Hatch director of project implementation, Dr Andrew Barton, explains how securing regional supply chains will be critical for Australia to reach its green energy goals.
Like the rest of the globe, Australia needs crucial equipment to complete projects vital to meeting green energy goals.
Unlike other parts of the world, we lack the local manufacturing and product demand to justify the enormous investment needed to make everything we need onshore.
This has left Australia reliant on international suppliers who – as pressure to go green mounts – have prioritised projects in their own regions. As a result, wait times on equipment for projects outside of those areas has blown out to two to five years and costs are escalating.
Prime Minister Anthony Albanese’s recent Future Made in Australia Act and $1billion pledge to support domestic advanced manufacturing and clean energy projects goes some way in alleviating the problem, but we need to look further afield.
There is a huge opportunity for collaborating with neighbouring South-East Asian countries. By manufacturing at a scale that supports projects in, for example, Indonesia, Singapore, Malaysia and the Philippines, there is much bigger demand to justify the investment.
By sharing the load locally, Australia and South-East Asia can create the security of supply that other countries already have.
In contrast to Australia, government owned developers of renewable projects in other countries receive significant government sponsorship, giving them the funds to lock in suppliers years ahead. In some countries, cable suppliers, for example, have been directed to prioritise local supply.
Australian developers have not had the same government assistance or local manufacturing. This means a lot of private developers do not have the funds to lock in offshore supply until they start construction and by then, wait times and costs have escalated.
Renewable projects
Offshore wind farms and underground electricity transmission are examples of what is at stake. In Europe, sanctions stemming from the conflict in Ukraine accelerated the need for European countries to wean off gas.
Respective European governments are funding the transition, locking away up to 10 years’ supply of high voltage cables produced by local manufacturers – the same manufacturers supplying other countries, including Australia.
The rest of the world pays a premium to get in the queue and will still wait years for high voltage cables, which are used for offshore wind farms and underground electricity transmission.
The Marinus Link, a proposed electricity and telecommunications interconnector between Tasmania and Victoria, is one such project that will require high voltage cables.
It is a critical part of Australia’s new energy future, enabling low-cost, clean electricity to flow in both directions between the two states, storing excess energy in Tasmania’s hydro storage for use when demand is high. It is due to start in early 2025.
The proposed SunCable AAPowerLink has the potential to support Australia’s ambition to become a renewable energy export superpower but it too is dependent on the supply of major power transmission equipment such as high voltage cables.
Transformers also have supply issues – particularly high capacity, high voltage transformers which are made by few manufacturers. Whether it’s renewable energy zones or interconnectors between states, these projects depend on transformers for their substations.
The delay for transformers, which is about two years and getting longer, means a project could go through design and approvals then wait years for critical equipment.
Supply chain
At the moment, Australia is dependent on international suppliers for our energy transition. If we understand the risks associated with that, we can develop strategies to mitigate them.
Every time, those strategies come back to diversifying and bringing the supply chain closer to home.
Hatch is actively engaging in critical energy projects such as wind, solar and hydro power generation, high voltage transmission systems, energy storage including BESS and pumped hydro, and sustainable fuels.
All of these projects play a vital role in driving forward the green energy transition. As experts in planning and executing energy projects, Hatch understands the critical importance of the supply chains that underpin the successful delivery of these projects.
Derisking supply chains is a key focus area and we strongly support localisation initiatives to improve the security of supply to our Australian and regional projects.
About the Author
Andrew is the Director (Project Implementation) of Australia-Asia Energy at Hatch – a global multidisciplinary leader in engineering, operational and development projects in metals, energy and infrastructure. He has almost three decades of global engineering and project management experience in renewable and oil-and-gas energy development projects. His role at Hatch is to build its capability to deliver projects, including securing equipment and materials.