Should Australia make solar panels? Supply chain security through global engagement

Executive summary

Global competition for clean energy industries is accelerating and Australia wants to join the race. The Australian Government plans to invest $1 billion in domestic solar manufacturing to build resilience in a supply chain currently overconcentrated in China. This could alleviate energy security concerns but could also risk wasting public resources on an uncompetitive industrial play.

The goal of Australia’s Solar Sunshot program is to contribute to Australia’s economic security and resilience. Drawing on private interviews and a literature review, this report outlines the security argument for diversifying the solar supply chain and key lessons from the history of solar trade and industry policies in the United States. The report concludes that Australia’s best chance to build supply chain resilience is to contribute to a globally diversified solar supply chain. This will require diversification across each segment of the manufacturing process. Therefore, this report recommends:

• That Solar Sunshot investments incorporate projects’ contributions to a globally resilient supply chain in its assessments. This could include conducting a sector assessment under the National Interest Framework to target funding at certain segments of the supply chain.
• Australia should pursue an import diversification strategy, strengthening links with Southeast Asian, Indian and American solar manufacturers.
• Leveraging diplomatic and education networks to advocate for Australia’s role in a global solar supply chain through linked industrial policies or research partnerships.

Australia’s industrial policy play

In March 2024, the Australian Government announced a $1 billion Solar Sunshot program to invest in domestic solar manufacturing as part of its $22.7 billion Future Made in Australia (FMIA) plan.¹

Government intervention in solar manufacturing has been on the rise globally as countries try to counter China’s dominance in the industry. A number of countries have introduced local content requirements for solar energy. The US Inflation Reduction Act (IRA) subsidises the domestic manufacturing of solar panel components and European Union (EU) members signed a charter to support their solar sector and diversify imports.² Of the four largest markets for solar panels outside of China, three — the United States, India and Brazil — have placed tariffs on imports of Chinese panels.³

Source: Getty

FMIA is Australia’s response to a global trend towards green industrial policy. At the FMIA announcement, Prime Minister Albanese outlined its goals: “capitalising on our comparative advantages and build sovereign capability in areas of national interest.”⁴ The former aims to use Australia’s renewable energy and mineral resources to develop future export industries. The latter is part of a broader global trend to insure against supply shocks, a concern triggered by disruptions that occurred during COVID-19, geopolitical conflicts (like Russia’s invasion of Ukraine) and the weaponisation of trade.⁵

The Solar Sunshot program forms only a small part of FMIA. Most FMIA investment is focused on critical minerals processing and hydrogen production. But the Sunshot program drew immediate criticism from some in industry, economists and government officials as commentators pointed out the difficulties in competing with cheaper Chinese-made solar panels. Some also raised concerns around wasted taxpayer funds and propping up likely uncompetitive industries.⁶ The underlying question of these criticisms is whether FMIA’s goals are worthy of public investment and whether the Solar Sunshot program, in particular, is the best way to address them.

Australia’s solar manufacturing ambitions

Solar energy will play an increasingly essential role in Australia’s energy system. Australia’s national grid will need at least 40 GW of solar installations in the next ten years, equivalent to over 100 million solar panels (by comparison, the national grid currently has 31 GW of solar energy capacity).⁷ Renewable energy also underpins the Australian Government’s ambitions to develop export-focused industries in hydrogen production and energy-intensive industries, requiring even greater deployment of solar energy.

The Solar Sunshot program has two objectives: supply chain resilience and commercialising innovation.⁸ The solar supply chain is extremely concentrated in China and diversifying to insure against the risk of supply disruptions is legitimate given the precedent for trade barriers or conflict disrupting supply chains.⁹ A stable supply of solar panels at low cost is important to achieving Australia’s energy security, decarbonisation and future economic goals. There are a few ways of improving supply chain resilience: investing in sovereign capabilities (domestic manufacturing), finding other trading partners and stockpiling.¹⁰ There are many other countries already invested in reshaping the solar supply chain — in particular, solar manufacturing investments in India, Southeast Asia and the United States are increasing.¹¹ In the event of a supply disruption, Australia could look to these countries for alternate sources through a trade and import diversification strategy.

