind tower and turbine manufacturing industry.
A recent report titled An Industrial Strategy for Domestic Manufacturing of Onshore and Offshore Wind Energy Towers and Equipment details the advantages of having a sovereign wind tower and turbine manufacturing industry.
“Manufacturing wind power equipment represents an enormous opportunity for Australia to attain a more balanced industrial structure and create well-paid jobs,” said report author and honorary senior research fellow at University of Sydney, Professor Phil Toner.
The report from the Centre for Future Work contrasts these potential benefits with Australia’s current landscape, where all installed wind towers are sourced internationally.
“Whilst there is some flow-on to regional economies in terms of construction and some maintenance jobs, these benefits are temporary and often muted by the use of fly-in fly-out labour,” said Toner.
The research showed that establishing an Australian wind manufacturing industry would lead to an output of over 800 towers per year and over $15 billion cumulative value over the next 17 years. The sovereign industry would also bypass 2.6 million tonnes of CO2 emissions through a reduction in sea freight.
Additionally, Toner noted that the industry could create 4,350 direct and ongoing jobs across diverse skill sets, along with thousands more in indirect sectors.
“Designing and customising wind towers requires engineers, especially mechanical and structural,” he said.
“Many tradespeople will also be needed, especially welders experienced in operating automated and semi-automated welding gear; other metal tradespeople for CNC steel plate cutting, rolling and edge bevelling and painting tradespeople.
“A variety of semi-skilled jobs will be required for materials handling and despatching.”
The job spark would see regional Australia rewarded, where traditionally, it has only received damaged roads and congestion from renewables investment.
“It would benefit regions where manufacturing jobs are scarce and especially those regions which have seen intensive renewable energy generation investment but have not benefited very strongly,” said Toner.
Sparking growth in Australian manufacturing
Beyond job creation, emissions reductions, and increased production, the industry could also serve as a source of demand for other manufacturing sectors. A beneficiary of this potential sovereign wind tower manufacturing is the local steel industry. According to the report, the towers could create the demand for up to 700,000 tonnes of Australian-made steel per year.
“Based on Australian Energy Market Operator (AEMO) projections, if these land-based wind towers were produced locally, this would absorb more than Australia’s current production of plate steel. This is currently around 400,000 tonnes per year,” said Toner.
The demand could have further flow on effects for the steel industry by allowing plants to recapitalise with carbon-free technologies.
“Domestic production of wind towers would contribute substantially to generating a level of output for local steel production to justify steel producers’ investment in ‘green steel’ technologies,” said Toner.
Other industries could also benefit from increased demand, which would lead to expanded production capacity.
“Other beneficiaries would be for example specialist flange makers, as each wind tower uses several bolted flanges to connect tower sections together and for connecting the tower to foundations and the nacelle,” said Toner.
“Wind tower production would also significantly increase demand for specialist non-corrosive coatings and large diameter bolts and fittings.”
Building a sustainable wind manufacturing industry
Despite advantages for Australian industry, Toner noted hurdles that exist in establishing this local manufacturing sector. The initial challenge that he foresees is pushback from overseas wind tower suppliers.
“Overseas wind tower suppliers and developers will argue that local production will increase costs,” he said.
Aside from international struggles, Toner said a lack of government subsidisation for these wind towers and turbines could present a problem.
“Most other industrial countries are investing aggressively in manufacturing the new equipment and products that will be in demand as the energy transition continues. Australia needs similar policy activism,” he said
To address issues, Toner made a case for the Federal Government to employ its policy tools in its Future Made in Australia (FMiA) manufacturing strategy.
“Policy can offset initial cost differentials by subsidising capital investment or having a production subsidy for each tower produced,” he said.
“Wind tower production fits squarely within the remit of Federal Government programs such as the Future Made in Australia (FMiA) program.”
Toner said that wind tower manufacturing is closely linked to the FMiA program beyond its obvious sovereign renewable energy equipment production.
“Wind towers are within Australia current technological capacity, they meet the ‘feasibility’ criteria of FMiA,” he said.
“There are also strong supply chain links to existing industries, notably steel production, anti-corrosion paint and flange manufacturers.”
“Finally, tower production holds the strong possibility of entering related and more advanced manufacturing activity entailed in wind turbine production such as blades, gearboxes and electrical control equipment.”
Aside from government investment, Toner said that ensuring the co-ordination of private sector investment across different industries is vital. This would see production levels and amounts of skilled workers following the demand made by the new industry.
“The most obvious is the requirement for plate steel production to ramp up to satisfy the large increase in demand from wind towers. Without this, steel inputs will be imported. The same issue applies to skilled labour requirements,” said Toner.
Toner suggested that collaboration between multiple parties is also essential for proper implementation of these strategies.
“Collaboration will be essential to ensure coordination both in terms of scale and type of local industrial inputs and labour required for a successful wind tower manufacturing strategy,” he said.
This collaboration extends to joint ventures with large overseas manufacturers.
“This would allow easier access to the latest technologies and would reduce the level of resistance of international turbine suppliers to being required to ‘buy local’ if they had a direct commercial interest in the success of the local manufacturing plant,” he said.
Moving forward, the report also highlights the necessity for early and coordinated planning that involves all stakeholders. The report suggests that the Federal and state governments, along with industry, conduct a study to assess the feasibility of establishing wind tower manufacturing. This study would scope out the optimal location, plant size, plant layout, advanced production equipment, and minimum scale of output required.
“A relatively large site is required, given the size of the towers and for inventory storage. To be competitive, the production equipment, materials handling, and production site scheduling and layout, would have to be of world-leading efficiency,” said Toner.
On top of these policy and partnership requirements, there are also costs that the government will have to prioritise. Toner said that these costs would originate from manufacturing equipment and could end up totalling around $50 million.
“The major costs are materials handling equipment, especially large steel plate and rolled and welded tower sections; plate cutting, tube forming and rolling equipment; automated welding; and a large sandblasting and paint shop where corrosion-resistant coatings are applied,” he said.
Shaping a future made in Australia
If these recommendations were to be overlooked, Toner noted that Australia may again become just a raw resource supplier for other countries.
“These countries will purchase Australian resources at the going global rate, transform them into innovative and expensive products, and then sell them back to us at premium prices,” he said.
If they are considered, based on AEMO projections, Toner said that this will result in a large amount of expenditure, value and thus demand.
“Assuming all towers are made domestically this translates to more than $1 billion per year in the value of towers,” he said.
“This generates a level of demand for wind towers that can support a world-efficient scale of production across a number of local wind tower plants.”
Establishing a sovereign Australian wind tower and turbine manufacturing industry presents an opportunity for economic growth, job creation, and emissions reduction. However, to overcome existing barriers, Toner believes strategic collaboration and government support must be prioritised.