Australian Government has legislated emissions reductions targets of 43 per cent (on 2005 levels) by 2030 and net zero by 2050. These targets are enshrined in law in the Climate Change Act 2022.
Author: Geoff Crittenden, CEO, Weld Australia
These targets will play a key role in limiting global temperature increases and ensuring Australia’s transition to a low carbon future, consistent with our commitments under the Paris Agreement.
Importantly, these targets will necessitate the construction of new infrastructure on a massive scale. Australia’s existing renewable energy generation of 64GW is forecast to grow to over 218GW by 2050. This will comprise 90GW of wind, 39GW of solar, 18.7GW of water, and 35.9GW of battery storage.
According to the Clean Energy Council, there are currently 106 renewable energy generation projects that are either under construction or due to start construction soon around Australia.
For example, it is expected that over 11,000 wind towers will need to be produced, each requiring 500 tonnes of plate steel (for onshore wind towers) or 750 tonnes (for offshore wind towers). The annual production of plate steel in Australia is currently 400kt.
According to Australian Energy Market Operator’s (AEMO) 2022 Integrated System Plan, demand for steel from the electricity sector (NEM-wide) is likely to increase by approximately 50 per cent from 2021 to 2027. These demands equate to 8 per cent of Australia’s annual crude steel production, most of which is needed for wind turbine towers.
To connect all this new generation to consumers, AEMO estimates that more than 10,000km of new transmission lines and 25,000 transmission towers (at 30 to 60 tonnes of steel per tower) will need to be constructed around the country.
To support this, the Government established the Rewiring the Nation project in the 2022-2023 Budget as part of the Powering Australia plan, with $20 billion in low-cost finance to expand and modernise Australia’s electricity grids at lowest cost.
A skilled clean energy workforce
However, while funding has been made available for the infrastructure itself, little consideration has been given to the skilled workforce that will be required. The only initiative announced so far is the New Energy Apprenticeships program.
The Federal Government has committed to spending over $95 million to support 10,000 new apprenticeships under the New Energy Apprenticeships program, and another $1 billion on a 12-month Skills Agreement that promises to deliver 180,000 Fee-Free TAFE places to priority groups in 2023.
The Federal Government recently added an extra 39 occupations to the Australian Apprenticeships Priority List. The list has grown to encompass 111 occupations, as Australia continues to struggle with skills shortages across a range of different sectors—particularly welding and fabrication.
Several occupations related to welding and fabrication were added to the Priority List, including Welder, Pressure Welder, Fitter, Metal Fabricator, Metal Machinist, Metal Casting Trades Worker, Sheetmetal Trades Worker, and Blacksmith. In fact, 11% of the occupations included in the Priority List are now related to welding.
Occupations on the Priority List are eligible for financial support through the Australian Apprenticeships Incentive System. A wage subsidy of 10 per cent is provided to businesses in the first and second year, and then it drops to 5 per cent in the third year. Up to $5,000 in direct payments is made to apprentices across two years.
While these initiatives will provide welcome financial incentives for both employers and their apprentices, this is just one small piece of the puzzle. These initiatives alone will not solve the skills crisis.
A veritable army of skilled workers
All this the renewable energy infrastructure will require a veritable army of skilled workers, including welders.
Australia’s renewable energy industry will need a raft of additional resources to deliver on these ambitious projects, including: manufacturing and fabrication capacity, raw materials (particularly steel), and contracting and contractor resources. Plus, new technologies will need to be developed and deployed.
The renewable energy industry will require huge volumes of fabrication in the coming years. While this represents enormous opportunities for Australia’s welding, fabrication and manufacturing industries, there are also enormous challenges ahead.
While our governments can wish, and hope, and make public pledges about Australia’s transition to renewable energy, we simply do not have the sovereign manufacturing capability to make this a reality.
The Federal Government and state governments can wish their renewable energy policies into existence, but without a massive investment in fabrication and steelmaking facilities, and skills and training in each state, it will not be achievable.
Local content policy
The main competition for Australian wind tower manufacturers are overseas suppliers from Vietnam, China and Indonesia. The issue is that the quality of imported wind towers is appalling. They do not adhere to Australian Standards.
Local fabricators comply to internationally recognised Australian Standards and are certified by the relevant Australian authority. In this way, Government and private clients can ensure the quality and safety of projects. Imported steelwork, which does not meet these requirements, is often of inferior quality and may not meet the Australian safety requirements.
These quality and safety issues will only be exacerbated by increased global demand. The whole world is looking to transition to renewable energy.
Countries like Scotland, New Zealand and Sweden are all investing in wind power. Not only will increased global demand likely reduce the quality of wind towers manufactured overseas, it will also increase scarcity of supply. There are already global supply chain issues— imagine how these will be magnified.
Local manufacturers like Keppel Prince Engineering and Crisp Bros. & Hayward cannot win jobs on their doorstep when governments and multi- national companies place a premium on price over and above quality and safety.
The Federal Government must commit to building sovereign manufacturing capability for renewable energy—in the same way that it has for shipbuilding.
The Federal Government must legislate local content policy. This will create a capacity mechanism that generates a clear, long- term signal for investment by private equity and local manufacturers. The Federal Government must also mandate that all wind towers are constructed, erected and inspected according to Australian Standards.
To overcome the established overseas supply chains and generate investment into fabrication capability, local manufacturers need certainty of demand. This demand must stem from government, project investors and developers, and OEMs.
Local manufacturing companies must be assured of the security of sufficient orders to enable them to invest in the necessary plant and equipment to deliver high quality, cost effective wind towers.
Our governments must support macro demand generation. For example, the Victorian Government’s Victorian Renewable Energy Target (VRET) legislation has helped to support the domestic manufacturing industry.
In addition, local content policy must be legislated. Given the huge scale of potential demand, local content need not be 100 per cent—VRET required 64 per cent local content and 93 per cent locally milled steel.
With this long-term demand a reality, local manufacturers will have the confidence improved production efficiencies and stability of supply can improve competitiveness.
Only with this commitment in place will industry have the confidence to invest. Unless industry and governments come together now to formulate a plan of attack, when the time comes to manufacture the assets needed for a clean energy transition, there will be no fabrication facilities, no skilled workforce, and no regulatory frameworks in place. There will be no sovereign manufacturing capability.
National Manufacturing Summit
Given the sheer volume of challenges and opportunities on the horizon in the renewable energy industry, Weld Australia, in conjunction with the Australia Institute’s Centre for Future Work, will host the National Manufacturing Summit at Parliament House in August.
With the theme of Renewable Energy: Challenges and Opportunities, the aim of the Summit is to help industry leverage the opportunities currently available in the renewable energy sector, and translate these into action.
The Summit will gather industry leading representatives from all the major stakeholders in Australia’s manufacturing sector—business, unions, universities, the financial sector, suppliers, and government—to discuss the sector’s prospects, and identify promising, pragmatic policy measures designed to support an industrial turnaround.
Government Ministers and international experts will delve into the challenges and opportunities of the renewable energy revolution.
Stay tuned for further information, including registration via the Summit website: https://manufacturingsummit.com.au.
Renewable Energy Infrastructure Group
Weld Australia is also proposing to establish a Renewable Energy Industry Group. It will bring together existing generators, new players, manufacturers, suppliers, specialists and consultants to:
- Share knowledge experience, and learnings
- Discuss and workshop renewable energy issues
- Network and collaborate with like-minded industry colleagues
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