A stable supply of solar panels at low cost is important to achieving Australia’s energy security, decarbonisation and future economic goals.

But the Solar Sunshot policy is also industrial policy — building new industries in Australia. Questions have been raised about Australia’s potential for competitiveness in the solar manufacturing industry. The cost to manufacture in Australia is much higher than China and other countries and global solar manufacturing capacity already exceeds demand.¹² The average utilisation rate of some solar factories in China is only around 50% and solar manufacturers often face poor profit margins and brutal boom-and-bust cycles.¹³ Industrial policy can come with risks, including entrenched lobbying for subsidies and protection, inefficient allocation of resources or disincentivising innovation.¹⁴

The Solar Sunshot policy should be designed to achieve its aim of building supply chain resilience at the lowest cost. Drawing on private interviews and a literature review, this report examines the current solar supply chain and the trajectory of the solar industry and outlines the security argument for diversifying the solar supply chain. It draws on lessons from solar trade and industry policies in the United States, which highlight the importance of end-to-end supply chain resilience and the trade-offs between resilience and cost, to provide recommendations for Australia.

Mapping the global solar supply chain

The solar panel supply chain is typically broken down into four segments: polysilicon, ingots and wafers, solar cells, and solar modules, and China has become the dominant producer in all four segments.¹⁵ China is a clean energy manufacturing powerhouse, producing most of the world’s lithium-ion batteries and wind turbines.¹⁶ But its dominance in the solar supply chain is unprecedented and has rapidly consolidated in recent years. Solar manufacturing in China is now an increasingly commoditised, viciously competitive industry. There are an estimated 1.8 million people employed in solar manufacturing in China, with an estimated manufacturing capacity of 1000 GW of modules per year (double the amount of solar modules installed globally in 2023).¹⁷

Polysilicon

Polysilicon is a purified form of silicon metal which is produced from quartz. It is a commodity primarily used in the solar industry with a smaller market for semiconductors. As of 2024, it is estimated that China produces 91% of the world’s polysilicon (up from 65% in 2019), in factories in its western provinces like Xinjiang and Inner Mongolia.¹⁸ Before 2012, the production of polysilicon was far more diversified, with major facilities in the United States, Europe and South Korea. But polysilicon prices have fallen as China’s capacity increased and many producers outside of China have shut down or focused on supplying the more lucrative semiconductor market.¹⁹ Today, a small but growing amount of polysilicon capacity exists in the United States, Germany and Malaysia. Australia has no domestic polysilicon manufacturing but does manufacture the precursor silicon metal.

Wafers

Ninety-seven per cent of solar wafers and ingots are manufactured in China, the most concentrated part of the supply chain.²⁰ Outside of China, there is some wafer manufacturing capacity in Vietnam and Malaysia, however, this is dwarfed by China’s scale (there is over 1000 GW of wafer capacity in China, compared to about 35 GW in Southeast Asia).²¹ Government subsidies, rapid innovation, and close relationships between local equipment makers and China’s wafer manufacturers have contributed to its success in wafer manufacturing.

Cells

China produced approximately 88% of the world’s solar cells in 2023.²² The remainder is primarily manufactured in Southeast Asia and India (mostly using Chinese wafers).²³ The European Union has 2 GW of cell manufacturing capacity (less than 0.5% of the global total).²⁴ The United States previously had no cell manufacturing, but is projected to have 5 GW by 2025, ramping up to 12 GW by 2028.²⁵ This segment of the supply chain has lower energy costs but high labour and material costs (particularly silver). Like wafers, cell manufacturing has experienced rapid innovations and changes to technology.²⁶

Modules

Modules (the solar panels themselves) are the most diversified segment of the supply chain and 85% are manufactured in China. There is significant manufacturing capacity in Southeast Asia, South Korea, India and Turkey, however many are reliant on imports of Chinese cells. Two per cent of solar manufacturing occurs in the United States, although its largest domestic manufacturer, First Solar, produces solar panels using cadmium and telluride rather than silicon and has a separate supply chain.²⁷ Australia has one domestic solar module manufacturer — Tindo Solar — which manufactures 30 MW of panels per year, using imported cells.²⁸ A second Australian company SunDrive is also planning to manufacture panels locally in a joint venture with China-based Trina Solar.²⁹

Solar modules are then installed in-country, usually either in large utility-scale ‘solar farms’ or on rooftops of houses and businesses.

The rise of China as a solar manufacturing superpower

Solar manufacturing in China took off in the early 2000s as solar energy became a popular energy source. Companies, typically drawing on overseas expertise, would begin manufacturing in low-cost China (often with the support of local governments) and export to growing markets around the world.³⁰ By 2010, China manufactured around 58% of the world’s solar modules, rising to around 85% today. China’s success in solar manufacturing can be attributed to innovative companies and to government investments and subsidies.³¹

China’s success in solar manufacturing can be attributed to innovative companies and to government investments and subsidies.

State support: Local governments in China were important initial supporters of the solar manufacturing industry. In 2000, Zhengrong Shi, a researcher at Australia’s University of New South Wales, received US$6 million from the local government in Wuxi in the Jiangsu province of China.³² There he established Suntech, which would go on to become one of China’s largest solar companies.

The central government in China began supporting the solar industry in 2005, providing subsidies for solar energy generation, low-cost credit through public banks (at least US$20 billion in 2010 alone), tax breaks and subsidised land and electricity.³³ China designated solar manufacturing a strategic industry in its Made in China 2025 plan and pushed for the industry to move further up the supply chain, placing tariffs on imports of polysilicon.³⁴ Between 2005-2019, government support is estimated to have provided nearly 3% of the revenue of global solar manufacturers.³⁵ Annual reports from major solar manufacturers indicate state support is ongoing. For example, LONGi, the world’s largest wafer manufacturer, has received hundreds of millions in government grants for asset investment, equipment purchases, and job creation.³⁶

Innovation: Innovation was crucial to the success of the solar industry in China, increasing the efficiency of solar modules and driving down costs. Public research and development investments, links with overseas universities (including in Australia), and a strong industrial learning ecosystem dispersed new innovations rapidly.³⁷ The technologies and manufacturing processes in the solar industry can change very quickly. As an example, PERC cells (a more efficient solar technology) went from 10% of the solar cell market in 2015 to 90% by 2022.³⁸

Innovation and economies of scale (boosted by state support) led to rapid declines in the cost of solar panels — from US$2.32 per watt in 2010 to US$0.13 per watt in 2023 — making it one of the cheapest sources of energy and enabling the widespread deployment of solar energy across the world.³⁹ As China’s manufacturing rose, manufacturers in the United States, Germany and Japan struggled to compete. Many went bankrupt, triggering trade barriers in the United States and Europe.⁴⁰ The industry became increasingly concentrated in China, sparking fears about the resilience of global supply chains.

The national security argument for diversifying solar imports

Geopolitical tensions are driving countries to reconsider how they economically engage and trade with China. Although arguments on how to do this vary, a tentative consensus has emerged for now — particularly on reducing dependencies on China for critical goods and building supply chain resilience through diversification.⁴¹ Energy has long been considered a ‘critical good’ by many countries. Import-dependent Japan and South Korea have made significant public investments in energy diversification and security.⁴² Russia’s invasion of Ukraine and the subsequent energy crisis in Europe sparked renewed efforts to diversify energy, investing in new sources and new suppliers.⁴³

The renewable energy transition requires a shift from energy sources that Australia has been self-sufficient in (like coal and gas) to sources it relies on imports for (like solar panels, batteries and wind turbines). Australia currently imports 96% of its solar modules from China.⁴⁴ Renewable energy sources differ from many fossil fuel sources in that they are long-lasting (solar panels have an average lifespan of 25 years) and a trade disruption would not necessarily affect existing energy consumption in the same way that a disruption to gas or oil would. However, a long-term disruption to the supply of solar panels would threaten the Australian Government’s other policy goals like decarbonisation, energy costs and its ‘renewable superpower’ industrial policy.

Each of these scenarios are hypothetical but they are possible and pose risks to Australia’s climate, economic, and security policy goals. Australia is simultaneously pursuing low energy costs which necessitates a stable supply of energy; lowering emissions by 43% by 2030 which requires energy to be renewable; and building an economy that is resilient to coercion and shocks which requires stability throughout supply chains. A disruption to the supply of solar panels would make achieving all three difficult.

For example, each year Australia plans on adding more solar generation capacity to the grid. This is important for its energy security as 90% of Australia’s coal-fired power plants retire by 2035.⁴⁶ In a supply disruption, Australia could find alternate sources like keeping coal plants open or increasing gas supply to avoid grid failures, but this would jeopardise reaching its decarbonisation target and increase electricity costs. Australia’s plan to expand and transition its energy-intensive industries also relies on deploying large amounts of solar energy.

But addressing this trilemma involves trade-offs. Investing in domestic production of solar modules could alleviate some of these impacts but Australia is unlikely to achieve self-sufficiency and cost-competitive manufacturing across the entire solar supply chain, meaning it would require higher costs for taxpayers and consumers. Continuing to rely on Chinese supply could be the best option now but raises risks if a disruption occurred in the future.

Developing a more resilient source of supply does not necessarily mean Australia should produce all parts of a solar panel itself. An ideal reaction to a supply chain disruption would be for Australian companies to be able to quickly pivot to alternate suppliers. This was recognised by Australian Treasury Secretary Steven Kennedy in his 2024 United States Studies Centre speech: “In many cases, it will be more efficient for other countries to develop alternative trusted sources of supply than Australia. In the event of a global disruption, we will then be able to access these alternative supplies.”⁴⁷ For solar modules and cells, this may be the case — other countries are contributing to the diversification of the solar supply chain through their own policies and subsidies, including lower-cost manufacturers in Southeast Asia, India, Turkey and Brazil.⁴⁸ US trade policy is also stimulating non-Chinese manufacturing throughout the supply chain.

Australia could be best placed to contribute to building global supply chain resilience as a consumer rather than a producer. However, there are still segments of the supply chain that have seen less investment outside of China, particularly wafers and to an extent, polysilicon.⁴⁹ Australia could examine investing in areas where its competitive advantage may be higher and where there is growing global demand for products manufactured outside China, potentially as an exporter.

Lessons for Australia from the US experience

The United States has a much more diversified source of solar modules than most of the world. A combination of trade and industrial policies since 2011 have shaped procurement and investment decisions. The majority of US module imports now come from Southeast Asia and only 0.1% from China.

US trade restrictions have reshaped the global solar supply chain

In place since 2012, US tariffs on Chinese solar modules and cells reduced US solar module imports from China from 47% in 2011 to almost nothing (0.1%) by 2023.⁵⁰ These trade restrictions shaped the decisions of Chinese solar manufacturers who shifted module and cell production to Southeast Asia. As China’s market share declined, imports from Southeast Asia and later India skyrocketed. Korean and American solar manufacturers were also beneficiaries of the trade restrictions, capturing significant market share.⁵¹ In 2024, the Department of Commerce announced further tariffs on imports of Southeast Asian modules and cells, alleging government subsidies.⁵²

While the tariffs were successful in diversifying US solar module supply, many of these manufacturers remained reliant on imports of solar cells or wafers from China.⁵³ Recent US solar trade policies have focused on the upstream of the supply chain. The Uyghur Forced Labor Prevention Act drove polysilicon producers inside China to invest in other provinces and Chinese polysilicon produced in Xinjiang declined from 57% in 2021 to 27% in 2023.⁵⁴ Polysilicon producers in Germany and Malaysia also benefited from increased demand for non-Chinese polysilicon. Notably, the European Union has since introduced a similar policy.⁵⁵

A 2023 Department of Commerce investigation ruled that Southeast Asian cell and module imports were circumventing tariffs if they used Chinese wafers, sparking a wave of investments into wafer manufacturing in Southeast Asia.⁵⁶ In 2024, the United States proposed tariffs on imports of Chinese wafers and polysilicon, which may further incentivise upstream manufacturing outside China.⁵⁷

The Inflation Reduction Act has attracted module production, but less upstream investment

In 2022, the United States passed the Inflation Reduction Act, a sweeping US$370 billion bill that subsidises the manufacturing of solar panel components and the generation of solar energy. This includes tax credits for manufacturing across the solar supply chain to bring costs on par with China and Southeast Asia:⁵⁸

• US$3/kg of polysilicon (20% of manufacturing costs)
• US$12/square metre of wafer (40% of manufacturing costs)
• 4 cents/watt of solar cells (20% of manufacturing costs)
• 7 cents/watt of solar modules (20% of manufacturing costs)

Tax credits for solar energy generation contain domestic content bonuses if the energy is produced from US-made solar modules and cells, creating further incentives for domestic manufacturing.⁵⁹ Notably, US-made wafers and polysilicon are not required to receive the bonus.

The IRA has attracted significant investment in US solar module manufacturing — three major Chinese manufacturers established module and cell manufacturing in the United States and existing domestic producers expanded.⁶⁰ By the end of 2024, it is estimated that the United States will have domestic solar module manufacturing capacity of 26.6 GW, enough to supply about 70% of its current domestic demand.⁶¹ By 2025, the United States is projected to have 5 GW of cell manufacturing (before the IRA, they had none). But many US module manufacturers will still have to rely on imported solar cells — the United States had to increase its cell import quota from 5 GW to 12.5 GW in August 2024 to meet demand.

US President Joe Biden signs into law H.R. 5376, the Inflation Reduction Act of 2022Source: Getty

Since the IRA was passed, only 3.3 GW of wafer manufacturing has entered construction (although a further 5 GW has been announced) to be supplied by the reopening of a US polysilicon plant.⁶² The lack of investment in wafer and polysilicon may be due to the exclusion from the domestic content bonus and fewer supportive trade policies. In October 2024, perhaps in recognition of this, the US Government made solar wafers eligible for 25% investment tax credits under the CHIPS Act, another US industrial policy aimed at incentivising semiconductor manufacturing.⁶³

IRA incentives have also attracted an additional 8 GW of solar module manufacturing capacity from US company First Solar which produces modules using cadmium and telluride, and is thus not reliant on the traditional global supply chain.⁶⁴

Contribution of trade and industrial policies to supply chain resilience

The complicated web of trade policies and subsidies has eventually led to a small amount of end-to-end supply chain resilience within the United States. A 2023 Sheffield Hallam University report details the supply chains of major solar manufacturers, showing that many have separate supply chains for the US market, concentrated in Southeast Asia.⁶⁵ This only occurred after the United States created trade policies that incentivised diversification in each segment of the supply chain.

While the United States has ambitions to build a solar supply chain that can supply at least half of its needs domestically and has seen success in module manufacturing, it will likely remain reliant on trade for cells and wafers, with only one end-to-end domestic supply chain planned.⁶⁶ But there has been tension between ‘friendshoring’ and ‘onshoring’ — the United States’ tariffs on Southeast Asian imports to protect its domestic industry could damage global diversification efforts.

While the United States has ambitions to build a solar supply chain that can supply at least half of its needs domestically and has seen success in module manufacturing, it will likely remain reliant on trade for cells and wafers.

There have also been trade-offs between resilience and cost (both through higher consumer costs and taxpayer subsidies). Module prices in the United States are much higher than in Europe or Australia.⁶⁷ This can potentially impact other policy goals like decarbonisation of the energy system if higher prices deter purchases.⁶⁸ Frequent shifts in government policy also leads to uncertainty and delays or prevents investment. For instance, US solar installations declined in 2022 due to uncertainty around trade regulations.⁶⁹

There are two major lessons for Australia:

1. Australia does not have to manufacture all segments of the solar supply chain. There is inherent tension between supply chain resilience, consumer costs and domestic goals like job-creation. Australia should balance its domestic manufacturing ambitions with ‘friendshoring’ efforts to diversify all segments of the solar supply chain without significantly raising costs.
2. Trade and industrial policies should focus on the entirety of the supply chain, not just the end-product. The United States may have benefited from a more defined strategy for its solar supply chain. Its original tariffs raised costs for modules without necessarily improving energy security. Only in the past couple of years have its policies recognised this and tried to incentivise investment in the upstream of the supply chain.

Australia’s Solar Sunshot policy targets resilience and innovation

Until now, Australian Government intervention in the solar industry has focused on incentivising solar installations and research and development, not manufacturing. This has resulted in the widespread deployment of solar energy but a high reliance on China for imports of solar modules (96% in 2023). The Solar Sunshot program will invest in domestic manufacturing across the supply chain.⁷⁰ Subsidies are required for Australian-made solar components to be cost-competitive with Chinese imports due to higher manufacturing costs.

Following the announcement, the Solar Sunshot program was retrospectively placed under the economic resilience and security stream of the FMIA, as an industry where “some level of domestic capability is necessary or efficient to deliver adequate economic resilience and security,” but it has not yet been subjected to the FMIA’s National Interest Framework.⁷¹ The first stream of the program opened for applications in 2024, allocating $500 million for domestic manufacturing of solar modules, cells, and racks, primarily in the form of capital grants and production subsidies.⁷² Stream 1 has two goals: support supply chain resilience and commercialise Australian innovations. Documents indicate the second stream will focus on other segments on the supply chain like wafers and polysilicon.

To build supply chain resilience, Australia should examine where it can support other countries’ efforts and where it is best placed to focus domestic investments.

While diversifying sources across the supply chain would improve resilience to supply shocks, in the absence of a National Interest test, it is not clear whether solar manufacturing requires domestic capability. An additional objective was added to the Solar Sunshot’s first round — commercialising Australian innovations. While this can be an important policy goal, it does not necessarily ensure supply chain resilience, particularly if technologies are reliant on imports of cells or wafers from China. The economic resilience argument for subsidising solar racking technologies is particularly weak as there are a number of global mounting and tracking companies in the United States and Europe, alongside a small amount of existing domestic manufacturing.⁷³

Instead, Australia is better placed to build supply chain resilience through trade and global engagement. There is growing interest and investment around the world in diversifying the solar supply chain. To build supply chain resilience, Australia should examine where it can support other countries’ efforts and where it is best placed to focus domestic investments.

Recommendations

1. Make supply chain resilience the centre of Solar Sunshot investments

Australia should learn from the United States that diversifying one segment of the supply chain (like modules) does not necessarily ensure resilience.

Given limited resources, it may be best to conduct an assessment (such as through the National Interest Framework) of how Australia can fit into global supply chains rather than create a small end-to-end domestic supply chain. For example, it may make more sense to focus on polysilicon or wafer manufacturing where Australia may have a competitive advantage or where there has been underinvestment from other countries, while other segments of the supply chain may struggle to compete with imports in the long-term.⁷⁴ The results of such an assessment could inform where the first and second rounds of Solar Sunshot funding should be targeted.

Included in the program’s ‘Merit Criteria’ is a project’s contribution to a “resilient PV supply chain.” This should incorporate how a project supports a globally resilient supply chain, for example, aiming to source cells, wafers and polysilicon from non-Chinese sources.

2. Invest in an import diversification strategy for solar modules

Australia should assess how its procurement can contribute to building a less concentrated global solar supply chain. This would build resilience, potentially at a lower cost, taking advantage of other countries’ investments in solar manufacturing.

India has introduced production subsidies for domestic solar manufacturing and its production and exports of modules have skyrocketed in recent years. Its module manufacturing capacity is projected to reach 150 GW and cell capacity to reach 75 GW by 2026.⁷⁵ Solar manufacturing giants have invested in Southeast Asian module, cell and wafer factories, primarily to serve the US market.

There are existing mechanisms to diversify imports. Austrade can connect Australian solar installers with manufacturers through trade missions and business exchanges or facilitate the entry of manufacturers into the Australian market. Export Finance Australia’s $2 billion Southeast Asia Export Finance Facility could catalyse investment in solar manufacturing projects.

Public procurement could also play a role. This is a strategy the EU is pursuing. Its Foreign Subsidies Regulation blocks companies that receive subsidies from bidding for European government tenders and has been used against Chinese solar manufacturers.⁷⁶ Contribution to supply chain resilience could be included as a factor in bids for government support for solar projects through the Capacity Investment Scheme or Clean Energy Finance Corporation. The merit criteria for these tenders already includes provisions for other socially beneficial goods like building social licence and First Nations engagement.

3. Advocate for Australia to occupy a strategic niche in the solar supply chain

There is growing demand for products made outside of China, particularly when selling into the US market. For example, there are separate polysilicon price averages for polysilicon made inside and outside of China.⁷⁷

Australia could use existing partnerships like its Climate, Critical Minerals and Clean Energy Transformation Compact with the United States to advocate for Australia to play a role in the US solar supply chain.⁷⁸ Australia and the United States are attempting to do this in the battery supply chain. IRA tax credits favour electric vehicles (EVs) made with materials from free trade agreement partner countries like Australia and the US Export-Import Bank has provided funding for Australian mining projects.⁷⁹

Australia could also leverage its expertise and research and development in the cell and module segments of the supply chain to create stronger links with manufacturers in Southeast Asia, India and the United States. Australia has a long history of involvement in China’s solar manufacturing sector — including training hundreds of Chinese engineers — and continues to have research links with successful Chinese manufacturers.⁸⁰ This could provide a model for engagement with other countries through scholarships or international research partnerships.

Conclusion

The solar supply chain is currently overconcentrated in China and Australia’s efforts to diversify its sources are legitimate. However, Australia must learn lessons from the US experience and ensure its public investments achieve its desired aim of creating a more secure supply of solar panels in the most cost-effective way. To do so, Australia should consider aligning its Solar Sunshot investments to focus on supply chain resilience with an import diversification strategy for the segments of the supply chain it may not be able to domestically fulfil. It can do this by:

• Using the Solar Sunshot program to make more targeted export-focused investments in certain segments of the supply chain and consider global supply chain resilience in its project funding.
• Forging closer links between Australian consumers and overseas manufacturers in India, Southeast Asia and the United States.
• Leveraging diplomatic and education networks to advocate for Australia’s role in a global solar supply chain.

Australia can improve its future energy security by investing in a more resilient supply chain for solar panels. It can best do so by engaging in a shifting global supply chain through a combination of onshoring and friendshoring tactics.

Acknowledgements

The author would like to thank the team at the United States Studies Centre for their feedback and support throughout the research process. The author also wishes to thank Jeffrey Wilson at the Australian Industry Group for his insightful reviews. The author thanks the individuals who contributed their time and expertise through interviews including those at Bernreuter Research and Solar Choice.